26 W. Va. 741 | W. Va. | 1885
In October, 1877, Beall bought of B. W. Walker a tract' of 279-|- acres of land in Gilmer county for $844.30, of which he paid $250.00 in cash and executed his two notes to said Walker for the residue of the purchase-money, one for $362.06 and the other for $232.24. On December 10, 1877, he paid the note for $362.06 ; and Walker executed a deed to him for said land with covenant of general warranty. Beall after-wards áscertained that there were various judgment-liens on said land, to enforce which liens a suit in chancery was brought against said Walker and said Beall and others, and said land was decreed to be sold to pay said liens. The said liens were as follows : To Fleming and Bennett commissioners $254.19, with interest; to Thompson & Jackson, $174.57; to William Logan & Co. $264.45; to Prager & Epstein, $285.86 subject to a credit of $79.06. The said Beall filed his bill in January, 1881, alleging these facts, and that he was compelled to pay, and did pay those several sums, in
Walker demurred to and answered the bill. He denies that the 100 acres of land is his, but avers that it was paid for by his son and is owned by him; that he, R. W., had bought a house and lot in Arnoldsburg, Calhoun county, of P. Hays, and gave him some personal property thereon, not more than $75.00 in value; that he had become indebtéd to his son for about $700.00, borrowed money, for which he executed his note. After negotiations by both himself and son, J. M. Walker, they succeeded in securing the 100 acres of land, on which respondent now resides for the sum of $800.00, Hayes agreeing to take the Arnoldsburg house and lot at $400.00, which had become the sole property of his son, J. M. Walker, by reason of respondent’s indebtedness to him, and the lot devised by James Shaw to R. J. Walker’s infant-daughter Josephine, at $75.00, and the remainder in money which respondent believes has been paid by said J. M. Walker. He denies all fraud, &c.
J. M. Walker answered the bill and substantially agrees with his father as to the purchase of the 100 acres and claims
Depositions were taken, and the cause referred to a commissioner, who reported the liens, and that they had been paid by Beall, and that B. W. Walker owned the 100 acres of land, &c. The cause was heard on October 8, 1883, and the court decreed that B. W. Walker should pay to H. G. Beall $883.04 with interest; that Beall be subrogated to the rights of the lienors, whose liens he had paid; and that said 100 acres of land be sold, &c. From this decree J. M. Walker appealed. William E. Lively the assignee in bankruptcy of B. W. Walker, was made a defendant but did not answer.
It is here insisted by counsel for the appellant, that the State-court had no jurisdiction of the cause, and that this appears on the face of the bill. As far as this record discloses, this question of jurisdiction would present no difficulty but for the following allegation in the bill: “The said Bobert W. Walker was on or about the 6th day of August, 1878, adjudicated a bankrupt upon his own petition before B. S. North - cott, register in bankruptcy at Clarksburg, and that on the 20th day of January, 1880, William E. Lively was appointed assignee of said Walker, but there are no assets in, or to come to his hands, all of which will more fully appear by reference to the proceedings had in the chancery cause of William Logan & Co. and others against Bobert W. Walker and others, but that no discharge has been granted to said bankrupt; that the cause of action, upon which this suit is instituted, did not, as plaintiff is advised, accrue to him, until the decree aforesaid was discharged by him, as hereinbefore stated, which was long after the adjudication in bankruptcy aforesaid and that such adjudication in bankruptcy does not preclude the plaintiff from prosecuting this suit upon
I will refer to a number of State and Federal decisions, to enable us to see whether, upon a demurrer to the bill by the bankrupt, the jurisdictou of the State court was ousted. Under the bankrupt law, a lien against the bankrupt’s property, and the right to enforce it remain unimpaired. (Bently v. Wills, 61 Ill. 59.) Where .a mortgager of real or personal property becomes a bankrupt, and the mortgagee does not sell the property under the direction of the bankruptcy-court, nor release or deliver,up to the assignee in bankruptcy his claim on the property, the mortgagee cannot prove any part of his debt against the estate in bankruptcy. A bankrupt is only discharged from such debts, claims, liabilities and demands as were or might have been proved against his estate in bankruptcy, and a discharge in bankruptcy is not a good plea in bar, except as to such debts as were or might have been so proved. Pierce v. Wilcox, 40 Ind. 70. The twentieth section of the bankrupt act was not intended to disturb the lien of the mortgagee except with his express consent and through the joint action of himself and the assignee in bankruptcy. If the mortgagee desires to prove his debt and participate in the assets of the bankrupt, he can do so upon the release of his lien; but the option is with him. (Cole v. Duncan, 58 Ill. 176.) This was a suit to foreclose a mortgage. The defendant pleaded a discharge in bankruptcy, and the lower court held the plea sufficient and dismissed the bill. The appellate court reversed the decree holding as above.
