68 Wis. 587 | Wis. | 1887
The plaintiff, by his first complaint, alleged as follows: The firm of Leonard, French & Griddings, of which the plaintiff was a member, was indebted to the defendant Tohnh in the sum of about $2,400, and on the 7th day of December, 1869, Tohnh commenced an action thereon against said firm in the circuit court of Earn Claire county. On the 13th day of December, 1869, the said firm filed their petition in bankruptcy, and were declared bankrupts accordingly, and afterwards the said Tohnh, with the other creditors of said firm, filed and proved said claim against the bankrupt estate, as it was provable according to the
On the 24th day of June, 1886, the plaintiff obtained his discharge in said bankruptcy in due form of law, and thereupon, by a rule to show cause, moved the court for leave to file a supplemental complaint in said action, setting up said discharge and praying a perpetual injunction of any proceedings on said judgment and execution. In the meantime the defendants had filed a demurrer to said first complaint on the ground of want of jurisdiction and of no cause of action. Both the motion and the demurrer were heard at chambers, and the motion was denied, and the demurrer sustained. From the orders of the circuit court refusing to set aside the orders so denying the motion and sustaining the demurrer, this appeal is taken.
The facts of this case raise the question which is in such • irreconcilable conflict in the state courts. In the following states it is held that by a subsequent discharge in bank
It may be well to consider briefly the effect of this new provision. Under the law of 1841 the bankrupt certainly had the right to go into the state court and ask for a stay of the proceedings on the same ground','and such court had the power and discretion to stay the proceedings if there had been no unreasonable delay in obtaining his discharge. Neither the bankrupt nor the state court- can do anything more now under this provision. The pendency of the bankrupt proceedings would have been no defense to the action then, and it is no defense now. The proceeding is only dilatory and discretionary at most. If the bankrupt could thereby absolutely prevent a judgment from being rendered, it would be different and quite effectual. But, as it is, the remedy is quite inadequate. There are two previous provisions- that ought to be and are more effectual. The first is applicable in all respects to this case: “No creditor proving his debt or claim shall be allowed to maintain any
But I have wandered sufficiently in attempting to discover the reason of the provisions. Their effect is not remedial. They cannot be interposed as a defense to the action. In view of them the state court may stay the proceedings or may refuse to do so. Not so, however, as to judgments obtained after the discharge in bankruptcy. In such cases the discharge may be pleaded in bar of the actions, or as a complete defense. That class of cases, therefore, which holds that such judgments are conclusive, is inapplicable to this case. It is conceded in the opinion in Boynton v. Ball, supra, that the English authorities are uniform upon this question that such a judgment is released by the subsequent discharge, but it is said that the English courts are forced to so hold by the provision of the English bankrupt law that if the debtor is arrested on execution he may be discharged on motion. A broader provision than that is found in the law of 186Y, which is that the debtor shall not be liable to arrest in any such action (sec. 510 Y, R. S. of U. S.), and, if arrested, it follows of course that he may be discharged.
The legal effect of the proceedings in bankruptcy and of the discharge upon pending actions by the creditors upon proved and provable claims, and upon intermediate judgments, would seem to present a federal question, for the authoritative decision of the federal courts. I have been unable to find any case in point decided by the supreme court of the United States, except the late case of Palmer v. Hussey, 119 U. S. 96, in which the judgment of the court of appeals of New York, giving such effect to a subsequent discharge in bankruptcy upon an intermediate judgment of the supreme court of that state, is affirmed. That case was
It is claimed by the learned counsel of the respondent that the question whether the judgment could be affected by the discharge according to the statute was not raised or
In Braman v. Snider, 21 Fed. Rep. 871 (in the United States district court for the district of Minnesota), a case of similar facts, Judge NelsoN held that “the doctrine of merger and extinguishment of the debt, and that the judgment constitutes a new debt from the time of its recovery, is not applicable under the bankrupt act.” A similar decision was made by the United States district court for the district of Nevada in Re Stansfield, 16 N. B. R. 268.
The decisions against this effect of the subsequent discharge to release the intermediate judgment under the law of 1867 have been in part based upon the provision of the law that allows the bankrupt to apply for a continuance of the action until he obtains his discharge. It is said in one of the leading cases supporting this doctrine,—in Bradford v. Rice, 102 Mass. 472,—that the same proceeding was
The opposite rule is founded on better reasons. They are stated, perhaps, fuller and more satisfactorily in Dawson v. Hartsfield, 79 N. C. 334, than in any other case, and they commend themselves to our judgment. (1) The bankrupt law, and the oath required of the creditor to prove his claim, show that it is the debt itself, in whatever form or however evidenced, which is affected by the discharge. (2) The consideration must be inquired into in order to ascertain whether the debt is provable, or of such a nature as to prevent a discharge (as in Palmer v. Hussey, supra). (3) The judgment is no more evidence of a new debt, in such a case, than a bond, promissory note, or some other evidence of debt into which the original debt was merged, and no more extinguishes the debt. It is the date of the demand and not the subsequent judgment on it that must determine whether the creditor was an existing one when an assignment or
In Dresser v. Brooks, 3 Barb. 429, it is said: “ The consequence of adopting the strict and narrow construction of holding a Judgment exempt from the operation of a discharge because the debt exists in a different form and under a different name would, in the case of a bankrupt whose debts were numerous, utterly defeat the benign object of the act, and leave the unfortunate bankrupt subject to a great portion of his debts after every dollar of his estate had been faithfully devoted to their payment.”
