A 7 3 2 6 4 8 Freeman Enforcement of Judgments Against Bankrupts F8773en \877 / IDG : TS AGAI2TST BANKRUPTS. 1G77. THE ENFORCEMENT -OF — Judgments Against Bankrupts. BY A. C. FREEMAN, Author op Treatises on "Judgments,'" "Executions," "Co- tenancy and Partition. " ST. LOUTS: THE CENTRAL LAW JOURNAL 1877. T Km Entered according to Act of Congress, in the year 1877, by A. C. Freeman, In the office of the Librarian of Congress at Washington. MAYNARD & THOMPSON, LAW PRINTERS. ST. LOUIS. a V * TABLE OF CASES Alcott v. Avery, Allen v. Montgomery, Angier, In re, Epperson v. Stewart. Appleton v. Bowles, Armstrong v. Rickey, Atkinson, In re, Austin v. O'Reilly, Avery v. Hackley, B. [The references are to sections.] Bridgman, In re, Briggs v. Stephens, Brinkman, In re, Britton v. Payen, Brown v. Gibbons, Brown, Stephen, In re, Buchanan v. Smith, Burns, In re, Burns, S. M., In re, Bush v. Lester, 14 11 8 13 11 S 12 8 8 Baker, In re, 3 Barber v. Terrell, 13 Barron v. Benedict, 13 Barron v. Morris, 8 Barrow, In re, 9,12 Batchclder v. Putnam, 4 Bates v. Tappan, 4,11 Baum v. Stern. 11 Beattie v. Gardner, 3 Beers v. Place, 8 Belden, In re, 4 Bellamy v. Woodson, 4 Bernstein, In re, S Bigelow, In re, 9,11 Black v. McClelland, 5 Bloss, In re, 10 Blum v. Ellis, 11 Boone v. Rcvis, 11,13 Borst, In re, 6 Bowman v. Harding, 4 Boyd v. Vanderkenip, 2 Bracken v. .Johnson, 4 Bradford v. Rice, I. :.. 7 Bradley v. Frost, 11 Brand, In re, 10 tf Campbell. In re, Campbell, Hugh, In re, Catlin v. Hoffman, Chambers v. Neal, Clark & Binninger, In r< . Clark v. Binninger, Clark v. Iselin, Clark v. Rowling, Clarke, In re, Cogburn v. Spcnce, Cole v. Duncan, Comstock, In re, Comstock v. Grout, Cook, In re. Cook v. Farrington, Cornell v. Dakin, Cotton, J. S., In re, Cozart, In re, Crawford, In re, Creditors v. < 'ozzens, Cross v. Hobson, Cniuinings v. ( 'legg. Cutter v. Dingee, I 'utter v. Evans, ii 10 11, 12 3 4 5 3 2 12 11,13 2 12 8 11 11 11 3 5 11 II 11 7 7 S 10 14 7 8 5 12 ."> in. 11 ii 5 IV TABLE OF CASES. I>. Daggett v. Cook. 4. 11 Davis, In re, -t- 12 Davis v. Anderson, 11 Davis v. E. E. Co., 11 Devoe. In re, 6 Dibblee. 1, 2 Dick v. Powell. 7 Dingee v. Becker. 4. 6, 11 Doe v. Childre--. 4. 11 Douglas v. St. L. Z. Co.. 10 Downer v. Eowell. 5 Dresser v. Brook-. 7 Dunbar v. Baker, 4 Dunn. In re, 2 Dusenbury v. Hoyt, 13 E. Eastburn v. YartUy. Edge v. Parker. Elliott v. Booth. Elli- v. Ham. Ey-ter v. Gall'. F. 12 11 13 5, 7 4.11 Fehley v. Fair. 11 Field v. Baker. 3 Flanagan v. Pearson, 2,4,7 Fletcher v. Morey, 8 Foster v. Ames. 9 Francis v. Ogden, 14 Frizelle. In re, 11 «.. Galli -on. In '■ . 5 Glaser, In re. 6 Goddard v. Weaver. 11. 12 Gold M. M. Co., I,- re, 2 Golson v. Xeihoff, 3 Granger & Sabin, In ft ■ 10 Grinnell, In re, 9 II. Hanibright. /;' re, 8 Hanna, In re, 12 Harrington v. IvIeXaughton. 5, 7 Hatch v. Seely, 10 Hatcher v. Jones. 8 Haughey v. Albin. 8 Haughton v. Eu^ti>, 8 Haworth v. Travis, 8 Haxtun v. Corse. 10 Hazleton v. Valentine, 6 Heard v. Jones, 10 Heller. In re. 3 Henkehnan v. Smith. 3 Hennocksburgh. In re, 5 Herpich. In re, 3 Hester. In re, S Hewett v. Norton, 4 Hill v. Fleming, 11 Hoadley v. Cawood, 10 Holbrook v. Fos-. 5 Hollister v. Abbott, 7 Hood v. Karper, 3 Hoover v. Greenbaum. 3 Horner v. Spelman, 7 Horter v. Harlan, 6, 8 House v. Swanson, 8 Huber v. Klauberg, 4 Hufnagel. In re, 11 Hughes, In re, 8 Hyde v. Bancroft, 12 Iron M. Co., 12 Ironsides. The. In re, 8 Irving. In re, 4. 12 Irving v. Hughes, 12 J. Jaycox i^ Green, //< ft . 10 Johnson v. Bishop, 4 Johnson v. Collins, 4 Johnson v. Fitzhugh, 7 TABLE OF CASES. Johnson v. Poag, .Font- v. Leach, Jones v. Lellvett. K. Keller, In re, Kellogg v. Russell, Kellogg v. Schuyler, Kent v. Downing, Kerosene Oil Co., Kerr. In re, Kimball. In re, King v. Bowman. Kintzing, Zn /•< . Lady Bryan M. Co. Lee v. Phillip-. Leighton v. Harwood, Leighton v. Kelsey, Lenihan v. Haraan. Levy. In re, Linn v. Hamilton. Little v. Alexander, Livingston v. Livingston, Loueheim v. Henszey, M. Macy v. Jordan, , Mallory. In re. Manning v. Keyes, Mansfield, In re. Manwarring v. Kouns, Maris v. Duron, Markson v. Heaney, Marsh v. Armstrong, Marshall v. Knox, Marshon v. Haney. Mason v. Warthens, May v. Courtnay, May- v. Fritton, McCance v. Taylor. 11 McClellan, in re. 9 12 McDonald v. Lngraham, 7 10. 11 McGie,i 3 McGilton, //' re, 5, Mcintosh, In re, a McKay v. Funk. 4 McKinsey v. Harding. 2 3 Mebane. In re. 8 3 Meeks v. Whatley, 8, 9 .">. 7 Metzler, In re. 12 4 Mitllin. In re, 6 12 Migel. // 6 8 Minor v. Van Nostrand, 6 6 Mollison v. Eaton. 11 10 Monroe v. Upton. 5, 14 12 Moshy v. Steele. 13 Moses, In re, 12 Munsonv. B. H. cV E. K. K. CO., 4 Murphy v. Smith. 14 Myerv. C. L. ct P. W., 11 12 14 11 X. 4 4 Nassau v. Parker, 7 7 National Iron Co.. hire, 9 7. 14 New H. S. B. v. Webster, 5 3 N. Y. M. S. Co.. In re. - 2 12 7 5 5. 14 11 12 11 11 11 4 4 3 11 Xoe v. Gibson. Norton v. Boyd, O. O'Brien v. Weld, O'Mara, In rt . O'Neill, Ex parte. Palmer v. Merrill. Palmer v. Preston, Park v. Casey, Parker v. Muggridge, Parks v. Sheldon. Partridge v. Dearborn, Patterson. In re, 11 11 11 6 4 7 5, 14 11 6,7 VI TABLE OF CASES. Payne v. Able, 11 Payne v. Drewe, 11 Peck v. Jenness, 11 Pennington v. Sale, 12 Perdue, In re, 8 Pettis, In re, 6 Phelps v. Sellick, 11 Phillips v. Bowdoin, 8, 10 Pierce v. Wilcox, 11 Pike v. McDonald, 5 Piper v. Baldy, 3 B. Ray v. Brigham, 9 Reed v. Bullington, 11 Rees v. Butler, 7 Reeser v. Johnson, 11 Ripley v. Sears, 3 Robinson, In re, 6, 7 Robinson v. Pesant, 13 Robinson v. Wilson, 11, 13 Roden v. Jaco, 7, 14 Rogers v. Ins. Co., 7 Rosey, In re, 2, 5 Rowe v. Page, 4 Ruckman v. Cowell, 14 Rudge v. Rundle, 14 Ruehle, In re, 11 Russell v. Cheatham, 11 S. Sacchi, In re, 4 Sampson v. Burton, 4, 11 Sampson v. Clark, 5 Savage v. Best, . 11 Savings Rank v. Webster, 14 Savory v. Stocking, 13 Second Nat. Bank v. N. S. B. of Newark, 11 Sedgwick v. Menck, 11 Seibel v. Simeon, 10 Seymour, In re, 7 Sharman v. Howell, 11 Sheehan, In re, 2 Shuey,W. H., In re, Shuman v. Strauss, Sidle, In re, Simpson, In re, Sleek v, Turner, Smith & Smith, In re, Snedaker, In re, Spalding v. State, Sparhawk v. Broome, Stansell, In re, Stemmons v. Burford, Stephens, In re, Steward v. Green, Stewart v. Isidor, Stewart, T. R., In re, Stinemets v. Ainslie, Stoddard v. Locke, Stoll v. Wilson, Stone v. National Bank, Stuart v. Hines, Sutherland, In re, Sutherland v. L. S. C. Co., Swope v. Arnold, T. Talbert v. Melton, Taylor v. Bonnett, Taylor v. Carryl, Tenth Nat. B. v. Sanger, Terry, In re, Thomas v. Shaw, Thompson v. Moses, Tills & May, In re, Tooker, In re, Townsend v. Leonard, Trimble v. Williamson, Truitt v. Truitt, Turner v. Gatewood, Turner v. The Skylark, U. Urau v. Houdlette, Usher v. Pease 11,12 7 2 6 3 6, 8, 11 12 2 13 10 11 5 4 10 9 13 4,11 14 4,11 11 2 9 11 11 11 12 3 14 11 8 4 11 13 11, 13 13 11 TABLE OF CASES. VI 1 V. Valk, In re, G Valkenburgh v. Dederick, 5 Valliant v. Childress, -4, 11 W. Walker, In re, 6 Wallace, In re, 12 Warner v. Cronkhite, 7 Warren v. D. L. & W. R. W. Co., 3 Wan-en v. Tenth N. B., 3 Weamer, In re, 1 1 Webb v. Sachs, 3 Webster v. Woolbridge, S Weeks, In re, 8 Westenberger v. Wheaton, 14 Whipple, In re, 11 Whitehouse, In re, 7 Whitaker v. Chapman, 7 Whitman v. Butler, 12 Wicks v. Perkins, 11 Wiggers, In re, 6, 7 Wilbur, In re, 12 Wilcox v. Pollard, 8 Wiley, W. II., In re, 8 Williams, In re, 5 Williams &. McPheeters, In re, G Wilson v. Brinkman, 3 Wilson v. Childs, 8, 11 Wilson v. City Bank, 3 Winship v. Phillips, 8, 10, 11 Witt v. Hereth, S Woodbury v. Perkins. 5 Wright, J. S., In re, 7 Wynne, In re, 8, 11 Zahm v. Fry, THK ENFORCEMENT -OF— JUDGMENTS AGAINST BANKRUPTS. Section 1. Bankrupts, like other persons, arc subject to the jurisdic- tion of the various courts. Sec. 2. Classification of Judgments against Bankrupts. Sec. 3. Judgments entered within four months prior to Bankruptcy, when may be avoided as unlawful preferences. Sec. 4. Validity of Judgments entered after the Petition in Bank- ruptcy. See. 5. Enforcing Judgments entered subsequent to the Petition in Bankruptcy. Sec. 6. Proceedings by Execution pending Proceedings in Bankruptcy. Sec. 7. Judgments not Released by Proceedings in Bankruptcy. Sec. 8. Judgment and Execution Liens not Extinguished by Bank- ruptcy. Sec. 9. Enforcing Judgment and other Liens in Court of Bankruptcy. SEC 10. Cases where the Creditor may proceed in the State Court after presenting his Judgment as a claim against the Bankrupt. Sec. 11. Enforcing Judgments never presented to the Court of Bank- ruptcy. Sec. 12. Enforcing Proceedings in the State Courts. Sec. 13. Effect of a Discharge in Bankruptcy. Sec. 14. The Method of making a Discharge Available. Section 1. Bankrupts are, like other Persons, subject to the Jurisdiction of the Court*. — The term bankrupt will, in this article, be employed to denote a person who has, either upon his own petition or thai of one or more of his credi- tors, been "adjudged a bankrupt" in proceedings authorized by the present statutes of the United States. Before pro- ceeding to consider the effect of any particular class of 2 ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. judgments, or the means by which the holders thereof may make such judgments productive, we shall first inquire whether there are any judgments which may be regarded as having no validity against the bankrupt. Tne answer to this question must be, that a bankrupt, like most other per- sons, is subject to the jurisdiction of the different courts, state and national . When summoned to appear before one of these courts, he must not treat its process with contempt, nor assume that it will take judicial knowledge of those cir- cumstances, which, if properly pleaded, would cause the court either to suspend its proceeding, or to grant judg- ment in his favor. In other words, whether an action be pending against a bankrupt prior to the commencement of the proceedings in bankruptcy, or commenced during the pendency of those proceedings, or subsequent to his final discharge, he must, in either case, exercise a proper degree of vigilance in preventing the entry of a judgment in con- flict with his rights ; for, if such judgment be entered, he will not be permitted to treat it as void. Sec. 2. Classification of Judgments against Bankrupts. — Judgments capable of enforcement against a bankrupt and his estate will, for the sake of convenience, be classified as follows: first, judgments entered so long anterior to the institution of the proceedings in bankruptcy, that they can not be assailed on the ground that they were given with a view of permitting the plaintiff to obtain a preference over the other creditors of the bankrupt ; second, judgments entered before the institution of the proceedings, but at so recent a date as to be liable to assault and overthrow if in- fected by such a preference ; third, judgments entered after the commencement of the bankruptcy proceedings ; and, fourth, judgments which, whensoever entered, are of such a character that the proceedings in bankruptcy do uot afford the bankrupt any immunity therefrom. The judgments of the first class do not require any special consideration. Their validity must be conceded in the courts of bank- ruptcy. They can not, in those courts, be impeached for ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. 3 error or irregularity, nor otherwise subjected to any collat- eral attack. 1 If they are presented as claims against the estate of the bankrupt, they, with all costs and interest accrued before the bankruptcy, are entitled to allowance. 