43 Vt. 662 | Vt. | 1871
The opinion of the court was delivered by
From the recitals in the pleadings and the course of the argument, it is understood that the bankruptcy of the defendant was voluntary, and that the proceedings were had upon his own petition. He must have commenced the proceedings for the purpose of obtaining a discharge from such debts that he owed as were provable against his estate. He could not do this without giving up such property that he had as could be reached for them. He could not accomplish the whole without procuring two judicial determinations. One, that he was a bankrupt, whereupon his property would pass to an assignee for the benefit of the creditors. The other, that he was discharged from provable debts. The judgment of discharge was most important to him because that alone would relieve him from further personal liability. It was also important to the creditors, for it would cut off their claims to the same extent that it would relieve him from them. This judgment was between him and them and all of them would be proper parties to it. It is a fundamental principle, in relation to júdicial proceedings, that all persons between whom such a proceeding is pending must have proper notice of it, and an opportunity to be heard in it before any judgment can be rendered upon it that will bind them. The bankrupt act recognizes this rule of law, and, in accordance with it, requires the bankrupt
That act provides a way for setting aside the discharge altogether, as to all persons ; but furnishes none for setting it aside as to some, and leaving it valid as to other persons. The fraud upon these plaintiffs did not injure the creditors who proved their claims. It probably benefitted them by keeping out the plaintiffs’ claim from those upon which the estate was to be divided, and so lessening the amount of them and increasing the dividend upon them. So they have no just ground to complain on account of it. They became parties to the proceedings, and may have known of the omissions from the schedules before the discharge was granted. If so, they probably have no legal claim to have the discharge set aside on account of the omissions. The discharge, therefore, may be justly and legally valid as to other creditors and invalid as to the plaintiffs. If it is so, then the provision in the act for setting it aside altogether should not prevent the plaintiffs from showing that it is invalid as to them anywhere where the other creditors are not concerned. This provision in the act does not directly, and does not seem to impliedly prohibit inquiry into the validity of this discharge for this cause in this suit.
The provision in the act that the discharge may be pleaded as a full and complete bar, does not show that matter which would invalidate the discharge might not be replied to the plea. The discharge is to be pleaded in suits upon the claims in the courts where pending, and those courts must, to some extent, determine the validity and effect of the pleas. No other court could consider them and render any judgment upon them in those cases. The provision in the same section, that the certificate shall be conclusive evidence of the fact and regularity of .the discharge, seems
The omission from the schedule of assignable estate, concealment of it from the assignee and creditors, and appropriation of it by the defendant to his own use, would not injuriously affect the rights of the plaintiffs as now involved in this suit. Those things did not deprive the plaintiffs of notice of the proceedings of any opportunity to be heard 'in them. They would lessen the amount of the estate to be divided among the creditors who proved their claims, and would be a fraud upon the rights of those creditors. But they would not prevent the court of bankruptcy from acquir
The county court having directed a verdict for the defendant notwithstanding the allegation of the plaintiffs that they were fraudulently deprived of notice of the proceedings in bankruptcy by the defendant, and the proof tending to support it, the judgment is reversed and the cause remanded for a new trial.