Exler v. American Box Co.

226 Pa. 384 | Pa. | 1910

Opinion by

Mr. Justice Brown,

On January 20, 1908, Joseph Exler, the appellant, entered a judgment in the court below against Theodore H. Geiselhart for 13,219.30 upon a warrant of attorney contained in a judgment note dated September 3, 1907, and payable three months after date. On March 5, 1908, involuntary proceedings in bankruptcy were instituted against Geiselhart, and on April 25, 1908, upon his having been adjudged a bankrupt, Justus Mullert was appointed trustee of his estate. On June 13, 1908, the trustee presented his petition to the court below, setting forth that at the time the judgment was entered Geiselhart was insolvent, that, having been entered within four months of the institution of the bankruptcy proceedings, its existence and enforcement would work a preference in violation of the bankruptcy act, and an order was asked for,, directing that it be stricken from the record so far as it affected the bankrupt estate of Geiselhart and the lot of land described in the petition. On July 25, 1908, the prayer of the petition was amended and the relief asked for was an order declaring the lien of the judgment to be null and void and releasing and discharging therefrom the property described in the petition. The rule granted on the amended petition was made absolute, on the ground that Geiselhart was insolvent on January 20, 1908, the court holding that if he was solvent at that time, the lien was valid, but, if insolvent, it was void.

In a proceeding like this, to set aside an alleged unlawful preference, state and federal courts have concurrent jurisdiction under the bankruptcy act, but when relief is sought in a state court and its jurisdiction is exercised,' the rules of practice as established in the courts of that state prevail: Collier on Bankruptcy, 7th ed., 406, 674; Bank of Commerce v. Elliott, 109 Wis. 648.

The judgment was regular on its face and the appellant denied the right of the trustee to have it stricken off for any reason dehors the record. The fact upon which the court was asked to so summarily dispose of it- — -the insolvency of Geiselhart on January 20, 1908 — was a disputed one, the supplemental answer averring unqualifiedly that on that date he was not insolvent within the meaning of the bankruptcy act. Under the unbroken line of our cases the court could not have stricken the judgment from the record. It is only when the fact upon which the court is asked to strike off a judgment, regular on its face, is admitted or not questioned that it may be stricken off. A judgment entered upon an admittedly forged warrant of attorney has no right to be on the record, and, upon admission of the forgery, the court having control of the record has power to strike it off. In such a case there is nothing to send to a jury: Humphreys v. Rawn, 8 Watts, 78; Bryn Mawr National Bank v. James, 152 Pa. 364; Long v. Lemoyne Borough, 222 Pa. 311.

But it is contended that the rule as to striking off judgments ought not to apply in the present case, because all the court was asked to do, and all that it did under the amended petition, was to declare the lien of the judgment void and that the property mentioned in the petition was not bound by it. We confess our inability to recognize this distinction. In declaring the lien to be null and void and that the real estate of Geiselhart was nob bound by it the court summarily struck it down. The very purpose of entering the judgment was to acquire the lien.' As an obligation of the debtor the judgment note was as valid unrecorded as recorded, but it could become absolute security to the appellant only by being recorded and thereby becoming a lien upon the real estate of the obligor. The lien thus acquired became the most valuable incident to the obligation, and, in striking it down, the practical effect was to strike off the judgment itself upon which it was based. With the lien gone the bare judgment remaining on the record was of no more value to the appellant as a claim against the bankrupt’s estate than a duebillor a demand note. The life was taken out of the judgment and it became a dead thing by the order of the court below. Its extinction was as complete as if the order had been one striking it from the record, and the rule with us as to such an order must prevail. It is to be remembered that the relief asked for was not equitable, but legal. The trustee stands upon what he alleges is his legal right under the bankruptcy act to have the lien of the judgment wiped out because Geiselhart was insolvent on the day it was entered. As this is the disputed question in the case, the court below was without authority to settle it. It was a question of fact upon which the alleged legal right of the trustee depended. In an equitable proceeding the learned judge might have found facts as a chancellor, but not so when he is asked on the common-law side of the court to enforce a legal right depending upon a disputed fact. Before such a right can be enforced the disputed fact upon which it depends must be established by the verdict of a jury.

The order of the court below is reversed and the rule to show cause discharged.