It might be added to these reasons, that if one creditor whose debt was provable under the bankrupt law could bring an action on it and cause it to be so changed by a subsequent judgment upon it as to be exempt from the operation of the discharge, they may all of them take the same course, and none of them be left to give effect to the proceedings or the discharge, and the bankrupt would be defeated in trying to take the benefit of the act. And, again, if even the}'- might be stayed in these actions upon the application of the bankrupt, he would, pending his bankruptcy, be harassed by a multiplicity of suits, here and everywhere, and suffer great expense in money and hardship and care and labor, and his whole time and attention be employed in seeking to stay the proceedings,— a trouble and embarrassment not only not contemplated, but actually prohibited, by the act.
It is well said in Bump’s Law & Practice in Bankruptcy (6th ed.), 411: “ A debt upon which a judgment has been rendered since the commencement of proceedings in bankruptcy may be proved. The debt is not extinguished. The instrument, contract, or obligation upon which the debt
I have referred specially to only a few of the decisions of this question cited by the learned counsel on both sides, which, however, will be preserved in their able briefs. But I think it may be safely said that the decided weight of authority, both in number and reason, is upon the side of the appellant. It being, a federal question arising under a law of Congress, the above decision of it b the supreme court and other federal courts is of the highest authority, if not binding. The intimation of Mr. Justice Gray, in Hill v. Harding, 101 U. S. 631, and the decisions of the circuit court for the district of Massachusetts, have clearly been induced by the uniform decisions of the courts of that state. The cases, cited from the United States Beports by the learned counsel of the respondents are not applicable.
The question of delay in procuring the discharge can cut. no figure in this case. That question was disposed of by the bankrupt court on granting the discharge, which is conclusive evidence that the delay, if any, was sufficiently excused. Palmer v. Hussey, supra. In that case there was. nearly the same delay in obtaining the discharge as in pressing the judgment. In this case the plaintiff filed his bill and obtained an- injunction just as soon as the defendant YohnJe attempted to enforce his judgment by execution, and then obtained his discharge without delay. What was. said in Dawson v. Hartsfield, supra, is appropriate here: “Eight years have elapsed since the judgment was entered up; and if the defendant has delayed in seeking his release, the plaintiff has also waited, and made no attempt mean
In this case the judgment was rendered in 1870, and- the execution was issued in 1886. There are peculiarities in this case that ought to be noticed. The defendant Yohnk filed his claim in the bankrupt court before he obtained judgment upon it. By so doing he is deemed to have waived all right of action against the bankrupt, and was not allowed to maintain any suit upon the claim, by sec. 5105, R. S. of H. S. See, also, White v. Crawford, 9 Fed. Rep. 371. But, not content with this submission to the bankrupt court, Yohnk filed his judgment also, after he had obtained it by default. The learned counsel contends, and cites some authorities to show, that the filing of the judgment was a nullity, and does not estop Yohnk from otherwise enforcing it. It is said by Freeman, in his tract on the Enforcement of Judgments against Bankrupts, that “ the authorities preponderate in favor of the position that the taking of the judgment pending proceedings in bankruptcy does not prevent the plaintiff from proving his claim against the bankrupt estate,” and the author cites many authorities to that effect. The disagreement is-as to whether, in such a case, any of the costs may be included. But the effect of such filing as a waiver of his right to enforce the
The only remaining material question is one of jurisdiction, — whether the plaintiff was not bound to seek his remedy by motion in the same case in which the judgment was rendered; or, in other words, whether the plaintiff had not in that way a complete remedy at law. In the first place, this objection to the action does not go strictly to the jurisdiction of the court. It is a mere rule of practice that courts of equity will not entertain jurisdiction when there is a complete remedy at law. It may be that the same remedy here sought might have been obtained by motion in that case; but the remedy need not be sought by motion, unless the facts appear on the record. If any facts are to be established by extrinsic evidence, then the suit in equity may be maintained. McIndoe v. Hazelton, 19 Wis. 567. In this case the whole matter of the bankruptcy and the discharge are extrinsic of the record. By the authority of that case, also, if the plaintiff has shown by his complaint that he will suffer any injustice by the levy of the execution and the sale of his property under it, he is entitled to equitable relief. It was not only proper, but necessary, that the further proceedings under the execution should be enjoined
I have given more space to this opinion, because the main questions are in conflict in other courts, and new in this ■court, and very important.
By the Gourt.— The order denying the motion to set aside and vacate the order sustaining the demurrer to the complaint, and the order denying the motion to set aside and vacate the order denying the plaintiff leave to serve the supplemental complaint, are both reversed, and the cause remanded for further proceedings according to this opinion.