2 Whether a judgment of this class constitutes a claim against the estate of the bankrupt must be determined by deciding whether it is a " debt," demand or liability within the meaning of Sec. 50G 7 of the Kevised Statutes. Generally a judgment merges or extinguishes the cause of action out of which it arose, and is, therefore, entitled to the same consideration when founded upon a tort, as when founded on a contract. It is a " debt " irrespective of its origin. There is there- fore no doubt that a judgment may be a provable debt, al- though the cause of action on which it was based could not have been proved as a claim against the bankrupt. 3 As a general rule, all judgments of the class of which we are now writing are provable debts within the meaning of the Bankrupt Act. 4 Judgments for fines imposed for the com- mission of crimes, or for contempts of court, are not within the general rule, and are not provable debts. 5 Pen- alties given by statutes are treated as debts. A judgment for such a penalty is therefore provable. 6 The pendency of an appeal does not destroy the provable character of a judgment. 7 Sec. 3. Judgments Entered within Four Months prior to the Bankruptcy. — Judgments of the second class, when at- 1 McKinsey v. Harding, 4 B. R. 39; In re J. H. Dunn, 11 B. R. 270; In re Dibblee, 2 B. R. G17; 3 Ben. 283; Flanagan v. Pearson. 14 B. R. 37; In re Campbell, 1 B. R. 165; 1 Abb. C. C. 185; 1 L. T. B. 30; In re Burns, 1 B. R. 174; 7 A. L. Reg. (N. S.) 105; 24 Leg. Int. 357. 2 Ex parte O'Neill, 1 Lowell, 163; 1 B. R. 677. 3 3 Parsons on Contracts, 6tb ed., 466. *Inre J. W. Sidle, 2 B. R. 220; Boyd v. Vanderkemp, 1 Barb. Ch. 27:?. s/n re Sutherland, 3 B. R. 314; 1 Deady, 416; Spalding v. State, 4 How. (IT. S.) 21; s. C, 10 Paige Ch., 2S4; 7 Hill, 301; Macv v. Jordan, 2 Den. 570. 6 In re Rosey, 8 B. R. 509. "In re Sheehan, 8 B. R. 345; In re Gold. M. M. Co. 3 Saw. C. C. 601. 4 ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. tempted to be asserted as the basis of a lien against the estate of the bankrupt, are likely to be attacked on the ground that, for the purpose of creating such liens, they are void by the provisions of sections 5021 and 5128 of the Revised Statutes. 8 Section 5128 provides that " if any per- son, being insolvent, or in contemplation of insolvency, within four months before the filing of the petition by or against him, with a view to give preference to any creditor or person having a claim against him, procures or sutlers any part of his property to be attached, sequestered, or seized on execution, or makes any payment, pledge, assign- ment, transfer, or conveyance, of any part of his property, either directly or indirectly, absolutely or conditionally, the person receiving such payment, pledge, assignment, trans- fer, or conveyance, or to be benefited thereby, or by such attachment, having reasonable cause to believe such person is insolvent, and knowing that such attachment, sequestra- tion, seizure, payment, pledge, assignment, or conveyance, is made in fraud of the provisions of this title, the same shall be void, and the assignee ma}- recover the property, or the value of it, from the person so receiving it, or so to be benefited." By section 5130 a, " in cases of involuntary or compulsory bankruptcy, the period of four months, men- tioned in section 5128, is changed to two months." The judgments most frequently subjected to the scrutiny author- ized by these sections are those rendered by confession, or upon default. When a confession of judgment, or a war- rant, or other power to confess a judgment, is given more , than four months prior to the filing of the bankrupt's peti- tion, and a judgment is in fact entered by virtue thereof within the four months, the question then arises whether the validity of the judgment depends on the date of its entry, or the date of the warrant or power. The answer to this question was given by the Supreme Court of the United States : " In a case where a creditor, holding a con- fession of judgment perfectly valid when it was given, s These are sections 35 and 39 of the original Bankrupt Act. ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. causes the judgment to be entered of record, how can it be said the debtor procures the entry at the time it is made? It is true the judgment is entered in virtue of his authority, an authority given when the confession was signed. That may have been years before ; or, if not, it may have been when the debtor was perfectly solvent. But no consent is given when the entry is made where the confession becomes an actual judgment, and when the pref- erence, if it be a preference, is obtained. The debtor has nothing to do with the entry. As to that, he is entirely pas- sive. Ordinarily, he knows nothing of it, and he could not prevent it if he would. It is impossible, therefore, to main- tain that such a judgment is obtained when his confession is placed on record." 9 It follows, therefore, that if the author- ity to confess the judgment was given more than four months before the filing of the petition, the judgment can not be avoided, merely because it was entered within that time. 10 The opinion of the Supreme Court of the United States, in the case of Clark v. Iselin, just cited, is undoubtedly in an- tagonism to the views of many of the subordinate judges ; and some of them are very loath to be governed by it. The case of August Herpich is a good illustration of what we have just stated. Herpich, being insolvent, executed cer- tain warrants of attorney in February, 1876, in considera- tion of prior indebtedness. A little more than two months later, judgments were entered on the warrants. Some ten days later, Herpich became an involuntary bankrupt. Con- ceding that the giving of the warrants was a fraudulent preference, the time within which they could be avoided had expired. The judge nevertheless refused to follow Clark v. Iselin, and held that the judgment based on the 9 Clark v. Iselin. 21 Wall. 360; 7 Ch. L. X. 18-"): 2 ('cut. L. J. 210; 11 B. R. 337; reversing, 10 Blatch. 204. io Clark v. Iselin. cited above; Piper v. Baldy, 10 B. R. 517: 31 Leg. Int. 310; Field v. Baker, 11 B. R. 415; Sleek v. Turner. 10 B. R. 580; 1 A. L. T. 485; 31 Leg. Int. 308; Contra, Zahm v. Fry, 9 B. R. 546; 31 Leg. Int. 107; Hood v. Karper, 5 B. R. 358; 28 Leg. Int. 340; Golson v. Neihoff, 5 B. R. 56; 2 Biss. 434; In re Terry, 2 Biss. 350. G ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. warrants should not be allowed as a valid lien against the estate of the bankrupt. 11 A confession of judgment, or a warrant to confess judgment, given to secure a loan then made, 12 or given by an insolvent to secure a pre- existing debt, to a person who did not have reasonable cause to believe the debtor insolvent, is not an unlawful preference, and a judgment thereon is not void under the provisions of sections 5021 or 5128 of the Revised Stat- utes. 13 To avoid any seizure or judgment by the aid of these sections, it is evident that these five circumstances must be established : 1st, that the debtor was insolvent, or contemplating insolvency ; 2d, that while so, he procured or suffered the seizure or judgment ; 3d, that the procuring or suffering was within the time specified by the Act ; 4th, that it was with the view of giving a preference ; and, 5th, that the person benefited had reasonable cause to believe the debtor insolvent, and that the latter was acting in fraud of the Act. 14 When a creditor, knowing his debtor to be insolv- ent, pursues the latter by the ordinary remedy for the col- lection of his debt, and the latter, also knowing his own insolv- ency, makes no defense, and permits judgment to be entered against himself by default, within four months before the commencement of proceedings in bankruptcy, all these five circumstances seem almost necessarily to co-exist. The only ones which can be absent in such a case are, the view on the part of the debtor of giving a preference, and the creditor's knowledge that the debtor is suffering judgment to be en- tered in fraud of the provisions of the Act. But, as the debtor is presumed to intend the necessary consequence of his own act, and as, in such a case, his inaction so uniformly leads to the obtaining of a preference in favor of the cred- n In re Herpich, 9 Ch/L. jST. 253. 12 Clark v. Iselin, cited above. 13 Mays v. Fritton, 20 Wall. 414; 11 B. E. 229. 14 Clark v. Iselin, 7 Ch. L. 1ST. 185; 2 Cent. L. J. 210; 11 B. R. 337; Hoover v. Greenbaum, 61 N. Y. 305; Webb v. Sachs, 9 Ch. L. N". 156; 15 B. R. 168. ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. 7 itor, and thereby accomplishes the result which the Bank- rupt Act was intended to avoid, it was, for a considerable time, almost conceded that a judgment so permitted was necessarily " suffered " " with a view to give a preference," and that the creditor knew it was so suffered ; and that he could, therefore, derive no benefit from it out of the bank- rupt's estate. 15 Different views finally prevailed in the Su- preme Court of the United States. It was there main- tained that, to render a judgment obnoxious to the Bankrupt Act, there must exist in the mind of the debtor a positive purpose or intent to defeat or delay the operation of the Act, or to accomplish something which the Act treated as unlawful ; that it would be immoral for him to oppose or impede his creditor by false or dilatory pleas ; that he was under no moral or legal obligation to file his petition in bankruptcy ; and, as the result of these propositions, that the debtor could not be presumed to have been actuated by an unlawful purpose, from the fact that he neither perpe- trated the wrong of defending against a just claim, nor made an application to the courts of bankruptcy, when he was under no obligation to make such application. 1 ' 1 In such cases the intent of the debtor is the turning-point : and what this intent was, must be determined from the consideration of all the attending circumstances. 17 While an unlawful in- tent is not to be inferred from mere "passive non-resistance to regular judicial proceedings," " undoubtedly very slight evidence of an affirmative character of the existence of a desire to prefer one creditor, or of acts done with a view to secure such preference, might be sufficient to invalidate the whole transaction. Such evidence might be sufficient to is Warren v. D. L. ct W. R. W. Co.. 7 B. R. 451 ; 5 Ch. L. X. 205 ; In re McGie, 2 Biss. 163; In re Heller, 3 Biss. 153; Wilson v. Brinkman, 2 B. R. 468; Buchanan v. Smith, 16 Wall. 277; 5 Ch. L. N. 277. 16 Wilson v. City Bank, 17 Wall. 489; 6 Ch. L. N. 149; 9 B. R. 97; Brit- ton v. Payen. 9 B. R. 445; Partridge v. Dearborn, 9 B. R. 474; Ilenkel- man v. Smith. 12 B. R. 121 ; 42 Md. 164; Loueheim r. Henszey, 77 Penn. St. 305. "Little v. Alexander, 21 Wall. 500; 7 Ch. L. N. 339; 12 B. R. 134. 8 ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. leave the matter to a jury, or to support a decree, because the known existence of a motive to prefer or to defraud the Bankrupt Act would color acts or decisions otherwise of no significance." 18 When a judgment is sought to be em- ployed to secure a preference forbidden by the Bankrupt Act, the usual and most convenient method of thwarting this purpose, and of litigating the issues necessarily in- volved, is by filing a bill in equity on behalf of the as- signee. 19 Sec. 4. Validity of Judgments Entered after the Filing of the Petition in Bankruptcy. — Actions pending in state courts do not abate by virtue of proceedings in bankruptcy by or against either of the litigants. 