# N. L. Wymard and George L. Stark, Receivers of Kemmel & Co., Inc., Debtor v. McCloskey & Co., Inc. > Court of Appeals for the Third Circuit · March 11, 1965 · 342 F.2d 495 URL: https://www.frixlaw.com/law-library/cases/9450514 ## Case - **Full name:** N. L. WYMARD and George L. Stark, Receivers of Kemmel & Co., Inc., Debtor, v. McCLOSKEY & CO., Inc., Appellant - **Court:** Court of Appeals for the Third Circuit - **Decided:** March 11, 1965 - **Citations:** 342 F.2d 495; 1965 U.S. App. LEXIS 6251 - **Precedential status:** Published - **Opinion:** Concurrence by Freedman - **Judges:** Kalodner, Staley, Ganey, Biggs, McLaughlin, Hastie, Smith, Freedman - **Cited by:** 38 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9450514 ## How later opinions describe it (automated extraction) - holding that “custom cannot prevail over a rule of law that such overhead charges, unless specified in the agreement, are not recoverable under a general promise to pay on a cost plus basis.” - finding no diversity jurisdiction where complaint lacked allegations necessary to determine citizenship and plaintiff was given opportunity to amend but stood on its original pleadings - finding jurisdiction under Bankruptcy Act, even though neither party asserted this basis of jurisdiction and complaint was insufficient to allege diversity jurisdiction - applying Pennsylvania and Maryland law, cost-plus contact does not impose an obligation to pay anything for general overhead, including supervision ## Opinion text FREEDMAN, Circuit Judge (concurring). The question presented is a close and difficult one. Decisive for me, however, is the fact that in the present case a full trial has been held and a decision reached on the merits, including the defendant’s counterclaim, all without any objection to the jurisdiction of the court. In contrast to diversity cases in which the consent of the parties and even of the court added cannot confer jurisdiction, proceedings for collection of the assets of a bankrupt estate are within the federal power but the extent of the exercise of this power is made dependent on the consent of the defendant. The strength of the dissenting view therefore lies in the incongruity of attributing to a defendant a consent which admittedly was never sought or intended, because the parties contemplated jurisdiction based on diversity. It is, however, a narrow notion which would restrict consent in every case to an intentional expression. By the doctrine of estoppel the result of a fictional consent has long been recognized whenever the circumstances are such that to *500 claim a lack of consent would be inequitable. What is involved here is not the allocation of power between federal and state sovereignties. It seems to me too artificial, therefore, to say that the so-called jurisdictional element — where authority rather than power is involved — requires the casting aside of a laborious process of factual decision in an adversary proceeding hotly contested by both parties, solely because it is brought to the attention of the parties that the jurisdiction which they had thought supported the adjudication of their controversy has evaporated even though the suit could be sustained if the defendant consented. The reality of the contest is for me stronger than a formal expression of consent at this late date. The purpose of the statutory provision is to afford to a defendant sued by a bankruptcy receiver the choice of having the claim decided by the State or Federal courts. The defendant has the power of choice because Congress intended, as said in Schumacher v. Beeler, 293 U.S. 367, 374 , 55 S.Ct. 230 (1934), that these controversies should be heard and determined in the State courts for the greater economy and convenience of litigants and witnesses, but saw no reason to deny the jurisdiction of the Federal courts if the defendant consented to be sued therein. The defendant here tried its case in the Federal court; it never sought a determination of the controversy in the State courts. 1 The reason why the defendant failed to channel the trial into the State courts is not of decisive significance. Error of fact or mistake of law by the defendant, or whatever else may have been the cause of its silence, has now produced the result that resort to the State courts at this time, far from being for the economy and convenience of the litigants and witnesses, or even of the defendant, would cast a double burden on all the parties to the litigation. Its only purpose would be to afford the defendant a chance to reliti-gate an issue that has been adversarily determined. The dissenting view would approve the anomalous result that at this stage of a case such as this a plaintiff would be at the mercy of the defendant. For whenever, as here, the defendant had lost on the merits, he would decline to give express consent and thus defeat the judgment against him, yet if he had won, he could express consent and thereby ratify the judgment. In the circumstances of the present case, therefore, I would hold that the defendant’s conduct which culminated in a full adjudication of the merits of the controversy, constituted an acceptance of the jurisdiction of the Court which it is now too late to deny. I, therefore, concur in the judgment of the Court. All members of the court who have joined in the majority opinion are also in accord with the views expressed in this concurring opinion. . Its effort to deflect the case to arbitration does not touch this point. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9450514. Public record. Not legal advice.