Johnson v. Fitzhugh

The Chancellor. The decree in this case was undoubtedly irregular, as the assignee in bankruptcy was not brought before the court. And if the defendant was personally liable for the deficiency after his discharge subsequent, to that decree, and if he had applied within a reasonable time after he had notice of the entry of a decree for the sale of the mortgaged premises, he would have been entitled to have such decree set aside. As I understand the case, the title to the equity of redemption in the mortgaged premises, .was in Fitzhugh at the time of the filing of the bill in this cause, and he and his wife alone were made parties to the suit; but before the decree, and even before the bill was taken pro confessa against them, Fitzhugh was declared a bankrupt, by a decree of the district court. The effect of that decree was to vest in the assignee in bankruptcy the whole interest, of both defendants, in the mortgaged premises, except the inchoate right of dower of Mrs. Fitzhugh in the equity of redemption. And as the assignee in bankruptcy had not been made a party to the suit, as he should have been after the decree in bankruptcy had been entered, the decree of foreclosure and sale was a mere nullity as to him; and it could not foreclose his equity of redemption in the mortgaged premises. The effect of such an erroneous proceeding would necessarily [372] be to prevent bidding at the sale made by the maste.r. F,or a purchaser would not get a perfect title to the mortgaged premises under such a decree. The proper course for the complainants,, alter the decree in bankruptcy, which vested the title, to the, equity of redemption in the official assignee, was to file a supplemental bill in the nature of .a bill of revivor, to revive and continue the proceedings against such .assignee, as the party upon whom the title to the equity of redemption had been cast by operation of law. Had that been done, tlie mortgaged premises could properly have been sold under the decree, so as to give a perfect title to the purchaser; and the bankrupt would have been rightfully charged with the deficiency if he should not succeed in obtaining his discharge,so as to exempt him from personal liability. I am satisfied, however, that the defendant Fitzhugh has no interest in this question ; if his affidavit is true, that he has been fairly and legally discharged from his debts, subsequent to the entry of the decree in this cause. Where a decree is actually made before the discharge of the defendant, under the bankrupt act, for the payment of a debt which was contracted before the proceedings in bankruptcy, were instituted,, such, debt may be proved under the proceedings in bankruptcy. And the discharge of the defendant is a complete and perfect bar.to. any suit, or other proceeding, upon the decree, to charge the defendant personally with the debt; unless the discharge can be successfully impeached, for some of the causes specified in the bankrupt act. The language of Mr. Justice Bronson, in the case of Thompson, v. Hewitt, (6 Hill, 254,) that the original debt was merged and extinguished by the judgment, must be confined to the case then under consideration. There the debt and costs for which the judgment was entered did not exist at the. time of the presenting of the petition in bankruptcy. The plaintiff was claiming a debt, the existence of which was disputed by the defendant. And, as a compromise, it was agreed between the parties that a cognovit should be given, for a certain specified sum, upr on which the plaintiff might enter up his judgment; and with an express understanding that any discharge which the defendant might thereafter obtain, under the proceedings in bankruptcy [373] which had previously been instituted, should not affect the judgment for the new debt thus created by the compromise. In ordinary cases however, although a judgment technically changes the nature of the debt, it is still in fact the same debt which was due at the commencement of the suit; and if contracted previous to the institution of the proceedings in bankruptcy it will be barred by the discharge, where such discharge is obtained subsequent to the entry of the judgment. The mere entry of the decree in this case in the docket of the clerk could not affect, the rights of thedefendant, in any way. Previous to the adoption of the revised statutes, a rule of this court required the register and assistant register to docket all enrolled decrees, in the manner in which judgments were docketed in the supreme court; not for the purpose of making the decree a lien upon the real estate of the party, but as a matter of reference, to facilitate searches. The revised statutes authorized the docketing of all enrolled decrees directing the payment of any debt, damages, costs, or other sum of money; and made such decree, when docketed in the manner prescribed by the statute, a lien upon real estate, But. in addition to the docket which had formerly been kept, pursuant to the rule of the 5th of May. 1825, the revised statutes required a transcript thereof to be sent by the register, or the assistant register, or clerk, with whom the decree was enrolled, to each of the clerks of the supreme court; to be entered in the docket of judgments in their offices respectively. (2 R. S. 182, § 95.) The statute having rendered the rule of May, 1825, unnecessary, it was left out on the revision of the rules which went into operation on the first of January, 1830, and in subsequent revisions. The act. óf May, 1840, concerning costs and fees in courts of law and for olhef purposes, (Laws of 1840, p. 334,) afterwards dispensed with the necessity of docketing judgments or decrees, either in the offices of the registers and clerks of this court, or with the clerks of the supreme court; and only required them to be docketed in the offices of the clerks of the counties where the premises were situated, in order to make them liens upon real estate. But as it was most convenient, for the purpose of giving the transcript [374] required by the act of May, ] 840, to enter the docket of the judgment or decree in their own books in the first place, it has, I believe, been the practice of the officers of this court, as well as of the supreme court, since that time, to docket the judgment or decree in the books of their own offices in the first instance: although it is no longer necessary to do so, and does not affect the rights of either of the parties to the judgment ol decree. As this entry of the substance of the decree in the docket of the clerk of this court, therefore, was merely for the convenience of the clerk, to enable, him to make a transcript of the decree to be docketed if such transcript should thereafter be required, and could not cast a cloud upon the title of Fitzbugh to real property any more than the enrolled decree itself could, he had no right to apply to have it set aside. His proper course is to plead his discharge in bar of the suit at law upon the decree; inserting in his plea the proper averments to show that the debt, for the payment of which that decree was made, had been contracted before the presenting of his petition in bankruptcy, so as to be provable under the proceedings in bankruptcy, and affected by the discharge which was granted subsequent to that decree. The order appealed from does not deprive the appellant of the right to make this defence in the suit at law, upon the decree, but merely gives him the right to litigate the question of the validity of his discharge upon a supplemental bill in this court, if he elects to proceed in that manner. The complainants, perhaps, might have appealed from the order, upon the ground that the applicant had no right to any relief in this court; and that they had the right to a jury trial, in a court of law, upon the question of the supposed fraud in obtaining the discharge. But the order ia not erroneous as to the appellant. It must therefore be affirmed, with costs.