Streeper v. McKee

Mr. Justice Sharswood delivered the opinion of the court, This was a scire facias upon a mechanic’s claim. There was no defence to the claim other than such as was set out in a special plea, and the evidence to sustain it was a record of proceedings in bankruptcy in the District Court of the United States for the Eastern District of Pennsylvania, against the defendant. Whether, upon the papers given in evidence the jury ought to be directedffo find for the defendant, as showing that the plaintiff waived his right to the further maintenance of the action, by the proof of his claim in the United States court, in bankruptcy, and the acceptance' of the amount paid him, was the question reserved at the trial, upon which the court afterwards entered judgment for the defendant. Proceedings had been instituted in the bankrupt court by his creditors against the defendant. He was not declared a bankrupt, [190] but on his petition a meeting of the creditors was called to consider a proposition of compromise, under the 17th section of the Act of Congress of June 22d 1874. At this meeting the defendant submitted a proposition, offering to pay to each of his general creditors twenty-five per centum in cash upon the amounts owing them, without interest. This proposition was accepted by the creditors. The ulaintiff was a general creditor for $2574.10, and also on four notes for $2972.87, which last amount was secured by the lien upon which the scire facias in this case was issued. It further appeared that two persons were selected by the plaintiff and defendant to appraise this mechanic’s lien, who reported that “ having reference to the present value of the real estate bound by the lien and the encumbrances uj)on said property antedating said lien, they value and appraise the said lien claim or security at the sum of one dollar.” This award was filed in the bankrupt court, accompanying the proof of his debt by the plaintiff, in which he refers to the appraisement, annexed. No objection appears to have been made to the appraisement either by defendant or any of his creditors, and the plaintiff accepted and gave a receipt for twenty-five per centum of the claim, less $1, the appraised value of the security. It is difficult to see upon these proceedings that there appeared any evidence, either in law or fact, of a waiver by plaintiff of his right to the further maintenance of this action. In fact there certainly was not, for the very appraisement and the deduction of the appraised value of the security from the amount of his claim showed conclusively his intention not to waive. The bankrupt law allows a creditor holding a .pledge or lien for securing a debt due by the bankrupt to be admitted as a creditor only for the balance of the debt, after deducting the value of such property to he ascertained by agreement between him and the assignee. Here there was no assignee, but the apjjraisement was made by agreement between the creditor and bankrupt, and it was filed without objection from any quarter. It is urged, however, that the appraisement was only for a nominal sum and should therefore be disregarded. But how could the court say without evidence that it was merely nominal ? If the prior encumbrances were equal to the full value of the property, the security was worth nothing.' But the plaintiff, looking forward to a prospective appreciation of the property, had a perfect right to retain it, and as the defendant submitted the question of its then value to appraisers, he has no .right to object on this ground, whatever may have been his right or that of his other creditors to raise an objection in the bankrupt court. Then and there was the time and place to make the objection. This retention of the security being expressly recognised in the proceedings of the bankrupt court, it was not necessary to obtain the permission of that court to institute his proceeding to enforce it. Judgment reversed, and now judgment for the plaintiff upon the verdict on the point reserved.