In Fehley v. Barr, 66 Penn. St. 196, it was held, that the 20th section of the bankrupt law of 1867 expressly saves the lien of a judgment, unless indeed the judgment-creditor releases or conveys his claim to the assignee and is admitted to prove his whole debt. He is entitled if he does not do so to proceed and realize whatever he can from his security and then come in and prove for the balance. In McCance v. Taylor, 10 Gratt. 580, it was held that under the bankrupt act of 1841 the lien of a judgment was not defeated by the discharge of a debtor as a bankrupt, and that such a lien could be enforced in the State-court. To the same effect is Stoddard v. Locke, 43 Vt. 574. Under the same act it was
In Stuart v. Hines Eames, 33 Ia. 60, it was held, that after the filing of a petition in bankruptcy, which is followed by an adjudication, no valid lien can be acquired agaihst the property of the bankrupt by proceedings instituted in State courts. In such case the assignee is not estopped, from asserting his claim to the property by the fact, that he failed to appear and defend in place of the bankrupt in an action com-menceddn the State-court subsequently to the filing of the petition in bankruptcy. No such duty is required of the assignee. Of course a judgment against a bankrupt after the adjudication would not hold the property transferred to the assignee. If it would, the bankrupt law would fail in the object of its creation.
In Douglas v. St. Louis Zinc Company, 56 Mo. 388, it appeared, that suit was instituted in a State-court to enforce a mechanic’s lien, alter a petition to have the debtor adjudicated a bankrupt had been filed. The suit was defended on' the ground, that the court had not jurisdiction. The plaintiffs offered to prove, that the bankrupt court had ordered the property, to which the lien attached, to be sold by the assignee, and that the property had been sold by the assignee subject to the plaintiff’s lien, and the plaintiff was by the the bankrupt-court ordered to proceed in the State-court to enforce the lien. All this evidence was rejected by the court below, and all evidence tending to prove plaintiff’s claim was rejected, on the ground that the State-court had not jurisdiction of the cause. The court by Voories, judge, said : “This was, we think, erroneous. We can see no reason, why
In Pindell’s Assignee v. Vemont’s Executor, 14 B. Mon. 400, it was held, that upon a decree in bankruptcy being rendered all the rights, interests and dioses in action of the bankrupt pass to the assignee; that, where by the terms of a mortgage the mortgager has the right to retain possession of the mortgaged property, the assignee in bankruptcy can not take it, until the mortgage-debts are extinguished ; that an assignee in bankruptcy, who comes into the State-court by answer and cross-bill and submits his rights as assignee to be heard and adjudicated, is estopped to question the jurisdiction in the Court of Appeals.
In Voorhies v. Frisbie, 25 Mich. 476, it was held, that a State-court has no jurisdiction of a bill in equity filed by an assignee in bankruptcy to set aside a conveyance made by the bankrupt in fraud of the bankrupt act — also, that of suits that can only be maintained tinder the bankrupt act, the United States courts have exclusive jurisdiction.
In the case of In re McGilton, 3 Biss. 152, Drummond, judge, said : “It is sometiemes the case, that creditors, who have judgments, proceed to sell the property covered by the liens of the judgments, where it has passed by law to the assignees; but the courts have uniformly held these sales invalid, if made without authority of the bankruptcy-court. If it be admitted, the court, where there are liens on the real property of the bankrupt, can order it to be sold free from the liens, to marshal the assets and pay off the liens, it is equally competent for the court to authorize the creditor to proceed in the usual way to collect his judgment, if that course seems best for the estate.”
