180 Iowa 29 | Iowa | 1917
On July 27, 1904, Alexander Armstrong, being indebted to plaintiff upon certain promissory notes, filed his petition in voluntary bankruptcy in the District Court of the United States for the Southern District of Iowa. On August 5, 1904, Armstrong was by said court duly adjudged a bankrupt. The bankrupt properly listed the plaintiff as one of his creditors. He also 'scheduled his
Turning once more to the record in the present case, we find that defendant appeared and answered plaintiff’s petition, admitting the execution and delivery of the notes. He also admits his ownership of the attached property, and pleads its exemption against the plaintiff’s demands, and denies that he is in any manner indebted to plaintiff on account of such notes. He further pleads his discharge in bankruptcy as a complete defense to the claim sued upon, and also sets up the proceedings and orders in the bankruptcy court sustaining his claim of homestead exemption. In reply, plaintiff admits all the proceedings in the bankruptcy court substantially as pleaded by the defendant, but avers, in substance, that said court did not attempt to pass upon or adjudicate the merits of plaintiff’s claim of right to subject the homestead to payment of the debt due him, but declined to assume or exercise jurisdic
“Such estoppel arises and is created by the fact that, in said bankruptcy proceedings, this defendant claimed and asserted to and before said bankruptcy court that it had no jurisdiction to determine the very matters now presented for adjudication to this court, and that defendant prevailed upon said claim and contention, and thereby induced said bankruptcy court to refrain from entering said controversy, and from administering upon said real estate, and Drees from applying for a stay of said discharge pending proceedings in the appropriate state court, and induced plaintiff to abandon all further proceedings in said bankruptcy court, and to bring this suit in state court. And plaintiff avers that defendant, having been successful, and inducing by said means to have a bankruptcy court thus act, and refrain from acting, and to have plaintiff thus act and refrain from acting, and having thus induced this by the claim that the courts of the state of Iowa had jurisdiction, and that said bankruptcy court did not have it, defendant is now estopped from saying to this court that said bankruptcy court did have, and this court does not have, jurisdiction to determine this controversy.”
To this reply the defendant demurred, stating many grounds therefor, which may perhaps be condensed into the following:
(1) That the reply in no manner attacks or impeaches the binding force or effect of defendant’s discharge in bankruptcy, which is in itself a complete answer to plaintiff’s alleged right of action.
(3) That it affirmatively appears that plaintiff never made any application to the bankruptcy court to stay the final discharge of the bankrupt to enable the plaintiff to pursue his remedy, if any he had, in the state courts; and that ’such discharge operated to release him from the claims asserted by plaintiff in the same manner and to the full extent in which he was released from the claims of his other creditors.
(4) That, plaintiff having admitted that he had no lien on the homestead to secure payment of his claim, such claim gave him no preferred standing in the bankruptcy proceedings, and, after he had'filed and proved his claim in those proceedings and obtained the benefit thereof, the discharge of the bankrupt necessarily operated to take away any right to pursue the debtor or his property in any other court.
(5) That the pleadings or resistance filed to plaintiff’s objection to the trustee’s report, (which pleading was filed after the judgment of final discharge of the bankrupt was entered) properly raised the question whether such court could then withdraw from the defendant his right of homestead exemption, and it does not appear that the position there taken by the defendant operated in any manner to deceive plaintiff, or to induce him to refrain from asking or procuring a stay of the proceedings in that court in order to permit this present action to be tried out.
The district court sustained the demurrer, and, the plaintiff refusing to amend his reply and electing to stand thereon, the court entered judgment for the defendant, and plaintiff appeals.
The case appears to have remained in a comatose con
“It is too clear for argument, whatever deductions may be drawn from the premise clearly established, that the bankruptcy court can give no one any rights in the exempt property of the bankrupt, even though the court has power to determine what shall be set aside, and to set that aside. The question is whether it follows that, therefore, the bankruptcy court can do nothing by a discharge which gives the bankrupt the right to retain exempt property against subsequent attack in state court, and can do nothing by the discharge which affects the right a creditor may have under state law to enforce his debt against the exempt property, set aside. The exact question is whether the use of language in the order of discharge, broad enough to protect*38 the bankrupt from the enforcement against Mm of all claims against all property remaining in the bankrupt, must not be limited so as to be operative only upon such retained property, as was within the jurisdiction of the bankruptcy court when the order of discharge was entered. • Can the bankruptcy court make any order which will affect dealing with property that in contemplation of law was never in its possession, and as to which it is conceded it could confer no rights upon any creditor?”
The argument is adroitly stated, but it overlooks the very essential element that, while the bankruptcy court can do nothing to relieve the debtor’s exempt property against subsequent attack in the state court, or do anything Avhich affects the right a creditor may hai^e under state law to enforce his debt against exempt property, yet it is just as manifestly true that the party Avho makes such attack or attempts to enforce such a claim must be a creditor; he must have a debt or claim which the courts will recognize and enforce; and, if the very debt or claim so asserted has been Aviped aAvay in a valid bankruptcy proceeding, he can never reach the point where the question of exemptions becomes at all material. The adjudication of bankruptcy and the debtor’s discharge cannot affect the subsequent status of property claimed to be exempt, but it does affe(;t the question whether any legal relation of debtor and creditor survives betAveen plaintiff and defendant as to any claim which was proved and allowed in such proceedings, and against the effect of Avhich there is no claim of lien or charge of fraud.
The judgment of the district court is — Affirmed.