Kohn, Weil & Co. v. Weinberg

Stevens, J., delvered tbe opinion of tbe court. Tbe appeal in this case is from a decree of tbe chancery court of Sunflower county canceling a judgment rendered by tbe circuit court in favor of appellant and against Abe Weinberg, principal, and Joe Zacbariab añcl I. Harris, sureties, and perpetually enjoining appellees from enforcing the said judgment. Appellant, a corporation, recovered judgment in tbe justice of tbe peace court ag’ainst Abe Weinberg for tbe sum of one hundred and eighty-two dollars and eighty-five cents. Weinberg appealed to tbe circuit court with Joe Zacbariab and I. Harris as sureties on bis appeal bond. Tbe appeal bond was conditioned according to tbe statute ‘ ‘ for tbe payment of such judgment as tbe circuit court may render against him.” Thereafter Weinberg filed a voluntary petition in bankruptcy, was duly adjudicated a bankrupt, a trustee appointed for bis estate, and bis estate was there [288] upon administered in accordance with the bankruptcy Jaw. Weinberg, within forty days after tlie adjudication in bankruptcy, filed his petition for discharge, to which •appellant filed objections, and the question of Weinberg’s ■discharge was referred to the referee for proof and his report. When Weinberg’s appeal came up for trial in the ■circuit court, and while his application for discharge was pending, he filed a petition in the circuit court, suggesting his bankruptcy, advising the court of his petition for discharge, and asking that all proceedings in his appeal case be stayed until his petition for discharge was acted upon. In response to this application appellant produced an order granted by the district judge sitting in bankruptcy, authorizing appellant as plaintiff to proceed to judgment in that suit. The circuit court thereupon overruled the application to stay the proceedings, and the case proceedcd to trial and judgment, was rendered, in favor of appellant and against Weinberg as principal and Zachariah ■and Harris as sureties on the appeal bond, for the full amount sued for. Execution was then issued on this .judgment against the sureties, and was in the hands of the sheriff when Weinberg and his said sureties, appellees herein, presented their bill in the chancery court, reciting the facts above stated, averring, further, that since the rendition of the judgment by the circuit court Weinberg had been'discharged from bankruptcy, and praying for the cancellation of the judgment as to all the judgment debtors and for an injunction against the execution of the same. Appellant answered the bill, denying the allegation that the judgment was void, or that Weinberg had been discharged, and denying the right of complainants to any of the relief sought by the bill. Thereafter appellant filed a motion to dissolve the injunction, and the cause was heard upon bill, answer, and agreed statement of facts. The agreed statement of facts discloses that the discharge was granted after the trial of the appeal in the circuit court and a month or so after the bill of complaint in this cause was filed. [289] The circuit court had jurisdiction of the parties and the subject-matter, and the judgment herein enjoined was not void. Conceding that suits against a bankrupt maybe and should ordinarily be stayed after adjudication and before the discharge is granted, the record discloses express authority, granted appellant by the bankruptcy court, to proceed to judgment in the state court, and the rendition of judgment based upon a claim that was admittedly due an owing. When the justice court rendered its judgment, there was no adjudication of Weinberg as a bankrupt, and the express obligation of the sureties was to pay such judgment as the circuit court should render. When the circuit court called the case for trial Weinberg had not been discharged, and was. therefore in no position to plead his discharge in bar of the demand sued on. It seems that he had no defense to the suit. The .judgment was rendered by the state court with full approval of the bankruptcy court, and the sureties have no right to complain. The appeal from the justice court was a voluntary act of Weinberg and the obligation imposed "by the appeal bond was a voluntary undertaking of the sureties. If Weinberg had no defense to the judgment rendered by the justice of the peace, the appeal was without merit, and no equity of the parties is invaded and no vested right taken away by the trial of the case on appeal and the rendition of the judgment in question. It is permissible, and not infrequent, for special judgments to be rendered by a state court for the express purpose of fixing liability against sureties. Loveland on Bankruptcy, vol. 1, p. 160; Hill v. Harding, 130 U. S. 699, 9 Sup. Ct. 725, 32 L. Ed. 1083. This case is differentiated from the case of Goyer v. Jones, 79 Miss. 253, 30 So. 651, where the contingency upon which the liability of the. sureties rested did not arise. In the Goyer case no valid judgment was or could be rendered'against the principal, and therefore under the express condition and agreement of the appeal bond no liability was or could be fixed against the [290] sureties. In the instant case judgment was in fact rendered ag'ainst the principal and a judgment based upon a debt admittedly due and owing. The record discloses, further, that the status of the parties had not been changed after the rendition of the-judgment by the circuit court and before the filing of the hill of complaint in this suit. If there was any error in the circuit court proceedings, any party aggrieved had the right of appeal. The sureties, however, are not relieved by the subsequént discharge. 27 A. & E. Encl. of Law (2d Ed.) 493; Whereatt v. Ellis, 103 Wis. 348, 79 N. W. 416, 74 Am. St. Rep. 865; Loveland on Bankruptcy, vol. 2, pp. 1389-1891. Inasmuch as the decree of the court below should have been in favor of appellant, the decree of the chancery court is reversed, and the bill dismissed. Reversed.