Case ID: ad_122/html/0456-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Rich, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

In the Matter of the Application of Abraham Quackenbush, a Bankrupt, Respondent, to Have Certain Judgments Discharged of Record. Franklin Burt, Judgment Creditor, Appellant.
    Second Department,
    November 22, 1907.
    Bankruptcy — discharge of judgment — default opened ... . failure to notify creditor.
    When, after a judgment creditpr has successfully opposed his debtor’s application for discharge in bankruptcy, the debtor makes a second successful application for discharge in which he schedules the judgment hut serves no notice of the application upon his creditor, whose address was misstated, and who had no knowledge of the second application, and the only notice of a subsequent application to discharge the judgment of record was served upon the creditor’s original attorney of record, who was known by the debtor to be no longer employed by the creditor, the latter’s default in opposing the motion to discharge the judgment should be opened.
    Under such circumstances, although the debtor had complied with the provisions of' section 1268 of the Code of Civil Procedure by serving notice on the creditor’s attorney of record, the purpose of the statute -is defeated.
    Moreover, as in the second bankruptcy proceeding, the creditor’s address, which could have been easily ascertained by reference to the city directory, was misstated, the debtor failed to give the notice required by the Bankruptcy Act, and such failure is a valid defense to a motion to discharge the creditor’s judgment.
    When a judgment is against two defendants the court is without power to discharge the judgment against both on the application of one who has been adjudged bankrupt.
    Appeal by Franklin. Burt, a judgment creditor, from an order of the Supreme Court, made at the Kings County Special Term and entered in the office of the clerk of the county of Richmond on .the 9tli day of May, 1907, denying the appellant’s motion for permission to open his default on a. motion made by the petitioner to have certain judgments in favor of the appellant discharged of record.
    
      Stillman F. Kneeland, for the appellant.
    
      Allan C. Rowe [James W. Purdy, Jr., with him on the brief], for the respondent.
   Rich, J.:

The facts stated by the appellant are substantially as follows: Appellant recovered judgment for over' $5,000 against the respondent Abraham Quackenbush, and also two other judgments for costs on appeal to the Appellate Division and the Court of Appeals. Subsequently the respondent went into bankruptcy and his application for discharge was opposed by the appellant and refused by the United States Court in Bankruptcy. After such denial by the Bankruptcy Court the bankrupt filed a second petition upon the same debts, and thereafter made a second application for and received a, discharge by the same court. It further appeared that the appellant was named in the schedules as a creditor in the second bankruptcy proceedings, but that his true residence was not stated in the schedules, it being stated as Ho. 9 Ferry street, Hew York city, while his residence was at St. George, S. I., where he had lived for ten years prior thereto except that for a small portion of that period he lived at 42 West Hinety-sixth street, borough of Manhattan, cfiy of Hew York, and his place of business at the time the second petition in bankruptcy was filed and at the time of the making of the schedules therein was' 81 Fulton street, borough of Manhattan, and that his name and address appeared in the city directory. The appellant had no personal knowledge of the second proceedings in bankruptcy or of the application for a discharge thereunder or of the subsequent motion to discharge these judgments. It appeared that notice of the motion to discharge the judgments was served upon one of the attorneys of record for appellant, but these attorneys ceased to represent appellant after the final judgment was entered, and he was represented in the first bankruptcy- proceedings by another attorney in nowise connected with the attorneys of record ; and it is not pretended that notice was given him or that appellant was ever informed of the service of the notice upon his former attorneys. Upon the contrary, it appears affirmatively that he was not. Respondent knew that the appellant was nO longer represented by the original attorneys of record, and that another attorney had successfully resisted his previous application for discharge in bankruptcy. Ho notice was given to the substituted attorney; this might easily have been done, while the respondent complied with the provisions of the Code (§ 1268), yet the purpose of the statute was defeated because, no actual notice was given.- I think, therefore, that under the circumstances a proper exercise of discretion demanded that the default be opened, but this is not all; I am of the opinion that no proper notice of the second bankruptcy proceeding was given. The Bankruptcy Act provides that the bankrupt must file a list of his creditors, showing their residences, if known,” and that- notices must be sent to the creditors at their respective addresses as they appear in the list of creditors.” (See 30 U. S. Stat. at Large, 548, § 7, subd. 8 ; Id. 561, '§ 58, subd. a.) Appellant’s true address might easily have been ascertained by referring to the directory, and while the purpose of the proceeding undoubtedly was to escape the payment of the judgments held by appellant, his address was erroneously given and the discharge obtained without notice to the largest creditor, and the one who had successfully defeated respondent’s former application for a discharge.

In Columbia Bank v. Birkett (174 N. Y. 112), Judge Gray, writing for the court, said: “ I think it was intended, that the decree discharging the voluntary bankrupt should be confined in its operations to the creditors, who had been duly listed and who were enabled to receive the notices which the act provides for.” I think within this rule the appellant established a valid defense to the motion for the discharge of the judgments, and that his.motion was improperly denied. There is another reason why the default ought to have been opened. The judgments were against two defendants— the respondent and one Taylor.' There was no power in the court to discharge the judgments as against Taylor, but the county clerk was directed to cancel and discharge the judgments . against both defendants.

I think the order discharging the judgments was improperly granted. The order from which this, appeal is taken must, therefore, be reversed, with ten dollars costs and disbursements, and the motion granted.

"Woodward, Gaynor and Miller, JJ., concurred; Hirsohberg, P. J., not voting.

Order reversed, with ten dollars costs and disbursements, and. motion granted, with ten dollars costs.