Joyner v. Bank of Menlo

Hines, J. A creditor holding a waiver of homestead exemption from his debtor, but having no lien, may apply for a stay of discharge in a court of bankruptcy, and the State court will impound the property set apart in a court of bankruptcy upon the claim for exemption, and subject it to the plaintiff’s demand when he obtains a lien. Bell v. Dawson Grocery Co., 120 Ga. 628 (48 S. E. 150); Bowen v. Keller, 130 Ga. 31 (60 S. E. 174, 124 Am. St. R. 164); McBride v. Gibbs, 148 Ga. 380, 384 (96 S. E. 1004); Meinhard v. Pincus, 200 Fed. 736. Notes of his debtor which contain waivers of exemption rights do not give to the creditor any lien, equitable or otherwise, on the property of the debtor which he had scheduled in bankruptcy and which had been set apart to the bankrupt as a homestead exemption. Coffey v. Mitchell, 139 Ga. 430 (77 S. E. 561). If the creditor holding such notes fail to apply to the bankruptcy court for an order staying the grant of a .discharge of the bankrupt until his right under the waivers of exemption in such notes could be enforced in the State court, and a discharge is granted to the bankrupt, such discharge will prevent the creditor from obtaining a judgment in rem against the exempted property and from subjecting it to his debt, such debt not falling within the exceptions specified in the bankruptcy act. Bowen v. Keller, supra; Richards v. Shields, 138 Ga. 583 (75 S. E. 602); Valdosta Guano Co. v. Green, 149 Ga. 610 (101 S. E. 538). The bankrupt act, § 58(9), provides that creditors shall have thirty days notice by mail of the bankrupt’s application for discharge. H. S. Comp. Stat., § 9642. Number 57 of the Forms in Bankruptcy requires additional notice by publication. Compliance with the requirement of thirty days notice by mail to creditors of the bankrupt’s application is essential to the validity [754] of the discharge, and is so far jurisdictional that no petition will be acted upon without proof that the prescribed notice has been given. In re Sykes, 106 Fed. 669; Lathrop v. Stuart, 5 McLean, 167; In re Langfeldt, 253 Fed. 458; Black’s Bankruptcy, § 687. This is the rule when the petition for discharge is under consideration, or an effort to revoke a discharge is made. Two questions then arise in this case. One is: Can a creditor collaterally attack and impeach a discharge on the ground that notice of the bankrupt’s application therefor was not mailed to him ? The other is: Did the creditor show lack of notice to him of the bankrupt’s application for a discharge? The bankrupt act, § 2If, declares that “A certified copy of an order . . granting or setting aside a discharge, not,revoked, shall be evidence of the jurisdiction of the court, the regularity of the proceedings, and of the fact that the order was made.” TJ. S. Comp. Stat. 1916, § 9605. Is such order conclusive in a collateral attack on the bankrupt’s discharge? While the discharge in a direct proceeding might be revoked for want of notice to the creditor, or might be set aside in equity in a proper case made, it can not be collaterally attacked for this reason. A discharge granted by a court having jurisdiction of the bankrupt’s estate can'not be treated by any other court as void as to any particular creditor, on the theory that the bankrupt court never acquired jurisdiction of his person, because he was not served with notice of the proceedings, including the application for discharge; and this is so although the name of the creditor was purposely omitted from the list of creditors, or although thé omission to serve him with notice was fraudulent and intentional. Allen v. Thompson, 10 Fed. 116; Benedict v. Smith, 48 Mich. 593 (12 N. W. 866); Sawyer v. Rector, 5 Dak. 110 (37 N. W. 741); Fuller v. Pease, 144 Mass. 390 (11 N. E. 694); Bailey v. Corruthers, 71 Me. 172; Black v. Blazo, 117 Mass. 17; Thornton v. Hogan, 63 Mo. 143; Brown v. Kroh, 31 O. St. 492; Williams v. Butcher, 12 N. B. R. 143; In re Walsh, 213 Fed. 643. In Allen v. Thompson, supra, the court said: “ Entire want of jurisdiction over the subject-matter may be taken advantage of at any time, and it is never too late to make the objection; and it may be even collaterally attacked: . . But where the objection goes merely to a want of jurisdiction of the person or the thing, there may be a waiver of the objection or restrictions as to the time and [755] manner of making it; the judgment becomes not void, but only voidable, and presumptions are indulged in favor of the jurisdiction, unless it be made, to appear by direct proceedings that there was want of it.” In Benedict v. Smith, supra, the name of the creditor did not appear in the list of creditors, and it was not shown that he had been served with any notice as required by the bankruptcy law. The creditor claimed that the discharge in bankruptcy was void as to him, for the reason that the bankruptcy court had never obtained jurisdiction of his person. In reply to this contention Judge Cooley said: "If bankruptcy proceedings were strictly proceedings in personam, this view would be unanswerable; but this is not the ease. Jurisdiction over the estate empowers the court to make decree, and the decree is conclusive upon claims unless attacked for fraud in the bankruptcy court itself. Bev. St. U. S. 1878, § 5120. It cannot be attacked collaterally in other courts.” In Sawyer v. Rector, supra, the Supreme Court of Dakota held that a discharge in bankruptcy “ cannot be attacked collaterally by showing that the plaintiff’s name was fraudulently omitted from the list of creditors, that he was never made a party to the proceedings, and that no notice was given of- the petition for discharge.” In Fuller v. Pease, supra, the Supreme Court of Massachusetts held: “ The validity of a discharge, under the United States bankruptcy act, can only be contested by application in the United States district court within two years, as provided by U. S. St. 1867, c. 176, § 34; and it makes no difference that the plaintiff’s name was fraudulently omitted from the schedules, and that he knew nothing of the discharge until after the two years had passed.” In re Walsh, supra, the court held: " That a bankruptcy court has no power to revoke a discharge on the ground that a creditor did not receive notice of the hearing of the application for the discharge, which was duly mailed.” We do not deem it necessary to quote further from the decisions cited above. While there are some authorities to the contrary, we think the true law is that a discharge in bankruptcy can not be collaterally attacked by a creditor on the ground that he did not have notice of the bankrupt’s application for discharge. But conceding that such collateral attack can be made upon a judgment in a bankruptcy court granting a discharge to the bankrupt, did the [756] plaintiff made out a case ? The evidence submitted by the plaintiff to support this contention was that delivered by a person who was its cashier during the period between the adjudication, of the defendant as a bankrupt and the date of the order granting him a discharge. This witness testified that the mail to the bank usually passed through his hands, that no such notice came to him or through him to the bank, and that he did not see in the Summer-ville News, the paper in which such notice should have been published, any notice of the' application for discharge or hearing thereof. It will be noted that this witness does not swear that notice of the bankrupt’s application for discharge was not duly mailed to the bank, or that such notice was not duly published. If this notice had not been duly published, proof of this fact was easily accessible to the plaintiff. Examination of the newspaper in which the notice should have appeared would have disclosed that it had or had not been published. Furthermore, it does not appear that this witness received and handled all the mail which came to the plaintiff during this period. Besides, the statute only requires that such notice should be duly mailed to the creditors of the bankrupt. If such notice was duly mailed and published, the bankrupt act does not require more from the bankrupt. In the absence of proof that the notice was not duty mailed and published, we do not think that the plaintiff made out a case, even if it could have collaterally impeached the discharge in this case. At the utmost the plaintiff could only claim the right to have this question of fact decided by a jury, and was not entitled to have a verdict directed against the defendant on this issue. In re Walsh, 213 Fed. 643. Under the above rulings, the court erred in directing a verdict for the plaintiff. Judgment reversed. All the Justices concur.