Rahm v. Minis

         First --The judgment obtained by Jacobs was valid on itsface, but void for want of jurisdiction. (See Insolvent Act, § 14.)

         The order staying proceedings in effect, transferred Jacobs action to the Insolvent Court, where he might resist the application of respondent for a discharge from his indebtedness. (Insolvent Act, § 14.)

         All suits instituted anterior to the application become merged in the insolvency proceedings. A discharge in the Insolvent Court operates as a discharge from all debt, except those secured by lien. (Insolvent Act, § 24.)

         No judgment can be recovered against a party after his discharge in the Insolvent Court without notice, so that he may appear and plead his discharge as a privilege. No notice being given, he has a right to remain silent.

         When respondent was discharged from his debts, the Jacobs debt was included, and as he had no opportunity to plead the discharge, and as Jacobs disregarded the order staying all proceedings, Rahm certainly was entitled to resort to equity to stay the judgment thus obtained.

         The debt for which the action was brought was discharged by the discharge in insolvency. (Dresser v. Brooks, 3 Barb. 420.)

         Even after insolvent's discharge, the avenue is opento a creditor to attack the proceedings, but it must be done by a direct proceeding, and not collaterally. (Insolvent Act, § 32.)

         Second --The jurisdiction of a Court to grant an injunction in a case like the one at bar, is fully recognized, and in fact conferred upon them, by our statutes. (Practice Act, Sec. 112.)

         The jurisdiction once undoubtedly existed. It having once existed, it continues in existence, unless taken away by statute. (Story's Eq. Secs. 64 I, 885, 886 and 887).

         As to the power of a Court to enjoin proceedings at law, we refer as follows: Foster v. Wood, (6 Johns. Ch. 80; ) Story's Eq. Secs. 74-5, 877, 879, 880, 885-6-7; 3 leading cases in Eq. Secs. 155-6.

         JUDGES: Rhodes, C. J., delivered the opinion of the Court, Temple, J., Crockett, J., and Wallace, J., concurring.

         OPINION

          RHODES, Judge

         The judgment which is the subject of controversy in this case was recovered by Jacobs, one of the defendants, about four months after the discharge of Rahm in insolvency, but the action was commenced before the proceedings in insolvency were instituted. The grounds of the attack are that the judgment was procured in violation of the restraining order which was made at the commencement of the proceedings in insolvency, and without the knowledge or consent of Rahm; and that Rahm was discharged from all his debts and liabilities, including the debt to Jacobs before recovery of the judgment. The judgment was not, for either of those reasons, void, for the Court had jurisdiction both of the cause of action and of the parties--it not being alleged that Rahm was not duly served with process.

         Rahm was entitled to plead his discharge in insolvency in bar of the action, by supplemental answer. If that fact was pleaded, the judgment of the Court is conclusive that the plaintiff was entitled to his judgment, notwithstanding the alleged discharge in insolvency. If he omitted to plead the discharge in insolvency, the judgment is equally conclusive upon him as it would be had his defense been accord and satisfaction, payment, etc., which he had neglected to plead. In such case he might have moved for relief from the judgment, under the sixty-eighth section of the Practice Act, if he could show that the judgment was taken against him through his mistake, inadvertence, surprise or excusable neglect, and he might then have set up his defense to the action. Having a complete remedy at law, he was not entitled to relief in equity, by means of an injunction restraining the enforcement of the judgment.

         Judgment reversed and cause remanded, with directions to sustain the demurrer to the complaint.