May v. Merchants & Mechanics Bank

Mr. Justice Sterrett delivered the opinion of the court, Our process of attachment execution is necessarily against the defendant in .the judgment as well as the garnishee. If duly served it is the duty of each, respectively, to appear and present his defence, if he has any. Two separate and distinct issues may thus be formed, one as to the defendant in the judgment and the other as to the garnishee. The former may plead payment, or any other matter of defence, to the judgment, that would be available on a scire facias to revive the Same. In this case issue was joined on special plea of defendant below, setting up his discharge in bankruptcy as an [149] extinguishment of personal liability for the debt evidenced by the judgment, and therefore a bar to the attachment. His contention was that the original debt, merged in judgment before proceedings in bankruptcy were commenced, was provable against his estate, and hence his personal obligation to pay the same was wholly extinguished by the subsequent order of the District Court of the United States forever discharging him from all provable debts and claims existing on the day his petition for adjudication as a bankrupt was filed in that court. The facts of which this proposition is predicated were not disputed. The judgment note was given and judgment entered thereon before defendant’s petition in bankruptcy was filed, and subsequently the attachment execution was issued. The debt was clearly provable under the bankrupt law ; but, if plaintiff was willing to rely on the lien of his judgment, he was not bound to prove it against the bankrupt's estate. If, however, for any such reason he declined to prove it, the defendant was nevertheless discharged from personal obligation to pay it, as fully as if the claim had been proved generally against his estate. It follows, therefore, from the undisputed facts, in regard to the nature and character of the claim, that the personal obligation of defendant below was extinguished by the discharge, unless it was preserved and continued in full force by virtue of the waiver, contained in the judgment note, in the words following, to wit: “ And do hereby further waive all rights under the exemption laws of the Commonwealth of Pennsylvania, and all bankrupt laws of the United States which are now in force or that may be hereafter in force.” It was virtually conceded in the court below that if it were not for the waiver the discharge in bankruptcy would be a complete defence to the proceeding. The question therefore is, did the waiver above quoted keep alive defendant’s personal obligation to pay the debt, notwithstanding his discharge as a bankrupt? The learned judge, considering the waiver effective for that purpose, substantially instructed the jury that it was in the nature of a covenant, on the part of defendant, not to interpose his discharge as a defence either to the note or the judgment in, which it was merged; and, therefore, directed a verdict in favor of plaintiff for the balance claimed to be due. If this construction is unwarranted, the error was radical and the judgment must be reversed. The power delegated to the general government to establish “uniform laws on the subject of bankruptcies throughout the United States” is grounded on considerations of public policy, supposed to be promotive of the greatest good of the greatest number rather than the strictly personal benefit of [150] any individual or class; and hence we think it is contrary to that policy to permit importunate creditors to exact from embarrassed debtors, who are alwaj’s more or less in their power, a waiver of the benefits intended to be secured by beneficent legislation, and thát too in advance of actual insolvency and in anticipation of the circumstances which would entitle them to the benefits, not intended for themselves alone but for the community at large. To reeognize such waivers as effective would to some extent interfere with the practical operation of a general bankrupt law such as was recently in force, and perhaps enure to the benefit of some individuals at the expense of others. But, aside from this, the waiver was not interposed in time. When defendant below applied for bis .discharge under the bankrupt law, all his creditors, including the plaintiff, were notified and had an opportunity of objecting to his discharge ; but no objection was interposed, and the court having exclusive jurisdiction of the subject ordered his discharge. That absolved the bankrupt from all debts provable against his estate and claims existing on the day his petition for adjudication was filed. The validity of that decree cannot now be questioned. The matter is res adjudieata and cannot be reviewed in this collateral proceeding. For the reason that the waiver is contrary to public policy and therefore void, and for the further reason that the order of discharge in bankruptcy is absolutely conclusive of any question that could have arisen on a waiver given in anticipation of bankruptcy, the several assignments of error are sustained. Judgment reversed.