In re Westbrook

GRUBB, District Judge. [1] This matter comes on to be heard upon the objection of a creditor to the application of the bankrupt for his discharge. The bankrupt denies the right of the objecting creditor [415] to appear and object as a party in interest, because his claim has become barred by the statute of limitations, after the filing of the specifications of objections, but before the hearing of the application. The statute of limitations does not destroy the cause of action, but merely affects the remedy. If not specially pleaded by the debtor, when the claim is sued on, judgment would go against him. The defense is personal, and waived by a failure to plead. [2] In view of the nature of the defense, there is left in the creditor a subsisting cause of action, in spite of the running of the statute. He is therefore a party in interest, even thereafter, in resisting the discharge. [3] Again, when the specification of objection was filed by the creditor, the statute had not run. He was then a party in interest, and it seems to me the time as of which this interest is to be determined is the time of the beginning of the opposition to a discharge. [4] The bankrupt had filed a prior petition, had been adjudicated under it, and had failed within the statutory time to apply for his discharge under the first petition. The objecting creditor was scheduled under the first petition, as well as under the second. The only ground of objection to the discharge is that, as to the objecting creditor, failure to apply for a discharge under the first petition within the time allowed can be offered as res adjudicata to an application to be discharged from the same debt under the second petition, and that the discharge should be restricted, so as to except tire debt of the objecting creditor from its operation. [5] While the right of the bankruptcy court to so limit the discharge admits of doubt, following the authorities cited below, which constitute the great weight of authority, a discharge will be granted the bankrupt, excluding from its operation the debt of Odum & Bowers, the objecting creditor. Collier on Bankruptcy (8th Ed.) p. 259; Remington on Bankruptcy, § 2438, p. 1474; In re Pulliam (D. C.) 22 Am. Bankr. R. 513, 171 Fed. 595; In re Kuffler (D. C.) 19 Am. Bankr. R. 181, 155 Fed. 1018, and same case 22 Am. Bankr. R. 289, 168 Fed. 1021, 93 C. C. A. 671; In re Levenstein (D. C.) 24 Am. Bankr. R. 822, 180 Fed. 957; Pollet v. Cosel, 24 Am. Bankr. R. 678, 179 Fed. 488, 103 C. C. A. 68; In re Schnabel (D. C.) 23 Am. Bankr. R. 22, 166 Fed. 383. If the bankruptcy court has no authority to limit the discharge, no injury is done, since the court in which the discharge is pleaded will give effect to the discharge, disregarding the limitation. On the other hand, if the court in wrhich the discharge is pleaded can give restricted effect to it, only when the limitation is placed in it by the bankruptcy court, injustice will be done, if it is not inserted, if the bankrupt is rightfully concluded by his failure to seasonably apply for his discharge under the first petition, and authority and reason concur in this last conclusion. The propriety of resolving the doubt as to the matter of procedure in favor of the objecting creditor is therefore manifest.