20 Section 5047 21 pro- vides that the assignee may, if he requires it, be permitted to prosecute or defend actions which, at the commencement of the proceedings in bankruptcy, are being prosecuted or defended by the bankrupt. This section clearly contem- plates that all pending actions shall proceed to judgment; but gives the assignee ample opportunity to protect all the rights which have vested in him by virtue of the assign- ment. If he does not interpose, the action will proceed to judgment in the same manner as though no proceedings in bankruptcy had been instituted. But, by section 5105, 22 a creditor who has proved his debt, is not allowed to main- tain any suit against the bankrupt therefor ; and all pro- ceedings already commenced are deemed to be discharged. By section 5106, 22 creditors whose debts are provable are not allowed to prosecute to judgment any action thereon, until the question of the bankrupt's discharge is determined; pending suits are to be stayed, on application of the bank- is Wilson v. City Bank, 17 Wall. 489; Beattie v. Gardner, 4 B. E. 323; 4 Ben. 479; see also 3 Cent. L. J. 651, referring to Kipley v. Sears, deci- ded by Judge Dillon; In re J. E. Baker, 14 B. R. 433; 14 A. L. J. 294. w Kellogg v. Russell, 11 B. R. 121; Warren v. Tenth N. B., 7 B. R. 481; 10 Blatch. 493. 20 in re Irving, 14 B . R. 289: Hewett v. Norton, 1 Woods, 68. 21 Sec. 16 of Act of 1867. -"-Sec. 21 of Act of 1867, contained similar provisions. ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. i) nipt, to await the determination of the question of the dis- charge, provided there is no unreasonable delay in endeav- oring to procure the discharge ; but, if the amount due is in dispute, the suit, by leave of the court of bankruptcy, may proceed for the purpose of ascertaining such amount. Thus, it will be seen that, in many cases, even where the pending proceedings in bankruptcy are properly brought to the attention of the state court, it must proceed to judg- ment ; and the judgment, when entered, must have the same validity as other judgments properly obtained. In the case of provable debts, the statute provides that the stay of proceedings shall be granted " upon the applica- tion of the bankrupt." 23 The assignee may, never- theless, obtain a stay of proceedings. 24 But it is evident that the court need not take judicial knowledge of the bankruptcy proceedings ; nor would it be proper for it to refuse to proceed in those cases where neither the assignee nor the bankrupt seeks the benefit of the proceedings in bankruptcy. 25 If an action has been stayed, the stay should be revoked if it appears that the bankrupt is guilty of unreasonable delay in seeking his discharge. 26 From the fact that the court, in which an action is pending, is not divested of its jurisdiction by bankruptcy proceedings in- volving either litigant, we infer that its judgments, given in the exercise of this jurisdiction, though founded in error, are not, on that account, void. The rendition of judgments against bankrupts, or their assignee, establishes either that the defendants waived their rights, or else that the court determined that the case was one in which it was proper to give the judgment entered. The judgment, if erroneous or irregular, should be corrected by appeal or by some appro- priate proceeding in the tribunal where it was entered. 23Rov. St., Sec. 5106; Sec. 21 of Act of 1S67. 24 Sampson v. Burton, 4B.K.1; 5 Ben. 32:». 25 Palmer v. Merrill, 57 Me. 2G; Stone v. Nat'l Bank, 39 Ind. 284. 26 In re Belden, 6 B. R. 443; 5 Ben. 47(3; Dingee v. Becker, 9 B. K. SOS; 31 Leg. Int. 156. 10 ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. Even where the suit is instituted in a state court subse- quent to the adjudication of bankruptcy, the judgment in such suit is not on that account void, but is binding upon all the defendants upon whom the summons to appear was served in the manner prescribed by law, 27 until they shall cause it to be vacated or reversed. Nor can a bankrupt who permits a judgment to be entered against him by default obtain an injunction to prevent its enforcement against him personally. 28 If an action is pending in a state court prior to the tiling of the bankrupt's petition, it will properly pro- ceed to judgment unless the bankrupt, or his assignee, dis- closes to the court the existence of the adjudication of bankruptcy.' 3 Even where an attachment on mesne process has been levied within four months prior to the tiling of the petition, and is therefore dissolved by the provisions of sec- tion 5044, 30 the assignee is not warranted in treating the court issuing, nor the officer serving, the attachment with contempt. He is not to seize the property, and by force wrest it from the possession of the officer of the state tri- bunal. He should go into that tribunal, allege and estab- lish the adjudication of bankruptcy and the assignment made in pursuance thereof, and ask that the attachment be dissolved, and that the officer be required to surrender pos- session of the property. 31 But, by section 5044, an assign- ment relates back to the commencement of the proceedings in bankruptcy, and, by operation of law, vests title in the -'■ In n Davis, 8 B. K. 167; 1 Saw. C. C. 260: In the Matter of Sacchi, 43 How. Pr. 250; Bradford v. Bice, 102 Mass. 472: McKay v. Funk. 13 B. B. 334; Brown v. Gibbons, 13 B. B. 407. 28 In re Tooker. 14 B. B. 35; Bellamy v. Woodson, 4 Ga. 175; Steward v. Green, 11 Paige, 535. 29 Dunbar v. Baker. 104 Mass. 211 ; Doe v. Childress. 21 Wall. 643; 7 Ch. L. X. 201: Palmer v. Merrill. 57 Me. 26: Hewett v. Norton, 13 B. B. 276: Yalliant v. Childress. 11 B. B. 317; Flanagan v. Pearson. 14 B. B. 37 : Lenihan v. Haman. 6 Ch. L. X. 63: 55 X. Y. 652; 8 B. B. 557; Eys- ter v. Gaff. 13 B. B. 546; 8 Ch. L. X. 177 : 1 Otto. 521 ; 3 Cent. L. J. 250. so See. 14 of Act of 1867. ? -iKent v. Downing. 44 Ga. 116; Johnson v. Bishop, 1 Woolw. 324; 8 B. B. 533; Huber v. Klauberg, 4 Cent. L. J. 342. ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. 11 assignee, though the property is attached on mesne process ; and dissolves any such attachment made within four months prior to the commencement of the proceedings in bank- ruptcy. Under the operation of this section, the dissolu- tion of attachments is so unequivocal, that a sale, made un- der an attachment not four months old, is probably void, althoutrh no application was ever made for the release of the property from the operation of the writ. 3 ' 2 If the at- tachment was levied more than four months prior to the tiling of the petition, the court issuing the writ may, after the adjudication of bankruptcy, enter a judgment author- izing the sale of the property as levied upon ; and a sale in pursuance of such judgment will relate back to the levy, and transfer title free of the claims of the bankrupt's as- signee. 33 Sec. 5. Enforcing Judgments Entered Subsequent to the Filing of the Petition in Bankruptcy .— In the preceding section we have shown that a judgment, entered against a bankrupt after the commencement of the proceedings in bankruptcy, is not, for that reason, void. Kelief against such a judgment can usually be obtained by the bankrupt, on prompt application, by proving a state of facts which is sufficient to show that he was not guilty of laches in not pleading the pending proceedings in bankruptcy, for the purpose of preventing the entry of the judgment. 34 Thus, he may, on motion, obtain a perpetual stay of execution, if he can make it appear to the court that, when his petition was filed, the action against •"-'Bracken v. Johnson, 4 Cent. L. J. 9; 15 B. R. 106. 33 Doe v. Childress, 21 Wall. 643 ; 7 Ch. L. N. 201 ; Valliant v. Child- ress, 11 B. R. 317; Batehelder v. Putnam, 13 B. R. 404; Munson v. B. H. & E. R. R. Co., 14 B. R. 173; Stoddard v. Locke, 43 Vt. 574; 9 B. R. 71; Daggett v. Cook, 37 Conn. 341; Bates v. Tappan, 99 Mass. 376; 3 B. R. 647; Leighton v. Kelsey, 57 Me. 85; 4 B. R. 471; Bowman v. Hard- ing. 56 Me. 559; 4 B. R. 20; May v. Conrtnay, 17 Ala. L85; Johnson v. Collins, 116 Mass. 392; Rowe v. Page, 13 B. R. 366; 54 X. II. 190; Ma- son v. Warthens, 7 West Va. 532; Mnnson v. B. II. & E. R. R. Co., 14 B. R. 173. 34 N. H. Savings Bank v. Webster. 4S X. II. 21. 12 ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. him had proceeded so far that he had no opportu- nity to avail himself of the proceedings in bankruptcy for the purpose of staying such action. 35 If, however, he has been guilty of laches, relief will be denied. 36 Assuming that a judgment against a bankrupt, entered pending the bankruptcy proceedings, has been procured under such cir- cumstances that he is not entitled to its vacation, the next inquiry is for means of obtaining its satisfaction. 37 If an execution is issued, it is evident that it can not be levied upon any property which has vested in the assignee in bankruptcy, except when the judgment is but the means of enforcing some lien paramount to the title of the assignee. Property acquired subsequent to the filing of the bankrupt's petition can, no doubt, be levied upon. The most difficult, as well as the most unsettled, question concerning judg- ments entered pending proceedings in bankruptcy, is this : Can such judgments, or the causes of action on which they are based, be proved as claims against the estate of the bankrupt? If the cause of action was not provable as a claim, then certainly the judgment, though entered pend- ing the proceedings in bankruptcy, can not be so proved. 38 But usually the cause of action is of such a nature that it did, before the entry of the judgment thereon, constitute a provable claim against the estate of the bankrupt. No claim can be allowed, unless it was due or existing " at the time of the commencement of proceedings in bankruptcy." 39 35 Monroe v. Upton, 50 N". Y. 593. 36 Monroe v. Upton, 50 N". Y. 593; Valkenburgh v. Dederick, 1 Johns. Ca. 133; Cross v. Hobson, 2 Cai. Ca. 102; Manwarring v. Kouns, 35 Tex. 171; Park v. Casey, 35 Tex. 536. 37 We assume in this section that a judgment, entered after the filing of the bankrupt's petition, is not affected thereby, and is not released by his subsequent discharge. Whether this assumption is correct or incor- rect, will be considered in the section on the judgments affected by a discharge. 88 Black v. McClelland, 12 B. K. 481; Kellogg v. Schuyler, 2 Den. 73; In re Hennocksburgh, 7 B. K. 37; 6 Ben. 150; Ellis v. Ham, 2S Me. 3S5. 3 » R. S., sec. 5067. Sec. 19 of the Act of 1867, Avas somewhat different in its terms. ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. 13 A judgment, entered subsequently to those proceedings, cer- tainly can not be due nor existing prior thereto. Moreover, it is well known that a judgment usually, for most purposes, is a complete extinguishment of the cause of action out of which it grew. The latter is drowned or merged in the former. 40 Hence, in several cases, courts, proceeding to what seems to us logical conclusions from conceded legal principles, have affirmed that judgments, entered pending bankruptcy proceedings, are new debts not existing at the commencement of such proceedings, and, therefore, not provable as claims therein ; "und, farther, that the causes of action, resulting in such judgments, are thereby merged and extinguished, and thus are as effectually deprived of their capacity to be proved as claims, as if they had been terminated by actual payment. 41 It is also urged that "the creditor, by taking judgment, and so changing the form of his debt, and securing to himself the benefit of conclusive and permanent evidence of it, and an extension of the period of limitation of an action thereon, is held, on his part, to have elected to look to the debtor personally, and to abandon the right to prove against his estate ; and the debtor, on the other hand, who might have protected him- self by moving the court in which the action was pending for a continuance, in order to afford him an opportunity to obtain and plead a certificate of discharge, is held, by omit- ting to make such a motion before judgment, to have waived the right to set up his certificate against the plaint- iff's claim ; and therefore the rights of both parties must be governed by the judgment which the one has moved for, and the other has Buffered to be rendered." 