In the case of “ The Ironsides,” 4 Biss. 518, it was held, that a party having a maratime lien may even after the filing of a petition in bankruptcy by the owner seize the vessel under a libel in another district, and the latter court has jurisdiction to hear and determine the lien. In such case the as-signee has the right to appear and be heard, and the court in bankruptcy should accept the determination of the court in
In Glenny v. Langdon, 98 U. S. 20, it was held, that it is only through the instrumentalities of his assignees, that creditors can recover and subject-to the payment of their claims the property, which the bankrupt fraudulently transferred prior to the adjudication, or which he conceals from and fails to surrender to his assignees; that assignees of the bankrupt are.subject to the control and direction of the proper court, and it may for good cause shown compel them to. take the requisite steps for -the full and complete protection of the rights of the creditors. This is the case principally relied upon by counsel for appellant to show, that the State-court had no jurisdiction of this cause. But the principles there decided are undisputed and do not apply to a case like this. That case decided principles for the benefit of creditors generally and did not embrace a case, where the State-court was merely proceeding to enforce a lien against the bankrupt’s estate which attached long before the commencement of the proceedings in bankruptcy.
Mays v. Britton, 20 Wall. 414 is a case, in which after the adjudication in bankruptcy a mortgagee brought suit in a State-court to foreclose the mortgage, and it was held that when the consideration of a question is prima fade within the
In Doe v. Childress, 21 Wall. 642, it was held, that under see. 14 of the bankrupt act an attachment, which under state-laws is a valid lien, laid more than four months before the proceedings in bankruptcy began, is not dissolved by the transfer to the assignee. And if such assignee, does not intervene (which in any such ease he may do) and have the attachment dissolved or the cause transferred to the federal court sitting in bankruptcy, but on the contrary allows the property to be sold under -judgment in the proceedings in attachment, the purchaser in a case free from fraud will hold against him ; that is to say, the assignee cannot attack collaterally such purchaser’s title. In this case the Supreme Court approves the decision in Kent v. Downing, 44 Ga. 116, and Gibson v. Green, 45 Miss. 209, the substance of which, as quoted by the supreme court of the United States, is : “The assignee may on his own motion be made a party, if for no other reason than to have it properly made known to the court that the defendant has become bankrupt. He has also a right to move to dismiss the attachment. The adjudication of bankruptcy must be made known to the court in some authentic mode. It may be denied, and the State-court can not take notice of the judgments of other courts by intuition. They must be brought to the notice of the court, and this cannot be done without parties.”
In Eyster v. Gaff, et al., 91 U. S. 521, it was held, that, where the assignee in bankruptcy of a mortgagee is appointed during the pendency of proceedings for the foreclosure and sale of the mortgaged premises, he stands as any- other purchaser would stand, on whom the title has fallen after the commencement of the suit. If there be any reason for interposing, the assignee should have himself substituted for the bankrupt or
In the case of In re Iron Mountain Co., 9 Blatch. 820, it appeared, that after the filing of a petition, in which J. was adjudicated a bankrupt, and after the appointment of an as-signee and the conveyance to him of all the estate of the bankrupt S. commenced a suit in a State-court to foreclose a mortgage on real estate of J. The district court after restraining the prosecution of the suit made an order dissolving the injunction and permitting the suit to proceed. The mortgaged premises were worth less than one half of the amount of the mortgage. The mortgage was given long before the bankruptcy of J., and there was no proof of the invalidity of the mortgage. On a petition of review by J. it was held, that the order of the district court was proper; that the district court has power to restrain the holder of a mortgage or other lien on the property of a bankrupt from enforcing such lien by suit, and when the Value of the property exceeds the amount secured by the lien, or the amount or validity of the lien is in doubt, it is generally proper to do so. In that case Woodruff, judge, said:
