Gibson v. Green

Tarbell, J.: This action was commenced in the circuit court of Monroe county, in 1866, by James H. Green, as the guardian of — 216 — Mary Bartow, against Thomas Gibson and James D. McAllister, to recover the amount due on a promissory note, made by Thos. Gibson, Benj. A. Allen and James D. McAllister, December 30, 1859, for $2,420, due twelve months after its date, with interest at eight per cent, payable to said Green, guardian. The said Benjamin A. Allen having died, and no administration having been granted on his estate, was not sued. The defendants pleaded the general issue, payment, and failure of consideration, which consisted of negroes represented to be slaves for life; whereas, etc. The plaintiff demurred to the last plea, and this demurrer seems not to have been disposed of. In this stage of the case an ancillary attachment was issued, levied and returned therein. Upon this attachment the plaintiff’s attorney, in writing, instructed the sheriff to levy upon two certain lots of land, being lots 12 and 13, in block 86, New Aberdeen; and to summon as garnishees, several named in the instructions, which was done by the sheriff. At a subsequent term of the circuit court, viz., in August, 1868, the bankruptcy of the defendant, Thos. Gibson, was suggested and entered of record.. In February, 1869, the cause was revived against Geo. W. Pennington, assignee of Gibson in bankruptcy, and continued at the January term of said court, 1870. Gibson filed a plea in abatement to the writ of attachment, traversing the truth of the causes alleged for the suing out thereof; subsequently, by order of the court, the plea in abatement was stricken out, without prejudice, and the defendant Gibson filed his plea of final discharge as a bankrupt. To this plea the plaintiff, demurred, stating the following causes of demurrer: 1. Because the same is no answer to the proceeding in rem instituted in this cause. 2. Because it is no bar to the ancillary attachment sued out in this cause. 3. Because said plea is no bar to this action. This demurrer was sustained and leave given to defendant to plead over, which he declined to do. Thereupon plaintiff dismissed his suit as to James D. McAllister, Geo. W. Pennington, assignee, and — 217 — as to all the garnishees summoned in the cause. Defendant Gibson saying nothing further, a general judgment was then rendered against him for the amount of the note sued on, interest, costs, etc. A bill of exceptions was filed by defendant Gibson, and another by Lucy A. Watson, who, being refused by the court leave to assert her claim to the real estate levied upon by the attachment, and to have her right thereto tried by a jury, excepted to this refusal of the court and filed her bill of exceptions. Defendant Gibson brought writ of error, and assigns here the following causes why the action of the court below should be reversed:, 1. Because the court below erred in sustaining the demurrer of defendant in error to the plea of discharge in bankruptcy of plaintiff in error, and entering up judgment against plaintiff in error generally. 2. Because the court below erred in rendering judgment against the property attached, it being shown by the sheriff’s return on said attachment that a third party claimed the property attached, which said third party had not been brought into court by citation as the statute required. 3. Because the court below erred in entering up judgment individually against plaintiff in error in the face of his discharge in bankruptcy. 4. Said judgment is excessive in the damages adjudged. 5. It was error to dismiss the suit as to Pennington, assignee in bankruptcy of plaintiff in error, and in taking judgment against plaintiff in error an admitted bankrupt, without bringing into court said assignee in bankruptcy. 6. Said judgment is erroneous, being a personal judgment against an admitted bankrupt; and the order for a venditioni exponas to sell the lots, as if attached, is erroneous, because neither said lots nor any interest therein was attached as the property of plaintiff' in error; and said alleged attachment was superseded by said proceedings in bankruptcy, and said property was no longer subject or liable to said alleged attachment. — 218 — The non-disposition of the demurrer to defendant’s third plea is not assigned for error. Probably non-action upon the demurrer was waived by consent, or has been, by mutual agreement, disregarded, or possibly the record is defective in failing to note the action of the court or counsel with reference thereto. In any event, the appearance in the record of a question or questions undisposed of is a perplexity and chargeable to laxity in practice, which it is desirable to reform. A demurrer to the plea of discharge in bankruptcy we think was a mistake, and are of the opinion that a reply stating the time of suing out of the attachment and the date of the proceedings in bankruptcy would have been the proper practice. If more than four months had elapsed between the levy of the attachment, and the commencement of the proceedings in bankruptcy, the creditor is entitled to the benefit of the lien thus acquired. The discharge was a bar to all further personal claim upon the defendant, but it did not dissolve the attachment unless issued within the time specified in the fourteenth section of the bankrupt law. These data should have been furnished in a reply to the plea of final discharge in aid of the judgment of the court. The pendency of the proceedings in bankruptcy had been suggested and entered upon the record. This suspended the cause until the final action of the bankrupt court granting or denying final discharge. Upon the decision of the court sustaining the demurrer, if correct, the discharge was virtually out of the case, and the cause again stood suspended upon the suggestion of pending proceedings in bankruptcy, thus rendering the personal judgment irregular, even in that