42 But, perhaps, 40 Freeman on Judgments, chapter XI. « Bradford v. Rice, 102 M;;<~. 172; 3 Am. Rep. 4S3; Holbrook v. Foss, 27 Me. 441: Cutter v. Evans. 115 Mass. 27; In re D. B. Williams, 2 B. R. 22'.); 3 A. L. Reg. 374; 1 E. T. B. 107: Pik>' v. McDonald, 32 Me. 418; In re A. S. Mansfield, 6 B. R. 388; In re Gallison, •"> B. R. 353; 2 L. T. B. 105. 42 Bradford v. Rice, 102 Mass. 47:!: :! Am. Hep. Is:'.; Sampson v. I 'lark. 2 Cush. 173; Woodbury v. Perkins, •"> Cush. SO. 14 ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. the authorities slightly preponderate in favor of the posi- tion that the taking of a judgment, pending proceedings in bankruptcy, does not' prevent the plaintiff from proving his claim against the bankrupt's estate. 43 These authorities do not agree whether it is the judgment or the original debt that must be proved, though they concur in excluding from the provable claim the costs of entering the judgment. On the one side it is said that, because the original debt is merged, the judgment must be proved. 44 On the other side, it is claimed that, because the judgment had no exist- ence at the date of the bankruptcy, it is the original cause of action that the creditor must rely upon as a claim against the bankrupt's estate. 45 The fact that those who insist, that a provable debt is not waived or extinguished as a claim against the bankrupt's estate by taking a judgment thereon pending the bankruptcy proceedings, are unable to concur in any common defense of their position, is, in our judgment, an indication that the position itself is un- tenable in principle. If this position shall ultimately pre- vail, as is altogether probable, the result must be recog- nized as one of the frequent triumphs which considerations of hardship and inconvenience win over abstract principles. What has already been said concerning judgments pend- ing bankruptcy proceedings must be understood as apply- ing to those cases only which are prosecuted without leave of the courts of bankruptcy. When leave to proceed by action is sought and obtained, the purpose of the action is confined to ascertaining the amount due to the creditor ; and the amount thus ascertained may, by an express stat- utory provision, be proved as a claim in bankruptcy. 46 « Monroe v. Upton, 50 N". Y. 593; Clark v. Rowling, 3 N. Y. 216; Harrington v. McNaughton, 20 Vt. 293 ; Downer v. Eowell, 26 Vt. 397. 44 In re Crawford, 3 B. E. 698; 1 L. T. B. 211; 3 L. T. B. 169; In re Stephens, 4 B. R. 367; 4 Ben. 513; 2 L. T. B. 121. 45 In re Stephen Brown, 3 B. R. (Quart.). 145; 5 Ben. 1; In re L. H. Rosey, 8 B. R. 509; 6 Ben. 507. 46 R. S.. Sec. 5106; Sec. 21 of Act of 1867. ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. 15 Sec. 6. Proceedings by Execution pending Proceedings in Bankruptcy. — By Section 5105 47 of the Kevised Stat- utes, if a creditor proves his debt or claim, "all proceedings already commenced, or unsatisfied judgments already ob- tained thereon against the bankrupt, shall be deemed to be discharged and surrendered thereby." The discharge here spoken of is evidently not an extinguishment, but merely a suspension of the right to proceed upon the debt. If a discharge be refused, or the proceedings terminate without a discharge, or if the debt be one against which the dis- charge does not operate, then it is evident that the debt may be resuscitated and become susceptible of enforcement. If a judgment is proved as a claim against a bankrupt, it is evident that no steps can without leave of the court, pend- ing the bankruptcy proceedings, be properly taken to pro- cure its satisfaction out of his assets. And if any levy should be made, no doubt it would be vacated on applica- tion to the court issuing the writ. 48 If the judgment cred- itor does not prove his judgment as a claim, the Bankrupt Act, so far as we can discover, does not prohibit him from issuing execution pending the proceedings in bankruptcy. An execution would, however, probably prove unproduct- ive, unless issued for the enforcement of some lien anteda- ting the bankruptcy. No levy could be made on the estate of the bankrupt ; for that, by operation of law, vests in the assignee at the date of the filing of the debtor's petition. And, in any event, it is probable that a stay of proceedings would be granted, on application to the court issuing the writ, to allow the defendant an opportunity to obtain his discharge, if it appeared that said discharge would, when obtained, release the debtor from the particular judgment sought to be asserted against him. If, however, an execu- tion issues and is levied prior to the proceedings in bank- ruptcy, the judgment creditor is entitled to proceed unless enjoined from so doing. If the judgment is one on which « Sec. 21 of Act of 1867. ^Dingee v. Becker, 9 B. E. 50S; 31 Leg. Int. 156. 16 ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. an execution against the person of the defendant may issue,, he is not liable to arrest, "unless the same is founded on some debt or claim from which his discharge in bankruptcy would not release him." 49 With respect to the judg- ments under which execution may issue against the person of the debtor, the rule seems to be that, if the defendant is under arrest when the bankruptcy proceedings are institu- ted, there is no means by which, pending those proceedings, he can procure his release through the operation of the Bankrupt Act, 50 and that, on the other hand, if he is not under arrest when those proceedings are instituted, he is entitled to exemption during their pendency, except when pursued for some ' ' debt or claim from which his discharge in bankruptcy would not release him." 51 It has been held, and, as we think, with great propriety, that the application for release from arrest should first be made to the court under whose writ it was made. 5 ' 2 But the courts of bankruptcy are not inclined to accede to this proposition, and are in the habit of themselves adjudicating upon the lawfulness of the arrest, and granting releases where they think proper, without first compelling resort to the state courts. 53 Whether the application for the release of a bankrupt from arrest under execution be made to a state or to a federal court, both he and the plaintiff are bound by the proceedings in the court issuing the writ. If, from those proceedings taken as a whole, it appears that the claim is one from which his dis- charge in bankruptcy would not release him, he will not be set at liberty. In other words, neither party will be al- 48 Rev. Stats., sec. 5107; Sec. 26 of Act of 1867. 50 In re Walker, 1 B. E. 318; 1 Lowell. 222; Hazleton v. Valentine. 2 B. R. 31 ; 1 Lowell, 270; Minor v. Van Xostraud, 4 B. R. 10S; 1 Lowell, 458. si Sec. 5107; In re Wiggers, 2 Biss. 71; In re Patterson, 1 B. R. 307; 2 Ben. 155; In re Mifflin, 1 Penn. L. J. 146; Horter v. Harlan, 7 B. R. 238; 29 Leg. Int. 229; In re Devoe, 2 B. R. 27; 1 Lowell, 251 : 1 L. T. B. 90; Usher v. Pease, 116 Mass. 440. 52 In re M. O'Mara, 4 Biss. 506; In re Migel. 1 B. R. 4S1. &In re Williams & McPheeters. 11 B. R. 145; 7 Ch. L. N. 49; In re Glaser, 1 B. R. 366; 2 Ben. 180; 1 L. T. B. 57; In re Borst, 2 B. R. 171; In re Valk, 3 B. R. 278; 3 Ben. 431; In re Simpson. 2 B. R. 47. ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. 17 lowed to contest the matters which must have been once determined in the original action. 84 Sec. 7. Judgments not Released by Proceedings in Bank- ruptcy. — In considering this question, attention must be directed to sections 5117, 5118 and 5119 of the Revised Statutes. The first-named section declares that " no debt created by the fraud or embezzlement of the bankrupt, or by his defalcation as a public officer, or while acting in any fiduciary character, 65 shall be discharged by proceedings in bankruptcy." The claim has sometimes been made that, by the entry of a judgment, the original cause of ac- tion is so merged that it can not be referred to for the pur pose of giving character to the judgment, and taking- such judgment outside of the operation of the bankrupt's discharge. But the better opinion is that the doctrine of merger can not prevail to this extent. " Whenever the debt, no matter whether it be in the shape of a judgment or in any other form, was created by fraud, had its root and origin in fraud, there it is not to be discharged. To hold that the recovery of a judgment, in an action where the gravamen of the complaint is fraud, condones that very fraud, by so merging the original claim that the judgment can not be said to be a debt created by the fraud set out in the complaint as the ground for recovering the judgment, would fritter away entirely the good sense and plain inten- tion of the 33d section." 50 If a judgment is shown by competent evidence to be founded on any of the causes of action specified in section 5117, then the defendant contin- ues liable, notwithstanding his discharge. 57 The competent 5*2>i re Pettis, 2 B. K. 44; 7 A. L. Keg. G95; In re Valk. 3 B. R. 278; 3 Ben. 431; In re Devoe, 2 B. R. 27; 1 Lowell, 251; 1 L. T. B. 90; In re Kimball, 2 B.R. 204, 354; 2 Ben. 554; 6 Blatchf. 292; Lire Robinson, 2 B. R. 342; 3G How. P. 176; 6 Blatchf. 253; 2 L. T. B. IS; Cutter v. Dingee, 14 B. R. 294. 55 Sec. 33 of Act of 1867. 56 in re Patterson, 1 B. R. 307; 2 Ben. 155. The 33d section referred to in this decision corresponds with section 5117 of the Revised Statutes. 57 Warner v. Cronkhite, 15 B. R. 52; 8 Ch. L. X. 17; In re J. W. Sey- 2 18 ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. evidence by which to show the true foundation of the judg- ment must, Ave think, be limited to the record in the case in which the judgment was rendered. 58 Both parties ought to be prohibited from showing any facts inconsistent with the record. 59 A judgment, not conclusive against the de- fendant by the laws of the state where it was entered, so as to estop him from denying that the debt was created by fraud, is released by his discharge, unless it can be shown that such debt was founded in fraud ; and whether this showing can be made by proof outside of the record is not fully settled. 60 If a plaintiff, having a cause of action in fraud, waives the fraud and proceeds to obtain judgment as upon a contract, he can not thereafter avoid the defendant's discharge by showing that the debt was created by fraud. 61 Section 5118 62 of the Revised Statutes provides that "no discharge shall release, discharge, or affect any person liable for the same debt for or with the bankrupt, either as partner, joint contractor, indorser, surety or otherwise." The signification of this section is too obvious to require any explanation. By it, proceedings in bankruptcy against one judgment debtor leave the judgment in full force against his co-debtors. 63 Section 5119 of the Revised Statutes 64 further limits the operation of discharges in bankruptcy to such " debts, claims, liabilities and demands " as were or might have mour, 6 Int. Kev. Kecord, 61 ; In re Whitehouse, 4 B. R. 63 ; 1 Lowell, 429; Whitaker v. Chapman, 3 Lans. 155; In re Patterson, 1 B. R. 307; 2 Ben. 155; In re W. E. Robinson, 2 B. R. 342; 6 Blatchf. 253; Flana- gan v. Pearson, 14 B. R. 37; 42 Tex. 1 ; Homer v. Spelman, 78 HI. 206. 58 See cases just cited. 59 Z» re J. S. Wright, 2 B. R. (Quart.) 57; Palmer v. Preston, 45 Vt. 154; 12 Am. R. 191 ; ; Flanagan v. Pearson, 42 Tex. 1 ; 14 B. R. 37 ; In re Robinson, 2 B. R. 342; 6 Blatchf. 253. go Shuman v. Strauss, 52 N". Y. 404; 10 B. R. 300; 34 N. Y. Super. Ct. 6. 61 Palmer v. Preston, 45 Vt. 154; 12 Am. R. 191. 62 Sec. 33 of Act of 1867. 63 Linn v. Hamilton, 34 N. J. L. 305; In re Levy, 1 B. R. 220; 2 Ben. 169. 