“ There is no doubt whatever of the power of the district court, in bankruptcy, to take administration of the entire estate, and ascertain and liquidate the liens thereon, and to restrain the holder of a mortgage or other lien from proceeding in any court to enforce such lien ; and when the value ot the property exceeds the amount secured by such mortgage, or lien, it will in general be proper to do so, in order to preserve to the assignee his right, secured by sec. 20 of the bankrupt law, to receive the excess in value, and release the right of redemption, or to sell the property, subject to the mortgage, or to invoke the power of the court to first liquidate and settle the amount of the lien. So it will be proper to*751 restrain the proceeding in any other court, where the amount or the validity of the lien is in doubt. This may often be necessary to the full protection of the general creditors, who are entitled to such protection in the court in bankruptcy, where they are to look for the fund tobe distributed to them. In all such cases it would be the duty of the assignee, to apply to the court in bankruptcy to assist him in bringing all the assets into that court to be applied and disposed of according to the rights and interests of all concerned, whether holders of liens or general creditors. But where no advantage can result to the estate of the bankrupt, I see no reason why the court should interfere, when neither the assignee, nor any creditor invokes such interference, and it appears without. contradiction that the equity of redemption is of no value. There is no excess of value to be paid to the assignee on his releasing the right of redemption. There is nothing to be sold subject to the mortgage, which will yield anything; and any action of the district court, for the liquidation and settlement of the amount of the lien, and for the sale of the property to satisfy it, would be a mere expense to the estate, producing nothing.”
In the case of Reed v. Bullington, 49 Miss. 228, Simrall, J. tor the court, said: “ There is no motive or reason why the assignee should interfere unless the property will yield a surplus after paying the lein debt.” And the court held that where no action has been taken by the assignee or creditor to deal with the property in the baulcr.uptcy-court, the .State-court has jurisdiction to make the lien available.
In Gibbs v. Logan, 22 W. Va. 208, this Court considered the question, whether an attachment-suit instituted m.ore than four months before the adjudication in bankiuptcy could be prósecuted to judgment and satisfaction of the debt out of the attached property in the State-court notwithstanding the bankrupt proceedings; and we 'held, that such suit could be prosecuted.
The question here arises, whether a suit may be instituted after the adjudication in bankruptcy to enforce a lien acquired before, where there is no interference by the assignee or by the bankruptcy-court. The State-court will follow the decision of the Federal courts on the construction of the
We do not think therefore, that the jurisdiction of the
It is also assigned as error, that the court did not dismiss the bill because the question, whether Walker had any other lands was res judicata in the suit of Wm. Logan &Co. against said Walker. It is a sufficient answer to this assignment that the res judicata, if it existed, was not pleaded. It could not be taken advantage of, unless it was pleaded in this suit. (W. M. & M. Co. v. Va. C. C. Co., 10 W. Va. 250.)
It is also assigned as error, that Beall was subrogated to the rights of the. judgment-creditors, whose judgments he paid. We think there is nothing in this position. Ho authority is cited to sustain it. Beall bought the land with general warranty and afterwards found judgment-liens recorded against it, which he was compelled to pay or lose his land. We think there is no doubt of his right to subrogation. It is denied that the proof shows that Beall did pay those judgments. The commissioner’s report ascertains this fact and the exact amount he paid, and no exception to the report questions the correctness of this finding.
It is also assigned as error, that the court found that the said 100 acres of land sought to be subjected was the property of B. W. Walker and not of James Walker. We have carefully examined the evidence and agree with the circuit court, that B. W. Walker and not James M. Walker bought and paid for the said land, and that the said land belonged in equity to the said B. W. Walker, and that the purchase of the same in the name of his son, James, was a fraud on his creditors.
The court did not err in overruling the exception to the commissioner’s report. The first exception “ for errors appearing therein,” will not be considered, as it is too vague and general. The other, that it finds that B. W. Walker owned the land, is fully sustained by the evidence.
The last assignment of error is, that the court erred in
There is no error in the decree, and it is therefore affirmed.
AEEIRMED.