Case ID: haw_10/html/0576-01.html
Source: Caselaw Access Project
Author: {"author": "WHITING, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

H. CANNON v. H. F. POOR.
    Equity Appeal from Circuit Judge, First Circuit Court.
    Submitted January 12, 1897.
    Decided January 19, 1897.
    Judd, C.J., Frear and Whiting, JJ.
    On an appeal from a decree dismissing a bill to foreclose a mortgage on real estate, the defendant, after the perfection of the appeal, wag adjudged a bankrupt, and the assignee in bankruptcy appeared and suggested the bankrutpcy of defendant and submitted whether such bankruptcy was an absolute stay of the suit'.
    Held, that after notice to the assignee of the appeal pending, and a reasonable time granted him, the stay should be removed and the appeal proceed.
    Held, also, that the suit involving property which, if released from the alleged lien of plaintiff, would be thrown into the general fund available to creditors, the assignee has the right to and ought to appear on the appeal. '
   OPINION OP THE COURT BY

WHITING, J.

TRe plaintiff RrougRt Ris bill in equity, against defendant Poor, to foreclose a mortgage given to secure a bond conditioned for tlie performance of certain covenants contained in an- agreement in writing between tRe parties. Upon a Rearing before tRe Circuit Judge of tRe First Oircuit Court tRe bill was dismissed and a decree made in favor of defendant Poor. The plaintiff appealed to the Supreme Court.

After the perfecting of such appeal, the defendant Poor was duly adjudged a bankrupt by the Circuit Judge of the First Circuit Court, and now, at this term of the Supreme Court, appears John F. Colburn, who suggests the bankruptcy of Poor, and that he, Colburn, is the duly elected and qualified assignee in bankruptcy of Poor’s estate.

The defendant Poor does not appear, nor does he suggest, on appeal, his bankruptcy.

Chap. 22, Sec. 5, Session Laws, 1888, provides that “Upon the filing of a petition” (in bankruptcy) “all civil suits pending-in relation to and all executions or attachments laid upon a bankrupt’s property shall be stayed.” * * *

We are of the opinion that, the suit being for the foreclosure of a mortgage on property, although involving the question of liability of defendant to respond to plaintiff’s claim, the plaintiff can still pursue his claim against the property mortgaged, although, by defendant’s bankruptcy, no decree or judgment could be rendered against the defendant Poor personally, or binding on the estate in the assignee’s hands other than the property secured by this mortgage. Surely a creditor can rely upon his mortgage security, and need not prove any secured claim in the bankrupt’s estate, although in such case he cannot claim any dividends from the assignee. If the plaintiff began his suit after the bankruptcy of Poor, the assignee would probably have been made a party to it. So far as appears of record in this case, the assignee would be and is interested in the result,, for if the decree stands, it may release a large amount of the-bankrupt’s property from the plaintiff’s lien and make it available for the general creditors. And he would be entitled to be.notified and appear in this appeal.

A reasonable stay of civil suits is necessary in these bankruptcy cases, but we are of opinion that where the cause is in equity to foreclose a mortgage, the court can direct and order the suit to proceed, and that the law providing for a stay does not require tbe court to construe it to be a perpetual stay. Tbe defendant Poor cannot by bis subsequent bankruptcy prevent tbe prosecution of plaintiff’s appeal in tbis suit. When a bankrupt is seeking to prevent tbe establishment of a claim against Mmself, tbe assignee bimself in tbe interest of tbe creditors may well be allowed to intervene in order to exclude claims wbicb, if established, might reduce tbe estate otherwise available to creditors. Tbe bankrupt also may have an interest in tbis appeal.

Magoon & Edings, for plaintiff.

G. Brown, for assignee.

Tbe assignee in all cases should be notified to appear, but tbe assignee in bankruptcy in tbis case now having appeared, although merely to suggest tbe bankruptcy, tbe stay of tbe appeal should be removed and tbe appeal beard by tbis court, unless tbe assignee has sound reasons to present to tbe contrary. Tbe mere fact of tbe bankruptcy of Poor should no longer stay tbe appeal. Tbe assignee lias a right to appear, and so far as shown to us, ought to appear herein. Tbe following cases may be referred to:

McKay v. Funk, 37 Iowa, 661.
Merritt v. Glidden, 39 Cal. 564.
Doe v. Childress, 21 Wall. 642.
Sanford v. Sanford, 58 N. Y. 67.
Serrao e Hijo v. Hoffmar, 17 B. R. 124.

There having been so much delay in bringing tbis appeal to tbe Supreme Court (unavoidable on tbe part of counsel), notice to defendant Poor ought to be given, if be has not yet been notified.

Let tbe parties appear on January 21, 1897, for further proceedings.