64 Sec. 34 of Act of 1867. ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. 19 been proved against the estate in bankruptcy. By this section, all judgments provable in bankruptcy are released, unless they fall within the prohibitions of section 5117 or 5118. Hence, every provable judgment founded in tort is released by the bankrupt's discharge, unless the tort is within the provisions of section 51 18. 65 The chief ques- tion arising in regard to judgments under section 5119 of the Revised Statutes is, whether judgments entered ponding the proceedings in bankruptcy, on causes of action existing prior to such proceedings, may be treated as provable as claims against the estate of the bankrupt. The question has already been considered in section five. It was there shown to be involved in insoluble doubt. A like doubt exists in regard to the effect of a discharge upon such judgments. All that can be said is, that in many courts such judgments are re- garded as within the scope of the discharge; 66 while, in probably an equal number of courts, the discharge is treated in such circumstances as entirely inoperative. 67 If an action be pending against a bankrupt before or during the exist- ence of the proceedings in bankruptcy, and a judgment be entered therein after the granting of his discharge, such discharge does not release the judgment. GS The entry of a judgment against a defendant necessarily implies that he is then liable for the amount of such judgment. If, at a sub- sequent date, he undertakes to show that by some means the cause of action against him terminated before the entry of the judgment, he tenders an issue which ought not to be made the subject of inquiry as long as the judgment re- mains in force. " The obstinacy with which litigants press 65 In re Wiggers, 2 Biss. 71; Manning v. Keyes, 9 R. I. 224: Comstock v. Grout, 17 Vt. 512; In re Comstock, 22 Vt. 642. 66 Harrington v. MeXanghton, 20 Vt. 293; Dresser v. Brooks. 3 Barb. 429; Johnson v. Fitzhugh, 3 Barb. Ch. 360; McDonald v. Ingrahani. 30 Miss. 389; Clark v. Rowling. 3 N. Y. 216; Rogers v. Ins. Co.,1 La. Ann. 161 ; Dick v. Powell, 2 Swan, 632. 67 Bradford v. Rice, 102 Mass. 472; 3 Am. Rep. 483; Ellis v. Ham. 28 Me. 385; Kellogg v. Schuyler, 2 Den. 73; Uran v. Houdlette, 36 Me. 15; Roden v. Jaco, 17 Ala. 344. esHollister v. Abbott, 31 N. H. 442; Rees v. Butler, IS Mo. 173. 20 ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. their claims upon the attention of courts, is such that it is not uncommon for matters once fully determined to be again made, or at least attempted to be made, the subjects of judicial inquiry. Sometimes, the circumstances attend- ing the former decision are such as to render the application of the law of res judicata apparently a matter of great in- justice. Hard cases have been characterized as the quick- sands of the law. Such cases are quick-sands in which the law of res judicata sometimes sinks so far, that the judges are entirely unable to see it, or even to remem- ber it. Generally, however, such is not the case ; and the instances are comparatively few, in which any cause of ac- tion or matter of defense is allowed to prevail, where it is inconsistent with the facts necessary to uphold any previous adjudication between the same parties." 69 If a judgment debtor undertakes to show that the judgment ought not to have been entered against him because of a discharge, or of pending proceedings in bankruptcy, then he offers to re- open an issue which either was litigated or ought to have been litigated prior to the rendition of the judgment. If the issue was in fact presented and determined, then he is un- questionably bound b} r that determination. If, through his neglect, it was not presented for determination, he ought equally to be bound by the judgment against him and pre- cluded from asserting his discharge. If, without fault or laches on his part, he failed to present this issue, then he ought to take such proceedings as, by opening the judg- ment, will enable him to present it. Otherwise he ought to be held liable to satisfy the judgment against which he makes no complaint. Sec. 8. Judgment and Execution Liens are not Extin- guished by Bankruptcy. — When a judgment is in existence against a bankrupt, the judgment creditor will seek to make it productive by proceeding either in the court of bank- ruptcy or in the court where it was rendered ; or it may happen that circumstances will arise making it proper to 69 Freeman on Judgments, sec. 284a. See Ibid., sees. 285 to 289. ENFORCEMENT OF JUDGMENTS AGADTOT BANKRUPTS. 21 proceed in both courts. If the judgment is not :i lien on the bankrupt's estate, or has not been followed by an exe- cution or lew constituting a lien, it is no more than a sim- ple unpreferred claim ; and, if the plaint ill' wishes to secure its payment out of the assets in the hands of the assignee, he must present it and procure' its allowance in the same manner as other unsecured claims. It is only when a judg- ment is a lien, or the foundation upon which a lien rests, that its assertion is likely to call for special attention or to occasion special resistance in the bankruptcy court. Let us nosv inquire when a judgment must be treated as a valid lien, or as the foundation of a valid lien, against the estate of the bankrupt. All liens are preserved in bankruptcy, 70 except those based on attachments on mesne process levied within four months before the filing of the petition, and those which can be avoided by showing that they were procured or preferred with a view of giving the preference prohibited by sections 5021 and 5128, to which reference has already been made. But no valid lien against the estate of a bankrupt can be created after such estate has, in contemplation of law, vested in his assignee. And the title of the assignee, by virtue of the provisions of section 5044, relates " back to the commencement of the proceedings in bankruptcy. Every judgment 71 or execu- ro In re Hambright, 2 B. R. 49S; 2 L. T. B. 61; 1 Ch. L. N. 201; Aus- tin v. O'Reilly, 2 Cent. L. J. 455 ; House v. Swanson, 7 Heisk. 32 ; Haugh- ton v. Eustis, 5 Law Rep. 505; In re Angler, 4 B. R. 619; 10 A. L. Reg. (N. S.) 190; 1 L. T. B. 4S; In re Hester, 5 B. R. 285; In re X. Y. M. S. Co., 2 B. R. 74; In re W. H. Wiley, 4 Biss. 171 ; In re Perdue, 2 B. R. 183; 2 West. Jur. 279; The Ironsides, 4 Biss. 51S; Parker v. Muggridge, 2 Story. 334; Fletcher v. Morey, 2 Story. 555; In re Wynne, I B. R. 23; 2 L. T. B. 116; 9 A. L. Reg. (X. S.) 627: Avery v. Hackley. 20 Wall. 407; Phillips v. Bowdoin, 14 B. R. 43; Hatcher v. Jones. 14 B. R. 387; Barron v. .Morris, 15 B. It. 371; Wilcox v. L'ollanl. 9 Ch. L. X. L80. TiMeeks v. Whatley. 10 B. R. 501; Phillips v. Bowdoin, 14 B. R. 13; Winship v. Phillips, 14 B. R. 50; In re Smith and Smith, 1 B. R. 599; 2 Ben. 122; 1 L. T. B. 112; Catlin v. Hoffman, 9 B. R. 342; 2 Saw. C. C. 486; Witt v. Hereth, S Ch. L. X. 41; 13 B. R. 106; Webster v. Wool- bridge, 3 Dill. 71 : In re Cook, 2 Story C. C. 376: Partridge v. Dearborn, 9 B. R. 474; Haworth v. Travis. 13 B. R. 145; Livingston v. Livingston, 22 ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. tion n lien, or lien created by the levy of an execution, 73 which, anterioigto the commencement of the proceedings in bank- ruptcy ,?was a lien against the estate of the bankrupt, con- tinues in force against such estate in the hands of the as- signee, unless he can show that it was procured or suffered to give a preference forbidden by the Bankrupt Act. Sec. 9. Enforcing Judgment and other Liens in Courts of Bankruptcy . — When a judgment creditor has either of the liens specified, in the preceding section of this article, and desires to obtain the benefit thereof by the aid of the court of bankruptcy, he should first prove his claim as a secured creditor. 74 He may then, by section 5075, be ad- mitted as a creditor for the balance of the debt after de- ducting the value of the property subject to his lien, to be ascertained by agreement between him and the assignee, or by a sale thereof ; or he may release his claim to the assignee and prove his whole debt ; or he may purchase the assignee's right of redemption ; or he may apply, at any time after the appointment of the assignee, to the court to have the property sold and the proceeds applied to the sat- isfaction of his claim. 75 The assignee may apply to the court and procure an order authorizing him to sell the property, either subject to or free from the lien. 76 In case 2 Cai. Cas. 300; In re John McGilton, 7 B. E. 294. But if the judgment is not, at the commencement of the bankruptcy proceedings, a perfect and vaiid lien by the laws of the state, it is, of course, no lien against the estate of the bankrupt. In re Mcintosh, 2 B. B. 506; In re Mebane, 3 B. R. 347; In re Cozart, 3 B. R. 508. 72/w re Weeks, 4 B- R- 364; 2 Biss. 259; Wilson v. Childs, 6 Ch. L. N. 27; Horter v. Harlan, 5 Ch. L. X. 374; Witt v. Hereth, 8 Ch. L. N. 41. Contra, In re Tills & May, 11 B. R. 214. 73 In re Kerr, 2 B. R. 388; 2 L. T. B. 39; Swope v. Arnold, 5 B. R. 148; In re Hughes, 7 Ch. L. N. 162; In re Bernstein, 1 B. R. 199; 2 Ben. 44; 34 How. Pr. 289; Haughey v. Albin, 2 B. R. 399; 2 Bond, 244; 2 L. T. B. 47; Beers v. Place. 4 B. R. 159; Armstrong v. Rickey, 2 B. R. 473; 1 Ch. L. N. 145. 74 In re Bigelow, 1 B. R. 632; 2 Ben. 480; 1 L. T. B. 95. 75 In re Grinnell, 9B. R. 29; In re T. R. Stewart, 1 B. R. 278. 76 In re Barrow, 1 B. R. 4S1; 1 L. T. B. 63; In re McClellan, 1 B. R. 289; In re National Iron Co., S B. R. 422; 20 Pitts. L. J. 208; 30 Leg. Int. 272; Sutherland v. L. S. C. Co., 9 B. R. 298; 1 Cent. L. J. 127. ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. 23 the assignee wishes to sell free of all liens, he should give the lien-holders notice of his intention to apply to th<' court for authority so to do." The funds realized from a sale made free of liens must he treated as subject to the same liens from which the property was freed for the purpose of being sold. Property sold by the assignee will be subject to all liens from which it does not clearly appear to have been freed by the order of the court. 7 " Sec. 10. Gases where Creditor may Proceed, in State Court after Presenting his Judgment as a claim against the Bankrupt. — The only provision of the statute in express terms forbidding the execution of judgments pending pro- ceedings in bankruptcy is to be found in section 5105. By that section, " no creditor proving his debt or claim shall be allowed to maintain any suit at law or in equity therefor against the bankrupt, but shall be deemed to have waived all right of action against him ; and all proceedings already commenced or unsatisfied judgments already obtained there- on against the bankrupt shall be deemed to be discharged and surrendered thereby.'.' While a portion of this section seems, when considered by itself, to discharge, uncondi- tionally, those judgments which are proved as claims against the estate of the bankrupt, yet it is evident from the whole section, and from the general purpose and result of the proceedings in bankruptcy, that a judgment is not, by be- ing proved against the bankrupt, so extinguished that it can not under any circumstances thereafter be enforced by execution. The judgment creditor may purchase the as- signee's right of redemption, or he may ask to be admitted as a creditor for so much only of his judgment as remains unpaid after deducting the value of the property as ascer- tained by agreement between him and the assignee ; or the property may, by order of the court of bankruptcy, be sold subject to the judgment or execution lien; or the "Foster v. Ames. 2 B. E. 455; 1 Lowell, 313; Ray v. Brigham, L2 B. R. 145; 25 La. An. 600; Meeks v. Whatley, 10 B. R. 498. 