Wineman v. Fisher
98 N.W. 404
Mich.
1904
Check Treatment
Carpenter, J.

Plаintiff brought this suit in justice court. His declaration was “in an action of assumpsit on all the common counts, and specially оn a certain judgment rendered by Justice Stein, one of the justices for the city of Detroit, on the 3d day of July, A. D. 1899, in favor of said plaintiff * * * and against the Fisher Electrical *606Manufacturing Company, on a labor debt, for the sum of $251.16, and interest since the date of said judgment. Recovery is sought in this case under section 7065, 2 Comp. Laws 1897, which makes stockholders of a corporation personally liable for labor performed for the corporation.” The plea was the general ‍‌‌​​​​‌​‌​​​​​​​‌‌‌​​​‌‌​​​‌​‌​‌​‌‌‌​‌‌‌​​​​​​‌​‍issue, with notice that defendant would rely upon a discharge in bankruptcy. The trial in the justiсe court resulted in a judgment for plaintiff.. The case was appealed' to the circuit. On the trial in that court plaintiff offered in evidence the judgment referred to, which contained this recital:

“ That the entire amount оf said judgment is for labor performed by the plaintiff for the defendant prior to the 15th day of February, 1898, and that the same is a preferred claim, under Act No. 91 of the Public Acts of 1887, against the estate of the defendant.”

He also offered in evidence an execution returned unsatisfied. These were objected to on the ground that defendant, as a stockholder, is not bound by any judgment against the original debtor. This objection was overruled, and the judgment and execution admitted in evidence.

Defendant introduced in evidence a discharge in bankruptcy, dated July 12, 1899. By its terms defendant was “ dischai’ged from all debts and claims which are made provable by said acts against his estate, and which existed on ‍‌‌​​​​‌​‌​​​​​​​‌‌‌​​​‌‌​​​‌​‌​‌​‌‌‌​‌‌‌​​​​​​‌​‍the 17th day of May, A. D. 1899, * * * excepting such debts as are by law excepted from the operation of a dischargé in bankruptcy.” The schedule of liabilities in the bankruptcy proceedings did not include plaintiff’s сlaim.

The court directed a verdict for the defendant upon the ground that the discharge in bankruptcy put an еnd to his liability. Leave was reserved at the same time to enter a verdict for the plaintiff if, on a motion for а new trial, the court should become convinced that such a direction was proper. In opposition to a motion for a new trial, defendant was permitted to urge that the verdict was properly *607directed, not only because of the discharge in bankruptcy, but because the declaration did not set forth a cause of action, and also because there was no evidence that plaintiff had performed labor fоr the Fisher Electrical Manufacturing Company; and the court for these reasons, as well as for the reasоn that the discharge constituted a defense, denied the motion.

We think, under the liberal rules governing practice in ‍‌‌​​​​‌​‌​​​​​​​‌‌‌​​​‌‌​​​‌​‌​‌​‌‌‌​‌‌‌​​​​​​‌​‍justice court, the declaration was sufficient. See Hartford v. Holmes, 3 Mich. 460; Cicotte v. Morse, 8 Mich. 427. It clearly apprised defendant of the claim asserted against him, and was not open to objection under the decisions of Tilden v. Young, 39 Mich. 58, and Chicago, etc., R. Co. v. Sturgis, 44 Mich. 538 (7 N. W. 213).

We do not think that the objection that there was no evidence that plaintiff had performed labor for the Fisher Electrical Manufacturing Cоmpany should have been considered by the circuit judge on the motion for a new trial, nor that it should be considered by this court. Assuming that the recital that “the entire amount of said judgment is for labor performed ” has no effect аs evidence, because the statute which authorized it was unconstitutional (see Fisher v. Wineman, 125 Mich. 642 [84 N. W. 1111, 52 L. R. A. 192]), this objection should have been made before the trial court directed a verdict. That objection was not made. The objectiоn that the judgment and execution were inadmissible in evidence because defendant, as a stockholder, was not bound thereby, was properly overruled, — for the judgment was clearly admissible in evidence, — and did not raise thе question now under consideration. In directing a verdict for ‍‌‌​​​​‌​‌​​​​​​​‌‌‌​​​‌‌​​​‌​‌​‌​‌‌‌​‌‌‌​​​​​​‌​‍the defendant on the ground that the proceedings in bаnkruptcy terminated his liability for the claim in suit, the court assumed that there was evidence of such liability. To permit dеfendant to shift his defense after he obtained a verdict on this assumption would be manifestly unjust and unfair to plaintiff. Had the objection now under consideration been made before verdict, it is by no means certain that the cоurt would *608not have permitted plaintiff to answer it by introducing additional testimony. In any event, plaintiff could then have аvoided the effect of a final adjudication by submitting to a nonsuit.

The important question in the case is whether the dеbt for which suit was brought was discharged by the bankruptcy proceeding. Section 17 of the national bankruptcy law reads:

“A discharge in bankruptcy shall release a bankrupt from all of his provable debts, except such as * * * have not been duly scheduled in time for proof and allowance, with the name ‍‌‌​​​​‌​‌​​​​​​​‌‌‌​​​‌‌​​​‌​‌​‌​‌‌‌​‌‌‌​​​​​​‌​‍of the creditor, if known to the bankrupt, unless such creditor had notice or actual knowledge of the proceedings in bankruptcy.” Act July 1, 1898, chap. 541, 30 Stat. 550.

It is apparent from this language — and it is so held; see Tyrrel v. Hammerstein, 6 Am. Bankr. R. 430, 67 N. Y. Supp. 717 — that the discharge does not release the bankrupt from claims omitted from the schedule, unless the creditor has notice or knowledge of the bankruptcy proceedings. There was no evidence in this case that plaintiff had such notice or knowledge. It is contended by the defendant that plaintiff was bound to provе that he did not have it. We think the burden of proving that plaintiff had such notice or knowledge rested upon defendant. See Potter’s Dwarris, Stat. & Const, p. 119; Sedgwick, Stat. Constr. (2d Ed.) p. 93; 1 Chitty, Crim. Law, p. 283.

The judgment of the court below must therefore be reversed, and a new trial granted.

The other Justices concurred.