Case ID: ad_55/html/0170-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Merwin, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Orrin W. Smith, Appellant, v. Marvin D. Wheeler, Respondent.
    
      Bankruptcy — a claim of a payee of a note, who has paid a judgment thereon against the maker and himself, is provable.
    
    Where a judgment recovered against the maker and payee of a note is satisfied by the payee, the latter’s claim against the maker is provable under subdivision i of section 57 of the Bankruptcy Act of 1898, and is barred by the maker’s discharge in bankruptcy.
    Appeal by the plaintiff, Orrin W. Smith, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county, of Delaware on the 31st day of January, 1900, upon the decision of the court rendered after a trial before the court without a jury at the Delaware Trial Term dismissing the complaint upon the merits.
    On the 19th of November, 1896, the defendant executed and delivered to the plaintiff, his promissory note dated that day for $550.19, payable to the order of plaintiff four months from the date thereof at the Delaware National Bank. The note was given for a debt on contract then due from defendant to plaintiff. It was duly indorsed and transferred by the plaintiff to the bank above named, was not paid at maturity and was duly protested.. The bank afterwards brought an action in the Supreme Court on the note against both parties, and on the 16th day of August, 1897, duly recovered a judgment against them for the sum of $586 damages and costs. An execution was issued thereon, and on the 31st of October, 1898, the plaintiff paid the amount thereof, being the sum of $650.39. That amount the. plaintiff in this action seeks to recover of the defendant. On the 18th day of August, 1898, the defendant filed in the proper court his petition in bankruptcy and was on that day' adjudicated a bankrupt. In the schedule of liabilities attached to the petition there was a statement of the judgment recovered by the bank. On the 7th day of February, 1899, a discharge was duly granted the defendant, pursuant to the act of Congress on that subject then in force. The defendant set up the discharge as a defense to this action. The court held the defense a good one and dismissed the complaint.
    
      C. L. Andrus, for the appellant.
    
      Arthur More, for the respondent.
   Merwin, J.:

The question here is whether the discharge is a bar to the claim •of the plaintiff.

A discharge in bankruptcy releases a bankrupt from all of his provable debts, with certain exceptions not important here. (Bankrupt Act of 1898, 30 U. S. Stat. at Large, 550, chap. 541, § 17.) If the claim of the plaintiff was a provable debt within the meaning of the Bankrupt Act, then the discharge is a bar.

By subdivision i of section 57 of the act it is provided as follows : “ Whenever a creditor, whose claim against a bankrupt estate .is secured by the individual undertaking of any person, fails to prove such claim, such person may do so in the creditor’s name, and if he discharge such undertaking in whole or in part he shall be subrogáted to that extent to the rights of the creditor.”

In the Bankrupt Act of 1867 (14 U. S. Stat. at Large, 525, chap. 176, § 19; U. S. R. S. § 5070) there was a similar provision, and under it it was held in Hunk v. Taylor (108 Mass. 508) that the liability of the drawee, upon a bill of exchange accepted and dishonored by him, to an indorser who then pays it, is barred by a discharge of the drawee in bankruptcy proceedings begun after his dishonor of the bill, though before the payment by the indorser. The action in that case was for money paid to the defendant’s use.

In Mace v. Wells (7 How. 272) a similar provision in the Bankrupt Act of 1841 was under consideration, and it was held that the bankrupt was discharged by his certificate from all liability to the surety for money subsequently paid on account of the debt.

These authorities are quite persuasive,’ if not controlling, on the question before us. Ho different rule was, I think, intended to be adopted by the act of 1898, although the wording of the provision •differs in some respects from the prior acts. (See Lowell on the Law of Bankruptcy, 132, 316, 465.)

It must be held, I think, that the claim of the plaintiff was provable under the Bankrupt Act, and that, therefore, the discharge is a bar.

All concurred.

Judgment affirmed, with costs.