78 In re McGilton, 7 B. R. 294; 3 Biss. 144; 5 Ch. L. N. 1. 24 ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. property subject to the lieu may have been sold by the bankrupt prior to the filing of his petition, or may, from some other cause, not vest in the assignee. In all these cases it is evident that the creditor must, where such a course is necessary to realize the fruits of his lien, be au- thorized to proceed in the state courts. 79 Whether the proving of a claim against a bankrupt's estate, without dis- closing that it is secured, is a waiver of the security is not yet settled. A majority of the judges are certainly of the opinion that it is a waiver. 80 It has been also held " that a creditor who has a lien upon the property of his debtors, by virtue of a judgment, execution and levy, or as secured by garnishment, filing a petition for adjudication of bankruptcy without reference to such lien or security, thereby waives and relinquishes the same, and stands be- fore the court as an unsecured creditor." 81 The reasoning upon which these decisions rest is that, by concealing his security, the creditor may perpetrate a fraud on the other creditors, by obtaining in bankruptcy a dividend on his whole debt, when, if the truth were known, he could obtain a dividend only on the balance after deducting the value of the security. If from the proofs presented it appears that the debt is secured, no concealment can be justly charged on the creditor, and he ought not to be held to have waived his lien, unless he does so in express terms ; 8 ' 2 and the Su- preme Court of Iowa has held that the proving of a debt "as a general claim " will not be deemed a waiver of the security, unless it appears affirmatively that the creditor ™ Phillips v. Bowdoiu, 14 B. E. 43; Wiuship v. Phillips, 14 B. E. 51; Jones v. Lellyett, 39 Ga. 64; Douglas v. St.L. Z. Co., 56 Mo. 388; King v. Bowman. 24 La. An. 506; Cummings v. Clegg, 14 B. R. 49; Seibel v. Simeon, 62 Mo. 255. soHaxtun v. Corse, 2 Barb. Ch. 506; 4 Echv. Ch. 585; Stewart v. Isi- dor, 1 B. E. 485; 5 Abb. Pr. (N. S.), 68; In re Stansell, 6 B. E. 183; In re Granger & Sabin, 8 B. E. 30; In re Jaycox & Green, S B. E. 241; Hoadley v. Cawood, 40 Inch 239; Briggs v. Stephens. 7 L. E. 281 ; Heard v. Jones, 56 Ga. 271. ^In re Bloss, 4 B. E. 147; 2 L. T. B. 126. &Un re Brand, 3 B. E. 324; 2 L. T. B. 66. ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. 25 tailed to disclose the existence of his security. 88 By sec. 5075 ^ of the Revised Statutes a secured creditor may, on releasing or conveying his claim to the assignee, be admit- ted to prove his whole debt. Conceding that, under this section, the proof of a secured claim as unsecured entitles the assignee to be subrogated to the rights of the creditor, the Supreme Court of Massachusetts has held thai only the assignee can invoke the benefit of the rule ; and, therefore, that the creditor can, after so proving a claim secured by mortgage, enforce his lien against the mortgagee. 86 Sec. 11. Enforcing Judgments never Presented to the Court of Bankruptcy. — The judgments referred to in the preceding section as being discharged or surrendered, em- brace those only which have been proved against the bank- rupt, or which are based upon claims which have been so proved. Judgments in actions for recovery of specific property, real or personal, instituted prior to the filing of the petition, may be enforced by the form of execution ap- propriate to confer the relief granted thereby. The assignee is bound by the doctrine of Us pendens to the same extent as any other person acquiring title pendente lite J* Or, in other words, he acquired the estate of the bankrupt, subject to pending suits affecting the title thereto. We come now to a more difficult question, that of the rights of a judgment creditor who does not choose to present his claim against the estate of the bankrupt, preferring rather to seek its enforcement in the state courts. If such cred- itor had no valid lien against such estate when the petition was filed, then it is clear that he has no temptation to pro- ceed in the state courts ; for he can not there create any lien or claim against the estate after the commencement of the proceedings in bankruptcy. But if he has a lien, 88 Hatch v. Seely, 13 15. R. 380. 84Sec. -Jo <,f An of L867. 85Cook v. Farrington, U»i Mass. 212. seBanin v. Stern, 1 Rich. (X. S.) 415; Eyster v. Gaff, L3 B. B. 546; S Ch. L. X. 177; 1 Otto. 521 ; U Cent. L. .1. 250. 26 ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. valid in both the national and state courts, he may desire to enforce it in the latter rather than in the former. May this desire be gratified? and, if so, when and how? Many cases may be found in which the general assertion is made that all liens against the estates of bankrupts must be en- forced in the courts of bankruptcy. 87 There is certainly nothing in the statute which directly points to this result. The statute nowhere declares that the adjudication of bank- ruptcy shall, of itself, operate as a prohibition against the assertion of pre-existing Mens in the state courts. When the courts of bankruptcy assumed that the mere adjudication of bankruptcy brought the bankrupt and all his assets so exclusively within their jurisdiction that no one could law- fully, even in the absence of any special inhibition, pursue his legal remedies elsewhere, they arrogated an authority which was founded rather upon their notions of what the Bankrupt Act ought to have done, than upon what it pro- fessed to do. The Supreme Court of the United States has, however, on each recurring opportunity, curbed the unsup- ported pretensions of the subordinate tribunals. It has insisted upon that interpretation which, without sacrificing the objects of the statute, would concede due respect both to the state and the national authorities, and would avoid needless collision between them. These principles have long been established, " that where the jurisdiction of a court, and the right of a plaintiff to prosecute his suit in it, have once attached, that right can not be arrested or taken away by proceedings in another court ; " ^ and that where prop- erty has been taken into the possession of the officers of a court, it does not allow such possession "to be disturbed 87 Blum v. Ellis, 73 ST. C. 293; 13 B. E. 345; 8 Ch. L. N". 162; Taylor v. Bonnett, 38 Tex. 521; In re Bridgman, 2 B. E. 252; In re Bigelow, IB. E. 632; In re Ruehle, 2 B. E. 577; In re Frizelle, 5 B. E. 122; Stuart v. Hines, 6 B. E. 416; In re Hufnagel, 12 B. E. 556; In re Whipple, 13 B. E. 373; In re Brinkman, 7 B. E. 421; Davis v. Anderson, 6 B. E. 145; Boone v. Eevis, 44 Tex. 3S4. ss Peck v. Jenness, 7 How. U. S. 625 ; Payne v. Drewe, 4 East, 523 ; Tay- lor v. Carryl, 20 How. U. S. 5S3. ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. 27 by a party, whether claiming by title paramount or under the right which they were appointed to protect, as their posses- sion is the possession of the court." 80 By the proper applica- tion of these two principles, most of the questions of conflict between the state and national authorities concerning pro- ceedings against the estates of bankrupts may be correctly determined. If an action to enforce a lien against specific property is pending in a slate court when the petition in bankruptcy is filed, such court is not thereby divested of its jurisdiction over the action. In such a case, if the plaintiff proves his claim against the bankrupt, "the pro- ceedings already commenced" thereon are by section 5105 "deemed to be discharged." If, on the other hand, the plaintiff does not prove his debt in bankruptcy, the suit maybe stayed until the question of the defendant's discharge is determined, provided there is no unreasonable delay in endeavoring to procure it. 90 The assignee may also be admitted to defend the suit. But the state court can not be divested, through the action of the bankruptcy courts, of its ultimate right to determine that suit, and all the issues therein which it would have been competent to deter- mine if no petition in bankruptcy had been filed. 91 Hence, if an action to foreclose a lien and obtain the sale of prop- erty is pending when the proceedings in bankruptcy are commenced, it may lawfully continue to judgment ; and a sale under such judgment will vest a title in the purchaser, taking effect by relation at the inception of the lien, and thereby divesting the title of the assignee. This result will be accomplished, whether the assignee was made a party to the proceeding or not. He shares the same fate as any other person acquiring an interest pendente lite.' J - If the ®Taylor v. Carryl, 20 How. V . S. 594; Xoe v. Gibson, 7 Paige, 513. w See Sec. 5106. 9i Sampson v. Burton, 4B.E.1: 5 Ben. 325 : Stone v. B. X. Bank, 39 Ind. 284; In re Clarke. 3 B. R. 491; 4 Ben. 88; Clark v. Binninger, 5 B. R. 255; 39 How. Pr. 363; In re Wynne. I B. R. 28; 2 L. T. B. 116; 9 A. L. Reg. (X. S.) 627. MEyster v. Gaff, 13 B. R. 546; 8 Ch. L. N. 177; 1 Otto. 521; 3 Cent. L. J. 250. 28 ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. state court has possession of property, either by its re- ceiver, 93 or by a sheriff under the levy of a valid execution, 94 its possession can not be disturbed. In the latter case the sheriff should proceed to sell the property, and turn over to the creditor so much of the proceeds as is necessary to sat- isfy the lien of the levy. 95 So, if the property be in the possession of an officer of the court under an attachment on mesne process levied more thau four months prior to the filing of the debtor's petition, the court should retain pos- session, enter a judgment for the sale of the property, and its officer should execute such judgment. 96 When, however, a state court has not the possession of the estate of the bank- rupt, but such estate is subject to a valid judgment or exe- cution lien, a more difficult question arises. In such a case it is claimed, with a great deal of force, that the property, by vesting in the assignee, becomes in custodia legist; and, therefore, upon well-settled principles, can not be sub- jected to any interference not sanctioned by the court of bankruptcy. 97 Where the property subject to the lien is ex- empt from the operation of the Bankrupt Act, 98 or has been sold by the debtor before filing the petition, 99 or, from any other cause, does not vest in the assignee, the claim that it 93 Davis v. R. R. Co., 13 B. K. 258; 1 Woods, GG1 ; Myer v. C. L. & P. W., 14 B. R. 9; Sedgwick v. Menck, 1 B. R. 675; G Blatchf. 15G; Apple- ton v. Bowles, 9 B. R. 354; 2 X. Y. Supr. Ct. 56S; 6 Ch. L. N. 192; In re Clark & Binninger, 3 B. R. 491 ; 4 Ben. SS. Contra, In re Whipple, 6Biss. 516; 13 B. R. 373. 9*Townsend v. Leonard, 3 Dill. 370; Bradley v. Frost, 3 Dill. 457; Marshall v. Knox, 8 B. R. 97; 16 Wall. 551; In re Smith & Smith, I B. R. 599; Wilson v. Childs, G Ch. L. X". 27; In re W. H. Shuey, 6 Ch. L. N. 248; In re Wearner, 8 B. R. 527; Allen v. Montgomery, 48 Miss. 101; Thompson v. Moses, 43 Ga. 383; O'Brien v. Weld, 2 Otto, SI. 95 Sharman v. Howell, 40 Ga. 257 ; 2 Am. Rep. 576 ; Parks v. Sheldon, 36 Conn. 466; 4 Am. Rep. 95, and the authorities in the last citation. 9 |; See citation No. 33. 97Marshon v. Haney, 12 B. R. 484; 4 B. R. 510; 1 Dill. 497; Davis v. Anderson, 6 B. R. 145; Turner v. The Skylark, 6 Ch. L. N. 239. 98Cummings v. Clegg, 14 B. R. 49; Robinson v. Wilson, 15 Kas. 595; Bush v. Lester, 15 B. R. 36. 99 Jones v. Lellyett, 39 Ga. 64; Winship v. Phillips, 52 Ga. 593. ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. 