145 S.W.2d 1059 | Ky. Ct. App. | 1940
Affirming.
On September 19, 1935, appellant instituted this action against appellee to recover the face value of five promissory notes alleged to have been executed by appellee to the Ashland National Bank and paid by appellant, an accommodation indorser, in the summer of 1926. By an amended petition it was alleged that the first of the five notes had been made payable to appellee instead of the Bank but that the proceeds had been placed to appellee's credit after appellant had indorsed it, and that the fifth note had been made payable to appellant instead of the Bank but that the proceeds had likewise been placed to appellee's credit. By another amendment appellant sought an additional recovery of $2,200, representing the proceeds of a lost note alleged to have been executed by appellee to appellant on May 11, 1926, the proceeds of which were similarly credited. The petition as finally amended sought judgment for the principal amount of the notes, $10,300, plus interest from the respective dates on which the appellant claims to have paid them to the Bank.
Without reciting the details of the pleadings, it is sufficient to say that among the defenses interposed were a denial by appellee that appellant paid any of the notes referred to, and an affirmative plea that on December 5, 1931, the appellant had filed in the Federal Court a voluntary petition to be adjudged bankrupt, without listing or scheduling among his assets any claim of any nature against appellee, and on October 11, 1932, had obtained a discharge, and that by reason of said bankruptcy the title to all property owned by appellant on December 5, 1931, including any claim he had against appellee passed to and became the property of the trustee in bankruptcy. The trial resulted in a verdict for the appellee and a dismissal of the petition. *764
The Trial Court ignored defenses predicated upon the five year Statute of Limitations and appellant's failure to list the notes for taxation prior to July 1, 1938, and by the first and second instructions directed the jury in effect to find for the appellant the amount of any of the notes which he was compelled to pay, unless he had been reimbursed through certain credits arising out of a mortgage executed by appellee to the Bank and an obligation of appellant to appellee arising out of certain oil and real estate transactions. By a third instruction the Court informed the jury:
"Under the law the title to all of the assets of a bankrupt upon his adjudication pass to his trustee and the notes in question so passed and for that reason you should find for the defendant unless you believe and find from the evidence that the trustee in bankruptcy knew of the existence of the notes in question and made no effort to take possession of same or take or administer same as an asset of the estate."
While we are of the opinion that the evidence was amply sufficient to have supported a verdict for the appellee upon the issues submitted by the first and second instructions, we perceive no object to be accomplished by discussing it, in view of our conclusion that even though appellant had in fact paid the notes without reimbursement, any right of recovery which in consequence accrued to him vested in his trustee in bankruptcy and did not thereafter revert to him.
Appellant's counsel concede that by virtue of the provisions of Section 70, Subsection a (6), of the Bankruptcy Act,
While a trustee in bankruptcy is a representative of the creditors, as well as a repository of the title to the bankrupt's property, and may disclaim burdensome property, the creditors are by the mandatory provisions of the Bankruptcy Act entitled to full information respecting all assets and to an opportunity to be heard on the question, whether the trustee should renounce any one of them. Sparhawk et al. v. Yerkes et al.,
Without questioning the soundness of those decisions in other jurisdictions holding that without petitioning the Court for authority so to do, a trustee in bankruptcy, by his failure to act, may be held to have elected not to take title to a particular asset of the bankrupt, we are, nevertheless, certain that the application of this rule should be confined to scheduled assets, and that it would be contrary to both the letter and the spirit of the Act, as well as against public policy, to permit a bankrupt to assert title to property, tangible or intangible, which he failed to list. Stephan v. Merchants' Collateral Corporation,
This conclusion renders it unnecessary to consider the defenses predicated upon the Statute of Limitations or appellees' failure to list the notes for taxation.
Judgment affirmed.