Moore Bros. v. Cowan

ANDERSON, J. The gravamen of plaintiff’s complaint, was for the breach of a bond, in that Moore Bros, had been duly adjudged bankrupts before the commencement of the suit and had failed to restore the property reclaimed under the bond or to pay for same. Pleas 1 and 2, both before and after amendment, did not present any facts to abate the suit, because premature]-'brought, nor did the facts therein set up a subsequent defense that should abate the action or that would bar a recovery, and, at most, merely set up suggestions that should suspend the action during the pendency of the [543] appeal and until a final determination thereof. Neither of them set up a suspension of the adjudication in bankruptcy before the suit was brought, or whether or not, or when the decree was -finally confirmed, and, for aught that appears, the appeal may have been subsequently dismissed, and there may have been no final confirmation, on appeal, of the adjudication of bankruptcy, and in which event it would date from the original rendition of same, October 8, 1908. Neither of these pleas deny that the decree in bankruptcy did not exist when the suit was brought, nor do they aver that said decree had been suspended before the snit was brought, as plea 2 specifically avers that “said adjudication in bankruptcy has been superseded and suspended since the execution of said bond.” It avers that the bond was executed on December 28, 1908, and which was subsequent to the bringing of the suit. It is evident that the pleader did not wish to deny that the order of adjudication was made, as averred in the complaint, but wished to set up facts to the effect that it became binding and effective at a subsequent date, because the decree had been appealed from and the adjudication was not of the date as averred in the complaint, but was subsequent to the bringing of the suit. This brings us to a consideration of subdivision 2 of section 1 of the bankruptcy act of 1898, and which reads as follows: “Adjudication shall mean the date of the entry of a decree that the defendant, in a bankruptcy proceeding, is a bankrupt, or if such decree is appealed from, then the date when such decree is finally confirmed.” We take this to mean, that if there is no appeal from the decree adjudicating the defendant a bankrupt, it dates from the rendition of same, and if there is an appeal, and it is finally com]firmed, the adjudication shall date from the confirmation. We do not think that the mere taking of an ap [544] peal and the dismissal of same either by the appellant or the appellate court is a final confirmation so as to change the date of the adjudication from the time it is made to the dismissal of the appeal. The statute is too plain in the use of the words “finally confirmed,” and the dismissal of the appeal is in no sense a final confirmation of the appeal. — Ashly v. Brasil, 1 Ark. 149. The pleas (1 and 2) only set up an appeal, and the pend-ency of same, and which fact should only suspend the trial until after the termination of said appeal. They do not aver that the adjudication had been confirmed or annulled, and until that was done the decree of adjudication would stand of the date of the rendition thereof. This would certainly be the result if the appeal was dismissed and the pleas do not show, with any degree of certainty, that the date of the original adjudication was or would be changed. We are aware of the fact that this statute received a different interpretation' by McPherson, District Judge, in the case of Re Lee (D. C.) 171 Fed. 266, wherein it was held that an appeal ■not only suspended the original decree of adjudication, but changed the date from the rendition thereof to the time of the dismissal of the appeal, thus, in effect, holding that the dismissal of an appeal was a final confirmation of the decree from which the appeal was taken. We think this construction illogical and in the teeth of the statute, and prefer following the well-considered Arkansas case, supra. We do not question the correctness of the result in the Lee Case, supra, and think the claims were presented in time, but justify this upon the idea that the time between taking the appeal and the dismissal of same should have been deducted. — Braun v. Sauerwein, 10 Wall. 218, 19 L. Ed. 895. The trial court did not err in sustaining the demurrers to pleas 1 and 2. [545] Plea 8 was not verified, and was subject to tbe demurrer upon this ground, and Avhich was properly sustained. —Section 5332 of the Code of 1907. There was no merit in plea T. The federal court has exclusive jurisdiction to adjudge a person a bankrupt and to appoint a receiver, and if .the order was irregular, improvident, or unauthorized, it should be corrected or questioned in that forum and not in the state courts upon collateral attack. — Turner v. Hudson, 105 Me. 476, 75 Atl. 45; 18 Am. & Eng. Ann. Cas. 600, and many cases cited in note, among Avhich aví.11 be found the cases of Oates v. Farrish, 47 Ala. 157, and Jones v. Knox, 51 Ala. 367. Moreover, the bond which was made a part of the complaint Avas signed by the defendants and made to Shelter and Cowan, “the receivers in the above cause.” Having made the bond to them as receivers, defendants Avere estopped from questioning their appointment as such. In the case of Watson v. Simmons, 91 Ala. 567, 8 South. 347, it was held, in discussing Avhen. sureties on a forthcoming bond would be released, that if the property is taken from them under a paramount title or lien, or under valid judicial proceedings, this excuses them from the delivery of the property and discharges the obligation of the bond, so far as to render invalid a return of forfeiture by the returning officer. The law will not punish the failure to do that AAdiich itself has rendered impossible to be performed. The court intimates very strongly, however, that if the second seizure was caused through the collusion or fraud of the principal obligor in the forthcoming bond, that the second seizure though under legal proceedings could not operate to discharge the sureties. While this is but an intimation by the court, it is but a wise and salutary doctrine, for the sureties undertake to answer for the prin [546] cipal obligor, and it would be unwise and unwholesome to hold that they would be released by the action of the principal obligor notwithstanding he took second legal steps to put the property beyond his control. The very purpose of the bond was to guarantee the conduct and custody of the property of and in the principal, and it would be a legal monstrosity to hold that he could make a voluntary disposition of the property so as to release the sureties and defeat the obligees in the bond, and conditions cannot be helped because he resorted to legal proceedings as a means of accomplishing such a feat. Plea B shows that the property was seized under second bankruptcy proceedings instituted by the voluntary action of the Moores, after the execution of the forthcoming bond, and a seizure of. the property, under proceedings instituted by them, could not operate to discharge the bond company, whether instituted with or without the knowledge of said company. Plea B, if not otherwise bad, was subject to grounds 2 and 4 of the plaintiff’s demurrer. Plea A fails to aver that the property was turned over to or accepted by Cowan as receiver in the bankruptcy proceedings in which said bond was given and was subject to ground 4 of plaintiff’s demurrer. On the other hand, if it sufficiently set up the capacity in which Cowan received and accepted the property, it was but a denial of the breach set up in the complaint and could have been shown on the general issue. All special pleas were eliminated and the judgment entry recites that, issue being joined, etc., we must, therefore, assume that the issue referred to was the general issue. The judgment of the city court is affirmed. Affirmed. ■Simpson, McClellan^ Mayfield, and Somerville, JJ., concur.