29 becomes^ custodia legishy virtue of the proceedings in bankruptcy is certainly unfounded. It may, therefore. In- sold under process issued out of a State court. So, after the proceedings in bankruptcy have terminated, either by the discharge 100 of the bankrupt, or by the refusal of such discharge, 101 we do not doubt that the creditor ma}' enforce his lien in the state court ; for in either of these cases ii is certain that the property, if ever in custodia legis, has ceased to be so. Except in the state of Louisiana, levies are made upon real estate without disturbing the possession of the defendant. 102 In fact, no authority for such disturb- ance exists until after the sale is made, and, in most ca-> s, not until the purchaser's title has become absolute by rea- son of the expiration of the statutory period allowed for redemption. The levy upon lands does not create any special property in the levying officer, as is the case when personalty is seized under execution. And we do not un- derstand that a levy upon real estate places it in the custody of the law in any of those states whose statutes give no authority for wresting it from the custody of the defendant. But we think it must be conceded that the levy of an exe- cution upon real estate confers authority upon the officer to proceed, notwithstanding the subsequent bankruptcy of the defendant, to make the levy productive by a sale of the property. 103 Where, however, no levy has been made prior to the filing of the petition, quite a number of au- thorities may be produced to support the proposition that a subsequent sale is void, though supported by a valid execu- tion or judgment lien. 104 Some of these authorities are wo Cole v. Duncan, 58 111. 176; Reed v. Bullington, 49 Miss. 223 ; n B. R. 408; Trnitt v.Truitt. 38 fad. L6; Pierce v. Wilcox, 40 fad. 70; Second N. B.v.N.S.B.of Newark, 7Ch. L.N. 70;11 B.R. 19; L4A.L. Beg. (N. S.) 281; Payne v. Able, I P.. R. 220;7 Bush, 344; Wicks v. Perkins, 13B. R. 280. Contra, Johnson v.Poag, 39 Tex. 92; Stemmonsv. Burford, / .352. WttDingee s. Becker, B. R. 508: :!1 !.<•-. Int. ir.c. lOSFxeeman OB Executions, sec 280. 108 Goddard v. Weaver, 6 B.R.440; Thompson v.Moses,43 Ga. ::-:'>: Maris v. Duron. 1 Brews. 428; Norton v. Boyd, '.'< Bow. I'. S. 426. i'» Davis v. Anderson, 6 B. R. 145; Turner v. The Skylark, 6 < !h. I.. X. 30 ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. founded upon the theory that the state courts have no power whatever to enforce a lien against the estate of a bankrupt ; and some upon the theory that, by virtue of the bankruptcy and the assignment in pursuance thereof, the property is in custody of the law. The iirst theory can not be sustained. Let us, therefore, proceed to examine the second. The title of the bankrupt is not divested by the filing of the petition, nor by. the adjudication of bankruptcy. 105 The judge or register must make a written transfer to the assignee. The assignee acquires no title to, nor authority over, any prop- erty not embraced in the transfer. ' " The assignment is not a precept issued by the court, but a conveyance of the bankrupt's property, giving the assignee the mere rights of ownership, but no authority or color of authority to take the property of strangers. 106 Hence, if he takes property which did not belong to the bankrupt, his acts are not those of an assignee, but those of a trespasser. 107 We shall show that the court of last resort, so far as it has expressed any opinion on the subject, considers the title of the assignee to be very similar to that of a grantee under a voluntary con- veyance. Thus, Mr. Justice Hunt, in delivering the opin- ion of the Supreme Court of the United States, in the case of Valliant v. Childress, 108 said: "The conveyance of the register operates as would, under ordinary circumstances, the deed of a person having the title, with two differences : first, it relates back to the commencement of the bankruptcy proceeding ; secondly, the register's conveyance dissolves any attachment that has been made within four months pre- vious to the bankruptcy proceedings." These views are sub- 239; Blum v. Ellis, 13 B. R. 345; 8 Ch. L. N. 162; Phelps v. Sellick, 8 B. R. 390; Stemmohs v. Burford, 39 Tex. 352. 105 Rev. Stats., sec. 5044. we Leighton v. Harwood. Ill Mass. 67; 15 Am. Rep. 4. i07Leighton v. Harwood, 111 Mass. 67; 15 Am. Rep. 4; Edge v. Par- ker, 8 B. & C. 697. As to remedy against U. S. Marshals in like cases, see Marsh v. Armstrong, 20 Minn. 81; Mollison v. Eaton, 16 Minn. 426; 10 Am. Rep. 150; Hill v. Fleming, 39 Ga. 662. 10811 B. R. 319. ENFORCEMENT OF Jl'DG.M KXTS VCAINST BANKRUPTS. 31 stantially identical with those subsequently expressed in the same court by Mr. Justice Miller, in the case of Eyster v. Gaff. 108 If the differences here suggested between a register's conveyance and that of* an ordinary conveyance by a person having the title arc the only differences that really exist, then it follows that the grantee takes title subject to its being divested by a sale under a pre-existing judgment or execu- tion lien against his predecessor in interest. If the lien be based on an attachment levied upon real estate over four months prior to the filing of the petition in bankruptcy, no doubt such real estate may be sold under a writ subsequently issued out of the state court. 110 We see no reason supporting such a sale, which does not apply with equal force to a sale under a judgment lien. In neither case is the property in the possession of the state court. In both cases the property is subject to a lien which is not extinguished by the bankruptcy of the defendant, and which needs no further levy to make it perfect. The Supreme Court of Pennsylvania has affirmed the right of the holder of a judgment lien to sell real estate pending proceedings in bankruptcy, although no levy had been made prior to the commencement of such proceedings. 111 This position is well fortified by the decisions made under the Bankrupt Act of 1841 ; 112 and we judge that it will in due time be equally well sustained by the judgment of the court of last resort declaring the true meaning of the pres- ent statutes of the United States. Sec. 12. Enjoining Proceedings in State Courts. — In what has been said in the preceding section about the right of judgment creditors to proceed in state courts, we have as- 109 8 Ch. L. X. 177; 13 B. R. 540; 1 Otto. 521 ; 3 Cent. L. J. 250. uoDoev. Childress, 7 Ch. L. N". 201; 21 Wall. 643 : Daggett v. Cook, 37 Conn. 341; Bates v. Tappan, 99 Mass. 376; 3 B. R. 647; Valliant v. Childress, 11 B. R. 319; Peck v. Jenneas, 7 Bow. U. S. 612. uiFehleyv. Ban-, 66 Penn. St. 196; Reeaer v. Johnson, 76 Penn. St. 313; 10 B. R. 467; see also Reed v. Bullington, 11 B. R. 40S; I'.i MNs. 223. "2 Savage v. Best, 3 How. U. S. Ill; McCance v. Taylor. 10 Gratt. 580; Russell v. Cheatham, 8 S. & M. 703; Talhert v. Melton. 9 S. & M. 27. 32 ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. sumed that such right was not exercised in defiance of any direct prohibition from the courts of bankruptcy. We shall now consider the power and propriety of the last-named courts enjoining proceedings in the first-named. The express authority granted by the Bankrupt Act to issue injunctions is that conferred by section 5024 of the present Revised Statutes. That section refers to involuntary or compulsory proceedings, and provides that "the court may, by injunc- tion, restrain the debtor, or any other person," from making any transfer or disposition of any part of the debtor's prop- erty. But this injunction is only to be operative from the filing of the petition until the adjudication of bankruptcy can be had. 113 At the time the Bankrupt Act was passed, a statute had long been in force expressly forbidding the national courts from restraining proceedings in the state courts. 114 This pre-existing statute, taken in connection with the significant circumstance that the Bankrupt Act, where it did mention injunctions, provided for their issuing in a specified case and then to remain in force but a limited time, fully justified, as we think, those decisions which de- nied the right of the courts of bankruptcy to enjoin pro- ceedings in the state courts. 115 Section 4972, among other things, confers jurisdiction upon the district courts as courts of bankruptcy, to collect all assets of the bankrupt ; to ascertain and liquidate all liens and claims thereon ; to us Creditors v. Cozzens, 3 B. K. 281 ; 2 W. Jur. 349; 17 Pitts. L. J. 236; Irving v. Hughes, 2 B. K. 62; 7 A. L. Reg. (N. S.) 209; In re Kintzing, 3 B. R. 217; In re Metzler, 1 B. R. 38; 1 Ben. 356; Iu re Moses, 6 B. R. 181 ; In re Irving, 14 B. R. 289. 11 4 Sec. 5 of Act of Congress of March 2, 1793, among other provisions, contained the following : "Nor shall a writ of injunction be granted to stay proceedings in any court of a state." The corresponding section in the present Revised Statutes is as follows : "The writ of injunction shall not be granted by any court of the United States to stay proceedings in any court of a state, except in cases where such injunction may be authorized by the law relating to proceedings in bankruptcy." R. S. of U. S., sec. 720. us Inre Hugh Campbell, 1 B. R. 165; 1 Abb. C. C. 185; 1 L. T. B. 30; 3 Pitts. L. J. 96; In re S. M. Burns, 1 B. R. 174; 7 A. L. Reg. (N. S.) 105; 24 Leg. Int. 357; 3 Pitts. L. J. 107; Tenth N. B. v. Sanger, 42 How. P. 179. ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. 33 adjust the various priorities and conflicting interests of all parties; and to marshal and dispose of the different funds and assets so as to scenic the rights of all parties and a due distribution of the assets. These powers are very extensive, and must, in many instances, be invoked when greal prompt- itude of action is required. Proceedings in the state courts, if permitted to continue, would frequently so dis- pose of the bankrupt's assets that the courts of bankruptcy could not adequately assert the jurisdiction conferred by this section. Hence, the last-named courts have so frequently asserted their authority to suspend proceedings in the state courts when such suspension appeared necessary to accom- plish the objects sanctioned by section 4972, that probably Mr. High is fully justified in his assertion that "the jurisdic- tion of the United States courts, sitting in bankruptcy, to restrain proceedings in the state courts against the estate of a bankrupt, though sometimes questioned, may be regarded as too clearly settled to admit of doubt. 11,; While conceding the decisive preponderance of the authorities, we are by no means convinced of their soundness, and, whether sound or not, we feel assured that the power which they affirm ought to be sparingly exercised. 117 In the first place, we question the existence of that imperative necessity upon which the " fi High on Injunctions, § 208; In re Mallory, 6 B. R. 22; 1 Saw. SS; Jones v. Leach, 1 B. R. 595; In re Barrow, 1 B. R. 4S1 ; Lady Bryan M. Co., 6 B. R. 252; Kerosene Oil Co., 3 B. R. 125; 3 Ben. 35; 6 Blatch. 521; In re Snedaker, 3 B. R. 629; Markson v. Beaney, 4B. B. 510; 1 Dill. 497; Whitman v. Butler, S B. R. 487; Pennington v. Sale. 1 B. R. 572: Hyde v. Bancroft, 8 B. R. 24; G Ben. 392; Irving v. Hughes, 2 B. R. 62; 7 A. L. Keg. (X. S. ) 209; In re Wallace, Deady, 433; 2 B. R. 52; Iron M. Co., 9 Blatch. :?20; In re Atkinson, 7 B. R. 143; 6 Am. L. T. 320; 3 Pitts. L.J. 423; In re Shuey, 6 Ch. L. X. 248. u" Our opinion thai injunctions t<> restrain proceedings in state courts ought not to be needlessly granted, and, When granted, oughl HOI to ex- tend any farther than is essentia] to the protection of the interests oi the general creditors, is sustained by the authorities. In re Davis, 8B. B. 167; 1 Saw. C. C. 260: Goddard v. Weaver, 6 B. B. 140; Eastburnv. Yardly. 8 Pac. L. B. 127; 30 Leg. Int. 404; Iron M. Co., 9 Blatch. 