Harrington v. McNaughton

| Vt. | Feb 15, 1848

The opinion of the court was delivered by

Hall, J.

There does not appear, from the authorities, to be any doubt, but that the bankrupt’s certificate, in England, is a bar to a debt, upon which a judgment has been recovered pending the proceedings in bankruptcy, and before the granting of the certificate, in all cases, where the debt would be otherwise proveable under the commission. Were it not so, it might be in the power of the creditors, by pressing their claims to judgment before the granting of the certificate, to prevent the bankrupt from deriving any benefit from it. It also seems equally well settled in England, that the costs, which accrue upon such debt after the act of bankruptcy and before the granting of the certificate, follow the fate of the debt, upon which they are founded. The costs, having relation to the original debt and resting upon it, a plea of the certificate puis darrien continuance operates as a discharge of the action, — of the costs, as well as the debt. The bankrupt may also be discharged on motion, either before or after judgment; and he is, in both cases, discharged from the debt and costs; — though, when he claims the summary interference of the court, before judgment, he may, where he has occasioned vexatious delay in the prosecution of the suit, be required to pay the costs occasioned by such delay. Willett v. Pringle, 5 Bos. & Pul. 190. Dinsdale v. Eames, 2 B. & B. 8. Vansandon v. Corsbie, 1 Chit. R. 16. Sadler v. Cleaver, 7 Bing. 771. The debt is considered as discharged at the time the party became a bankrupt. The certificate is but the evidence, that it was then discharged; and the costs, being founded upon a discharged debt, partake of its character, and do not constitute a new ground of claim against the bankrupt.

Whether it sufficiently appears by the pleadings in this case, that the debt, upon which the judgment was founded, was a debt which the certificate would bar, we have entertained some doubts; but have come to the conclusion, that the defendant’s plea may be sustained. The plea was, that the plaintiff’s cause of action was a debt proveable under his bankruptcy; which averment, alone, would doubtless, in general, be a sufficient statement of the time, when it accrued; but whether it ought to be sufficient, when the action is upon a judgment which for most purposes merges the original cause of action, when the judgment appears to have been rendered after the defendant became a bankrupt, is perhaps questionable. Conceding such averment to be insufficient, we think it is to be taken, from other averments in the plea, that the debt existed at the time the defendant became a bankrupt. The declaration states, that the judgment at December Term, 1842, was recovered by the plaintiff “ for a certain debt then due by the defendant to the plaintiff,” and for his costs in that suit; and the plea avers, that “ the debt in the declaration mentioned was due and owing from the defendant to the plaintiff at the time the defendant was declared a bankrupt.” The question, then, is, whether a debt, which existed at the time of such decree, is to be considered as discharged by the certificate.

Under the English system of bankruptcy, which is of a compulsory character, the bankrupt becomes such, not by instituting proceedings before a judicial tribunal, but by the commission of certain acts of his, — which are inconsistent with the conduct of a solvent trader. The statute of 5 Geo. 1, c. 24, provides, that bankrupts “ shall be discharged from all debts due and owing at the time they become bankrupts;” and under this provision it is held, that a debt accruing after the act of bankruptcy, and previous to the issuing of the commission, is not barred by the certificate. Bamford v. Burrell, 2 Bos. & Pul. 1. But the act of congress contains no specific provision in regard to the time, from which the debt of the bankrupt shall be discharged. All the property of the bankrupt, belonging to him at the time he is declared a bankrupt, immediately vests in the assignee, for the benefit of his creditors; and it seems most consistent with a just distribution of his estate among his creditors, which is a leading object of the statute, that all debts then existing should be proveable against it, and consequently be barred by the certificate.

It was held by the circuit court for the district of Massachusetts, Judge Story presiding, in Ex parte Newhall, 5 Law Reporter 306, that property, which comes to a person seeking the benefit of the bankrupt act, by descent, or as distributee, in the intermediate time between his filing his petition and his being declared a bankrupt, passes to the assignee, as a part of the assetts of the bankrupt. In the well considered case of Downer v. Brackett, in the district court for the Vermont district, it is said by Judge Prentiss, that “ all debts existing before and at the time of the decree of bankruptcy are proveable under the bankruptcy, and all debts up to that time are barred by the certificate of discharge.” 5 Law Reporter 399. This seems to us to be the reasonable construction of the statute,— so far, at least, as relates to bankrupts who become such on their own petition, — and as it sufficiently appears from the pleadings in this case, that the debt, upon which the plaintiff’s judgment was founded, was an existing debt against the defendant, when he was declared a bankrupt, we think the certificate is a bar to a recovery upon it.

The rejoinder being held sufficient, the judgment of the county court is reversed and judgment rendered for the defendant.