Claster v. Soble

Opinion by Beaver, J., Plaintiffs held a bill single of the defendant, dated September 10, 1900, for $250, with power of attorney to confess judgment and a waiver of exemption and other privileges, as collaterial security for a note of like amount which they indorsed for defendant. Judgment having been entered thereon, defendant applied by petition to the court below to have it stricken off, alleging that the note held by plaintiffs, upon which the judgment entered was collateral, had all been paid, except $100, which was evidenced by a renewal note held by the original holders and which had been duly proved in proceedings in voluntary bankruptcy instituted by the defendant. It was also alleged in the petition that the plaintiffs had knowledge of the proceedings in bankruptcy and had proved other claims, which latter allegation Avas admitted in the answer. On the hearing, the defendant produced a discharge in bankruptcy from the district court of the United States for the western district of Pennsylvania, the essential parts of which follow: “Whereas John J. Soble, of Clinton county, in said district, has been duly adjudged a bankrupt under the acts of [634] congress relating to bankruptcy and appears to have conformed to all the requirements of law in that behalf, it is, therefore, ordered by this court that said John J. Soble be discharged from all debts and claims which are made provable by said act against his estate and which existed on February 4, 1901, on which day the petition for adjudication was filed by him, except such debts as are by law excepted from the operation of a discharge in bankruptcy.” There can be no doubt that the claim of the plaintiff, upon which judgment was entered, was a provable claim on the day on which the defendant made his application for the benefits of the bankrupt law. Did his discharge release him from personal liability thereon ? A very cursory examination of the bankrupt law of 1898 will answer this question. In section 1, clause 12: “ ‘ Discharge ’ shall mean the release of a bankrupt from all his debts which are provable in bankruptcy, except such as are excepted by this act.” Section 17 of said act is as follows : “ Debts not affected by a discharge, (a) A discharge in bankruptcy shall release a bankrupt from all of his provable debts, except such as (1) are due as a tax levied by the United States, the state, county, district or municipality in which he resides; (2) are judgments in actions for frauds, or obtaining property by false pretenses or false representations, or for wilful and malicious injuries to the person or property of another; (8) have not been duly scheduled in time for proof and allowance, with the name of the creditor,.if known to the bankrupt, unless such creditor had notice or actual knowledge of the proceedings in bankruptcy; or (4) were created by his fraud, embezzlement, misappropriation or defalcation while acting as an officer, or in any fiduciary capacity.” It is very clear from these provisions, the plaintiffs having admitted that they had knowledge of the proceedings in bankruptcy, that the defendant was discharged from all personal liability under the note upon which the judgment was entered. It follows, of course, that the judgment had no validity and that all proceedings thereunder were absolutely void. As to the general effect of a discharge in bankruptcy, we are not without authority in Pennsylvania. The decisions, although made under the act of 1867, are equally applicable to [635] the late act of 1898 : Williams v. Butcher, 1 W. N. C. 304; May v. Merchants and Mechanics Bank, 109 Pa. 145. A discharge that did not discharge would be of no value whatever to a business man and, if a debt such as the one involved in this case could be enforced after a discharge in bankruptcy all the beneficent effects of the bankrupt law for business men and the community in general would be entirely lost. As to the first assignment of error, the decree was not definitive, but it was cured by the subsequent decree to which the second assignment relates. The entire question is, therefore, disposed of under what we have said, which relates to the second assignment of error. Judgment affirmed.