Wofford v. Philip

Bonner, Associate, Justice. In pursuance of the statute in cases, where a jury has been waived, the presiding judge below entered of record the following conclusions of fact, deduced from the evidence: 1. That appellees, Phillip and Mary Unger, executed the mortgage set out in the appellant’s petition, and that the note mentioned in the mortgage became due on September 22, 1872. 2. That $549.40 have been paid by appellees, leaving a balance of $294.33 principal, and $156.49 interest, due on said note, both amounting to $452.82. [640] 3. That on October 4, 1872, appellee Phillip Unger filed his petition, as a voluntary petitioner, praying to be adjudged a bankrupt. 4. That on July 10, 1873, the payee of the note, Miller, filed his claim, and the same was received and filed on the same day by the register in bankruptcy. 5. That the affidavit proving said claim is not in compliance with the bankrupt law, but there is no evidence of any proceedings to set it aside. 6. That after said filing of said claim by Miller, he by his attorneys entered into the agreement attached to appellees’ answer, and collected in pursuance of said agreement the sum of $499.40. 7. That on February 11, 1877, Miller, the payee, died. 8. That on June 20, 1877, his administratrix, Laura A. Miller, qualified. 9. That subsequently B. W. J. Wofford was appointed administrator de bonis non and prosecutes this suit. 10. That on November 22, 1877, administratrix, Laura Miller, filed an additional deposition proving said claim in bankruptcy, which deposition also does not comply with the requirements of the bankrupt act. 11. That on January 10, 1878, an order was made in the district court of the United States, permitting plaintiff' to withdraw said claim from the register’s office and prosecute it in the state courts. 12. That this suit was instituted on January 12, 1878. The conclusions of law by the judge, based upon the facts so found, were as follows: 1. That the agreement executed at Miller’s instance, and attached to defendant’s answers, is not a novation and substitution of a different security and bar to recovery. 2. That the claim was wholly barred by the statute of limitations as to appellee Mary Unger, and that the laches of Miller and his representatives in not prosecuting his claim in the bankrupt court, and in collecting his claim outside of said [641] court, and in violation of the bankrupt law, estops him from claiming that the filing of his debt before the register in bankruptcy suspended the statute of limitation, and therefore the claim is also barred as to defendant Phillip Unger; and judgment was rendered for defendants and for costs against appellants. After a careful examination and re-examination of this case, we find ourselves unable to concur in the conclusion of law reached by the learned judge presiding. We regret that we have not access to some of the authorities cited by counsel. According to those we have, the statute of limitations would cease to run against a claim provable in bankruptcy when it was offered for proof, if not when the adjudication in bankruptcy was had; and that so long as the right to prove continues, the right to amend a defective proof exists. Bump on Bankruptcy (9th ed.), 104-106; id., 573, citing In re Eldridge & Co., 12 B. R., 540; In re Robert Morris, Crabbe, 70; id., 627, citing In re Myrick, 3 B. R., 154; In re Montgomery, 3 B. R., 429; In re Loweree, 1 B. R., 74; In re Elder, 3 B. R., 670; Blumanstiel’s Bankruptcy, 240. The testimony shows that, in this case, the bankrupt has not yet received his discharge. Proof of debt in bankruptcy is analogous to the institution of a suit upon the claim, the proceedings in which, though so defective that they may be subject to demurrer, will nevertheless stop the running of the statute, Killebrew v. Stockdale, 51 Tex., 529. The claim under consideration was not barred by limitation at the date of the adjudication in bankruptcy, or when first offered for proof. Although this proof seems not to have been formal, yet no objection thereto or appeal therefrom is shown to have been taken in the bankrupt court. Bump on Bankruptcy, 104-107. On the contrary, the parties to this suit, in their agreement of January 2, 1874, treat it as having been proved, and it seems thus to have been considered by the bankrupt court in [642] the order of January 10, 1878, permitting it to be withdrawn and the lien to be enforced in the state court. Under these circumstances, we are of opinion that the want of formality in the proof in the bankrupt court should not now be collaterally raised in the state court, to admit the defense of limitation. We infer this to have also been the opinion of the presiding judge below, as he finds that, though the proof was defective, there was no proceeding to set it aside, and that the claim was not barred because of defective proof, but by reason of the laches of Miller and his representative in not prosecuting it in the bankrupt court, and in collecting it outside of the court and in violation of the bankrupt law. The laches in not prosecuting the claim in the bankrupt court, and the endeavor to collect it outside that court, were with the approval, consent and express agreement of appellee Philip Unger himself, and it is reasonable to presume that it was intended as much for his benefit as that of appellant. If the proceedings for proof of the debt were sufficient to stop the running of the statute, we are of opinion that this agreement and attempt under it to collect the debt, to which Philip Unger was a party, should not have the effect to bring the claim within the bar of the statute. We are not advised, either from the statement of facts in evidence or the conclusions of fact found by the court, how the attempt to collect the debt outside the bankrupt court was in fraud of the bankrupt law. In the absence of testimony we may infer, as the bankrupt was permitted to continue in possession of the property, that it had been set apart to him as exempt property, and that the rents and profits were under his exclusive control, and could be applied to the payment of a debt for which his estate in bankruptcy might otherwise have been liable. For the error of the court in adjudging the claim to have been barred, for the reason stated in the record, the judgment must be reversed. [643] By the letter of the agreement of January 2, 1874, appellant bound himself not to ask a sale of the property by decree of the bankrupt court. Whether it was in fact intended that this affirmative provision should be a negative upon the right to ask a sale in the state court, when the proceedings in the latter were upon leave granted by the former; whether the parties by the agreement intended an entire novation of the debt, or for its payment in part and release of the security for the remainder, if the agreement should be complied with, are questions which are not so fully developed, either by the pleadings or the evidence, as that we can satisfactorily pass upon them. Reversed and remanded. [Opinion delivered November 30, 1880.]