Burtis v. Wait

The opinion of the court was delivered by HoetoN, C. J.: It is claimed by the plaintiffs in error, defendants below, that as Lizzie S. Burtis did not sign the note executed by her husband, James P. Burtis, and that as she was the owner of the property mortgaged, and that as the discharge in bankruptcy released her husband from the payment of the note, therefore that the property mortgaged is not subject to the payment of the debt secured thereby. It is conceded that the mortgage was given before the discharge iu bankruptcy was obtained, or the application filed therefor, ■ and that the debt secured by the mortgage has never been paid; but it is contended that the discharge under the bankruptcy proceedings wiped out the debt secured by the mortgage, and that there is no debt whatever existing. The argument of counsel is not sound. The discharge in bankruptcy is not payment; it operates to discharge the bankrupt and future acquisitions, while at the same time the mortgagee, or other lien creditor, is permitted to have satisfaction out of the property mortgaged or subject to lien. (In re Campbell, 1 N.B.R. 165; Cole v. Duncan, 58 Ill. 176.) [482] Under the bankrupt law, a secured creditor against a bankrupt could resort to one of these remedies: First, he could rely upon his security; second, he could abandon it and prove the whole debt as unsecured; or, third, he could be admitted only as a creditor for the balauce remaining after the deduction of the value of the security. (Assignee v. Perkins, 1 Woods, 383; Reed v. Bullington, 11 N.B.R. 408 ; In re Hartell, 7 id. 559.) Section 5118 of the U. S. Rev. Stat. (1878) reads: “No discharge shall release, discharge, or affect any person liable for the same debt for or with the bankrupt, either as partner, joint contractor, indorser, surety or otherwise.” In Hubbard v. Ogden, 22 Kas. 363, it was said by this court that “where a husband and wife execute a mortgage on two separate pieces of real estate, one of which belongs to the husband and the other to the wife, and the mortgage is executed for the purpose of securing the individual debt of the husband, held, that the wife is surety of the husband to the extent of her separate property which she mortgages.” (See Jenness v. Cutler, 12 Kas. 500.) Applying this principle to the case at bar, Lizzie S. Burtis, by executing the mortgage upon her own real estate for the purpose of securing the individual debt of her husband, became surety of her husband, and within the terms of the bankrupt law, his discharge in bankruptcy did not release or discharge her from liability upon the mortgage. (In re Hartell, supra; Reed v. Bullington, supra; Meeks v. Whately 10 N.B.R. 498; Roberts v.Wood, 38 Wis. 60.) The court did not err in allowing the amended reply to be filed. Granting leave to amend petitions is largely in the discretion of the court. (Code, §§ 139, 144; The State v. Marston, 6 Kas. 525; Kunz v. Grund, 12 id. 547; Railway Co. v. Kunkel, 17 id. 145.) We perceive no error in the court reforming the mortgage as to the estate of Lizzie S. Burtis, deceased. There was sufficient evidence introduced upon the trial to sustain the findings of the court in that regard. (Miller v. Davis, 10 Kas. 541; Crane v. Chouteau, 20 id. 288.) The judgment of the district court will be affirmed. All the Justices concurring.