condition of the record. Had the creditor, however, replied instead of demurring, setting up his lien by virtue of the attachment, it would have properly placed the court in possession of the facts upon which to base, and which would have probably led to, proper judgments, first, of the discharge of the defendant from all personal claim in the original action, or growing out of the — 219 — ancillary proceedings ; and, second, of condemnation of the property attached for the payment of the debt and costs. The discharge duly granted is declared by the bankrupt law to “release the bankrupt from all debts, claims, liabilities and demands which were, or might have been, proved against his estate in .bankruptcy, and may be pleaded by a simple averment that on the day such discharge was granted to him, setting the same forth in liceo verba as a full and complete bar to all suits brought on any such debts, claims, liabilities or demands, and the certificate shall be conclusive evidence in favor of such bankrupt of the fact and the regularity of such discharge.” Upon pleading his discharge, the defendant was entitled to the judgment of the court, giving effect to the foregoing provision of the bankrupt law.. Prom that moment, except as a matter of form, the defendant was a stranger to the controversy. He had no longer any interest in the property involved, and no personal claim could be made against him, either in that proceeding or in the original action. Such, at the same time protecting the lien of the creditor, should have been, in its results, the judgment of the court. The plea seems to be correct in form and substance, and no objection is made to it on these grounds. It is not pleaded in terms to the attachment proceeding, and we apprehend a reference specially thereto, claiming the discharge as a dissolution of the attachment, or excepting the latter from its operation, would be improper. We can see no objection to the plea, or the time and mode of filing it; nor how the defendant could well have said more or less. The discharge having been pleaded, it devolved upon the court to direct the proper judgments. The personal judgment, against Gibson, was clearly erroneous. Whether the assignee is a necessary party, in a case like this, is a question not fully settled by the authorities, as far as we have been able to ascertain. The cases of Peck v. Juness, 7 How. (U. S.) 623; Bates v. Tappan, 99 Mass. 376; Carpenter v. Turrell, 100 ib. 450; Bowman v. Harding, 56 — 220 — Me. 559; Leighton v. Kelsey, 57 ib. 85, appear to have proceeded to judgment against property attached, without the presence of the assignee. In Ex parte Foster, 2 Story, 131, the reasoning of Judge Story is decidedly, if not conclusively, in favor of the proposition that the assignee is an essential party in a case like this. The doctrines of that case were substantially these: By the decree of bankruptcy, property and rights of property of the bankrupt are divested from him, and vest in the assignee as soon as one is appointed ; and such decree relates back to the time of the petition; consequently, pending the proceedings in bankruptcy, before or after the decree, an attaching creditor will not be permitted to proceed in the suit against the bankrupt .to trial and judgment, because there can be no party defendant properly before the court. If an attaching creditor, knowing that proceedings in bankruptcy have beeu instituted, should, nevertheless, proceed in his suit to get a judgment against the bankrupt, before an assignee was appointed, it would be a fraud upon the law. While the bankrupt proceedings are in progress, no attaching creditor, by a mere race of diligence, will be permitted to overreach and defeat the just rights of the other creditors. Chancellor Walworth, in Lowry v. Morrison, 11 Paige, 327, was of the opinion, in a similar case, that the assignee was a necessary party defendant, and that the case could not proceed to judgment without him. This view is assailed by Judge Strong, in 23 Barb. 201, but his reasoning is adverse to his conclusion. Lacey v. Rockett, 11 Ala. 1002, purports to be an authority for the doctrine that, in such a case, the cause cannot proceed to' judgment without the presence of the assignee. Tide, also, Barb, on Parties, 129; Story’s Eq. Pl., § 158 a, and § 726, and cases cited in notes. By the terms of the bankrupt act, the property of the bankrupt is vested in the assignee. Section 14 of the bankrupt law of 1867, enacts that, “all” the bankrupts’ “rights of redeeming such property, or estate, with the like right, title, — 221 — power and authority to sell, manage, dispose of, sue for and recover or defend the same, as the bankrupt might or could have had, if no assignment had been made, shall, in virtue of the adjudication of bankruptcy and the appointment of his assignee, be at once vested in such assignee; and he may sue for and recover the said estate, debts and effects, and may prosecute and defend all suits at law or in equity pending at the time of the adjudication of bankruptcy, in which such bankrupt is a party in his own name, in the same manner and with like effect as they might have prosecuted or defended by such bankrupt,” etc. It seems to us in accordance with reason and analogy, that the assignee should be made a party to this suit, or at least that he should be afforded the opportunity, by citation, to come in if he will. He represents the creditors of the bankrupt whose interests are entitled to protection. He takes this property subject to all legal liens upon it, and in his hands he can interpose every defense open to the bankrupt, whether to the demand itself, or to the attachment, interposing a defense, in his discretion, in the best interests of the estate. Because of the personal judgment against the bankrupt, and the dismissal as to the assignee, we reverse the judgment of the court below, and remand the cause for further proceedings.