32 La. Ann. 397 | La. | 1880
The opinion of the court was delivered by
Defendants, Horner & Gaff, recovered judgment in December, 1869, against Henry Shorten, plaintiff herein, for $2311 95,. and interest-. This judgment was duly recorded as a judicial mortgage on tenth of same month in the parish of East Baton Rouge, where the judgment was obtained.
On 21st April, 1871, before any execution was taken out, Shorten filed his schedule in bankruptcy and made a surrender of his property to his creditors. He was duly discharged by the U. S. District Court for Louisiana on 12th June, 1874.
The claim upon which Horner & Gaff obtained their judgment was not of a nature excepting it from discharge by the bankruptcy.
Among other property surrendered was a house and lot in Baton Rouge. In January, 1873, proceedings were taken,in the bankrupt-court to sell this property free of mortgage. The court ordered notice
In March following, a decree was entered reciting that the required-notice had been given and ordering the sale free of encumbrances. It was accordingly sold and adjudicated to Mrs. Shorten, plaintiff’s wife,, between whom there existed a community of acquets and gains.
Horner & Gaff made proof of their claim and judgment in the bankrupt court as one “ without security,” swearing that they held no “ security whatever.”
The proof is that Horner & Gaff were never legally notified of the proceeding to sell this property free of encumbrances.
On the 15th May, 1878, Horner & Gaff took out a general writ of fieri facias on their judgment against Shorten and caused it to be levied on the property above referred to.
Shorten enjoins the sale and claims damages. He sets up his discharge from the judgment by operation of his bankruptcy, and claims to have acquired said property at bankrupt sale free of encumbrances, and that neither himself personally nor his said property is liable to execution for said debt, and that said writ of ft. fa. was illegally and wrongfully issued.
First — It is manifest that the' discharge in bankruptcy released Shorten from every sort of legal personal obligation to pay this debt; and that no execution could legally issue against him on said judgment. TJ. S. Statutes, secs. 5105, 5106 ; in re Robinson, 6 Blatchford, 254; Dinges vs. Becker, 9 Bankrupt Register, 508; Bank vs. Buckner, 20 How. 108 ; Beach vs. Miller, 15 A. 601; Murphy vs. Smith, 22 A. 440 ; 27 A. 572 ; 29 A. 21.
If not personally liable for the debt, he is a third possessor of the property, and if the same is subject to a judicial mortgage in favor of Horner & Gaff they should proceed by the hypothecary action, and not by execution.
Second — This brings us to the consideration of a second question, which is presented by the pleadings and has been argued before us, to wit: Have Horner & Gaff a judicial mortgage on this property ?
This court has repeatedly decided that the bankrupt court could not sell free of mortgage without giving notice to and making parties of the mortgage creditors. King vs. Bowman, 24 A. 506 ; Willard vs. Brigham, 25 A. 600 ; Pickett vs. Hayes, 28 A. 844.
It has been held uniformly that a creditor who makes proof of his debt, vnfh security, does not waive his mortgage. But it is contended that if he proves it as an unsecured debt, he does. Section 20 of the bankrupt act of 1867, being now section 5075 of the Revised Statutes of the U. S., provides:
"We think it fairly results from these provisions that where a creditor comes in and proves for his whole debt, as unsecured, he thereby releases any mortgages he may hold. The reason of this rule is apparent. One holding a special security should not come in and participate in the general dividends on the basis of his whole debt. In this very case Horner & Gaff have received, or at least were entitled to receive, and •must be presumed to have received, on the basis of their whole debt, their pro rata of the proceeds of the sale of this very property. It is plain to see that it was the intent of the law, and that it is in consonance with reason, that they should not now be heard to demand again the proceeds of the same property. See Stewart vs. Isidore, 4 Bankrupt Reports, 485, 129. Houdly vs. Oawood, 40 Ind. 239 ; In re Bloss, 4 B. R. 37 ; Bump, 79, 328.
Plaintiff claims damages, and we think him entitled to a reasonable sum for attorney’s fees, and will fix the amount at one hundred and fifty dollars.
It is therefore ordered and decreed that the judgment appealed from is annulled and reversed ; and it is now ordered and decreed that ,the injunction sued out by plaintiff be re-instated and made perpetual, and the said plaintiff and the property seized in this case be and are declared not liable for the judgment sought to be executed. It is further decreed that plaintiff recover of defendants, Horner & Gaff, one hundred and fifty dollars damages and all costs.