320; In re Wilbur, 3 B. R. 71; High on Injunctions §214; In r< Banna, I B. R. 411; In re Brinkman, 6B. B. 541. 3 34 ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. issuing of injunctions to restrain proceedings in the state courts has been maintained. It by no means follows, be- cause very extensive powers are granted to the bankruptcy courts in regard to marshalling assets, adjusting priorities, and liquidating liens and claims, that those powers must be supported by the further power to issue injunctions. On the contrary, it ought to be assumed that the state courts would act in full accord with the national courts, and would yield a voluntary submission to the authority of the latter. The statutes of the United States in regard to bankruptcy are addressed to the state, as well as to the national courts, and must, of necessity, be invoked, interpreted, and enforced in the former as well as in the latter ; the decision of the state courts being, however, subject to review in certain cases by the Supreme Court of the nation. The court from which process to enforce a judgment is issued has such perfect con- trol thereof that it may, for any proper cause, set it aside, or may stay it either temporarily or permanently, as may be requisite to prevent any abuse thereof. 11S If this be true, why resort to the extraordinary and somewhat offensive remedy by injunction. If proceedings have been instituted, or are about to be instituted, to test the validity of the judgment ; or if the judgment, though valid, can not be enforced in the state court without undue sacrifice of the bankrupt's assets ; or if, from any cause whatever, an emergency arises in which, in aid of the proceedings in bankruptcy, it is proper that execution should be stayed, either temporarily or per- manently, — why not disclose the fact to the state court, and in it procure the requisite relief? In defense of injunctions against litigants in state courts, it was claimed that, because these injunctions did not assume in direct terms to restrain the courts, they were not forbidden by the Act of 1793, be- fore referred to. But surely statutes are not enacted with the view of preserving matters of form, and permitting the sacrifice of matters of substance. Every act ought to be characterized by the result which it accomplishes, and which us Freeman on Executions, Sec. 32. ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. 35 it was designed to accomplish, rather than by the deceptive guise in which it is sought to be perpetrated. The different between destroying a court and prohibiting all litigants from resorting to it for redress is, in the eyes of justice, an im- material difference. By conceding the right to enjoin the litigants from proceeding in a particular action, we, in effi concede the right to enjoin the court from so proceeding. Sec. 13. The Effect of a Discharge in Bankruptcy is, by the statute, declared to be the release of the bankrupt from the liabilities which were or might have been proved against his estate. m The debts of the bankrupt are not, however, in fact paid ; nor are they so extinguished in conscience, that thev can not be a sufficient consideration for a new promise. 120 In the case of a judgment, within the operation of a discharge in bankruptcy, it is evident that no proceed- ings can properly be taken to enforce any personal liability against the bankrupt; but the lien of the judgment, if the plaintiff has done nothing to waive it, still exists and may be enforced. A discharge in bankruptcy does not release liens which were valid at the inception of the proceedings. 1 -' 1 Hence, a judgment creditor may redeem real estate, by vir- tue of his judgment lien, after the defendant has been ad- judged a bankrupt. 122 Sec. 14. The Method of Making a Discharge Available, when a bankrupt is pursued by an action, is by pleading it in bar. " It may be pleaded by a simple averment that, iw A discharge takes effect as of the date of the fi li n g of the bank- rupt's petition. Turner v. Gatewood, S B. Mon. 613; Blosby v. Steele, 7 Ala. 299. It does not. therefore, protect him from liabilities incurred pending the proceedings in bankruptcy. Robinson v. Pesant, 53 N. Y. 419; SB. R. 426; Sparhawk v. Broome, 6 Binn. 256; Savory v. St. irking, 4 Cush. 607; Stinemets v. Ainslie, I Den. ~u3. lMDusenbury v. Hoyt, 10 B. R. 313; 53 CT.Y. 521; 14 Abb. Pr. (N. S.) 132; Barron v. Benedict, ll Vt. 518; Apperson v. Stewart, 27 Ark. G19. 121 Elliott v. Booth. 44 Tex. 1*0: Bush v. Lester. .V> Ga. .~>79; L5 B. K. 36; Robinson v. Wilson, 15 Has. 595; Truitt v. Truitt, 38 End. 16; her v. Terrell. 54 <;a. 146; Boone v. Revis. 44 Tex. 384. 132 Trimble v. Williamson. 14 B. R. 5;$; 49 Ala. 525. 36 ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. on the day of its date, such discharge was granted to the bankrupt, setting a full copy of the same forth in its terms." 123 If a judgment has been entered against a bank- rupt, by default, after his discharge, it may, on seasonable application, be vacated on such terms as may be just, for the purpose of permitting him to interpose the discharge as a defense. 124 The true rule seems to be that this defense will be treated like any other meritorious defense. Courts Mill set aside defaults, or judgments by default, in order to let it be pleaded, provided the application is not too tardily made and the applicant has not been guilty of gross laches. If the failure to interpose the plea in due time was the re- sult of some fraud or trick on the part of the plaintiff, certainly the defendant would be relieved from the uncon- scionable acts of his adversary. 125 If, on the other hand, the defendant has no excuse sufficient to account for his disregarding the process of the court, and failing to make his proper defense, then he will not be treated with any special leniency on account of his defense being founded on his discharge in bankruptcy. 126 In some cases it is said that, where a discharge has been granted, a plaintiff claim- ing that his judgment is not within the operation of the dis- charge must not issue an execution without first making an application to the court and obtaining leave so to do. 127 But, in many cases, the plaintiff is ignorant of the exist- ence of the discharge, and from this, and other causes, it must frequently happen that executions will issue on judg- ments which are unquestionably discharged. Some author- ities evidently incline to the view that a writ so issued is voidable and not void ; and that the defendant, to escape its effect, must take some affirmative measures to procure 123 Sec. 5119, Rev. St. of U. S. ; Sec. 34 of Act of 1S67; StoU v. Wilson, 14 B. R. 571. 124 Savings Bank v. Webster, 48 jST. H. 21 ; Lee v. Phillips, 6 Hill, 246. i 25 Park v. Casey, 35 Tex. 536 ; Manwarring v. Kouns, 35 Tex. 171. 126 Eudge v. Eundle, 1 N. Y. Supr. Ct. 649 ; Manwarring v. Kouns, 35 Tex. 171. 127 Alcott v. Avery, 1 Barb. Ch. 347; Francis v. Ogden, 22 N. J. L. 210. ENFORCEMENT OF JUDGMENTS AGAINST BANKRUPTS. 37 its vacation or to prevent its execution. 128 On the other hand, it has been determined by the Court of Appeals in New York that a judgment which has been released by operation of a discharge in bankruptcy is, in legal effect, satisfied ; and that the plaintiff can not justify the issuing and levy of a writ thereunder, although he acted in igno- rance of the existence of the discharge. 129 Such a writ be- ing regular on its face would, however, justify an officer who innocently undertook to execute it. Unquestionably the safest course for a discharged bankrupt, having judg- ments ostensibly in force against him, is to take some affirmative action for the purpose of securing the benefit of his discharge. Formerly matters of discharge, occurring subsequent to the rendition of a judgment, were brought to the attention of the court by proceeding by writ of audita querela. m In the United States this remedy has fallen into desuetude. The usual method of securing the benefit of a discharge in bankruptcy is by motion to the court wherein the judgment is. This court will, in a proper case, set aside any writ which has been issued, and will grant a per- petual stay of proceedings. 131 In some instances relief has been obtained by injunction. 132 This character of relief ought usually to be denied ; for, unless in very exceptional cases, the remedy at law is both speedy and adequate. i28Cogburn v. Spence, 15 Ala. 549; Roden v. Jaco, 17 Ala. 344; "Wes- tenberger v. Wheaton, 8 Kas. 169. In the last-named case it is held that a discharged bankrupt can not maintain an action of replevin for goods levied upon by a sheriff under a discharged judgment. i29Ruckman v. Cowell, 1 X. Y. 505. 130 Freeman on Judgments, Sec. 95. 131 Linn v. Hamilton, 34 NT. J. L. 305; Chambers v. Xeal. 13 B. Mon. 256; Monroe v. Upton, 50 X. Y. .">!>:!: V, Lans. 255; Cornell v. Dakin. 38 X. Y. 253; Thomas v. Shaw, 2 Chin. 97. 132 Murphy v. Smith, 22 La. An. 441. INDEX. The figures have reference to the sections. ACTIONS PENDING PRIOR TO BANKRUPTCY. may proceed to judgment. 4. 11. APPEAL. effect of. on judgments as provable debts, 2. ARREST UNDER EXECUTION, no relief from, before discharge. 6. when allowed pending bankruptcy. 5. ASSIGNEE, may prosecute or defend suits to which bankrupt is a party. 4. the nature of his title, 8, 11. take.- as a pendente UU purchaser, 11. may obtain a stay of proceedings. 4. ATTACHMENT. how release from, is obtained. 4. when not released by bankruptcy. I. sale under. 4. 11. B. BANKRUPT, defined, 1 . La BUbjecl to the jurisdiction of all the courts. 1. how to obtain relief from judgment. .">. release from arrest under execution, 6. how to obtain benefit of his discharge, 14. CONFESSION, judgment by, 3. COSTS ON JUDGMENTS, when allowed in bankruptcy, 2, •"). 40 INDEX. D. DEFAULT. JTDGMFXT BY. when valid in bankruptcy. 3. vacating. 14. DISCHARGE. what judgments not affected by. 7. the effect of. 13. how made available. 14. E. EXECUTION.- AGAINST BAXKBUPTS. proceedings on. pending bankruptcy. 5. 6. arrest of bankrupt under. 6. issued after discharge granted. 14. perpetual stay of. 14. test:. judgment for. not a provable debt. 2. ixjuxctiox. not granted where bankrupt fails to plead his discharge. 4. against proceedings in state courts. 12. IXTEXT TO PREFER. . from what inferred. 3. J. JUDGMEXTS AGAINST BAXKRUPTS. classified. 2. entered four months prior to bankruptcy. 2. entered four months prior to bankruptcy, when provable. 2. entered within four months prior to bankruptcy, whenpreferei. entered after filing petition in bankruptcy, validity of. 4. entered after filing petition in bankruptcy, how enforced. 5. entered after filing petition in bankruptcy, whether provaU ution thereof pending proceedings in bankruptcy. 0. when bankrupt may be arrested under. 6. are conclusive by way of es:oj. judgments entered before bankruptcy. 2. judgments entered pending bankruptcy. 5. R. RECEIVERS. - n of, not'to be disturbed. 11. RELIEF. from judgments entered after filing of petition, how procured under a discharge, 14. SALES UNDER 4 AYRITS FROM STATE COURTS. when valid. 11. SHERIFF-. when may retain possession and sell property, 11. 42 INDEX. STATE COURTS, proceedings in, to enforce liens, 10, 11. having acquired jurisdiction, may proceed, 11. enjoining proceedings in, 12. STAY OF PROCEEDINGS, when and for whom to be granted, 4. when to be revoked, 4. perpetual after discharge, 14. TORT, judgment for, when a provable claim, 2. W WAIVER OF LIEN, by proving claim as unsecured, 10. WARRANT TO CONFESS JUDGMENT, judgment under, when a preference, 3. Manufactured by GAYLORD BROS. Inc. Syracuse, N. Y. Stockton, Calif. ' "■"■" ■ ■ i n — UNIVERSITY OF CALIFORNIA LIliRARY - */7lf[ Los Angeles This book is DUE on the last dale stamped below. ' i 1 1974 Form L9-Series 4939