Case ID: mo-app_91/html/0517-01.html
Source: Caselaw Access Project
Author: {"author": "SMITH, P. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

HORACE P. SCRUBY, Appellant, v. HENRY S. NORMAN, Respondent.
    Kansas City Court of Appeals,
    January 20, 1902.
    1. Appellate Practice: EVIDENCE DEHORS RECORD: BANKRUPTCY. An appellate court may eso necessitate rei be compelled to receive evidence dehors tbe record sucb as to show one of tbe parties bas become bankrupt since tbe taking of tbe appeal, and to act thereon.
    2. -: BANKRUPTCY: DISCHARGE: DISMISSAL OF APPEAL. Where after his appeal an appellant becomes a bankrupt and he and his trustee are discharged by the bankrupt court, the appellate court may on proper motion investigate the facts and dismiss the appeal, though the debt in controversy was not scheduled nor even came to the knowledge of the trustee, since the adjudication of bankruptcy divested the bankrupt of his property rights and his discharge can not revest them.
    Appeal from Livingston Circuit Court. — Mon. E. J. BroadduSj Judge.
    Appeal dismissed.
    
      J. M. Davis & Sons and Sheetz & Loonuis for respondents.
    (1) By tbe Bankruptcy Act of 1898, section 70, it is provided that tbe title to all of tbe bankrupt’s estate, botb real, personal and mixed, of every kind and nature, shall vest in tbe trustee of tbe bankrupt, by operation of law, except tbe property exempt by tbe statutes of tbe State. Section 70 of tbe Bankruptcy Laws of 1898. (2) Under tbe Bankruptcy Law of 1867, tbe person who is, under tbe present bankruptcy laws, known as tbe trustee was known as tbe assignee in bankruptcy. Under section 5044, Revised Statutes of United States 1875 (Laws of 1867), it was provided, in language almost identical with section 70 (U. S. Bankruptcy Laws 1898), that the title of all of the property of the bankrupt should, by operation of law, vest in the assignee, who under the law performed the same duties as the trustee (under the present law). (3) Under the Bankruptcy Law of 1898 it is further provided that if no property or money come to the hands of the trustee, he is not required to call a second meeting of the creditors, but is to report the facts therein detailed, and the bankrupt is then discharged, and the proceedings are wound up. (4) Under the bankruptcy law no right, title or claim in or to this case, or appellants’ right of action herein, is left in the bankrupt, the appellant. He has no right to prosecute this suit, and has no title or claim under or by virtue of having been plaintiff to this case. All rights thereto of plaintiff vested in the trustee, who never having been substituted, and having been discharged, and the bankrupt case wound up, has now no title in this case. Malone v. Martin, 2 S. W. 909; s. c., Ky. Law Rep. 692. (5) This case should be stricken from the docket because of failure to prosecute and because there is now no person or officer who can under the law, prosecute this case, as the property and interest in the proceedings has gone from the bankrupt never to return. The trustee, being now without any power or authority, the estate haying been wound up and the trustee discharged, has now no right to prosecute the case. Malone v. Martin, supra.
    
      Lewis A. Chapman for appellant.
   SMITH, P. J.

— This suit was brought by plaintiff against'defendant on a promissory note executed by the latter to the former for $1,330. On October 2, 1899, there was a trial which resulted in judgment for the defendant. On the twentieth day of January, 1900, an appeal was taken by the defendant from that judgment to tbis court. After tbe cause was removed bere by tbe appeal, tbe defendant filed a motion to dismiss and abate tbe action, etc., alleging as grounds tberefor, tbe following facts:

“(1) That on tbe sixteenth day of June, 1900, tbe plaintiff herein was, on bis own petition, by the district court of tbe United States for tbe western division of tbe western district of Missouri, duly adjudged a bankrupt, according to tbe act of Congress; that is to say, tbe Bankrupt Act of 1898; (2) that afterwards, on June 6,1900, a trustee'of tbe creditors of tbe plaintiff herein was elected, qualified and took charge of the estate of tbe plaintiff — tbe bankrupt — in accordance with said bankrupt act; (3) that on tbe twenty-seventh day of December, 1900, said trustee made bis final report to said district court wherein it appeared that be neither received nor paid out any money on account of said estate; (4) that on tbe twenty-eighth day of December, 1900, said report was approved by said district court and an order duly entered of record discharging said trustee and tbe said bankrupt as well; (5) that tbe debt sued for accrued prior to June 16, 1900, tbe date when tbe plaintiff’s petition in bankruptcy was filed in said district court, and, therefore, it became and was a part of tbe assets of tbe estate of tbe bankrupt plaintiff, and that all tbe right, title and interest of tbe bankrupt therein under said bankruptcy proceeding passed to tbe said trustee, so that tbe plaintiff bad no right, title and interest in said debt and no legal right or capacity to sue for or recover tbe same nor to prosecute tbis appeal.”

Tbe defendant filed with bis said motion a duly authenticated copy of tbe record and proceedings of tbe district court of tbe United States, in said proceeding in bankruptcy, from which it appears, in addition to tbe facts just stated, that tbe plaintiff did not in any inventory or schedule of bis property and effects, mention or enumerate said debt sued on in tbe present action.

I. The first question which suggests itself is, whether or not the granting of the defendant’s motion involves the exercise by us of original, instead of appellate, jurisdiction? Courts of review are often compelled ex necessitate rei to receive evidence dehors the record affecting their proceedings in cases before them on error or appeal. “A death of one of the parties after a writ of error or appeal, requires a new proceeding to supply his place. The transfer of the interest of one of the parties by assignment or by a judicial proceeding in anothér court, as in bankruptcy or otherwise, is brought to the attention of such courts by evidence outside of the original record and acted on.” Dakota Co. v. Gliddin, 113 U. S. 222; Hutton, Adm’r, v. Hutton, rendered by us at present term. Accordingly, we conclude that in the exercise of our appellate jurisdiction we may, for the purpose of passing upon the defendant’s motion, take into consideration the record of the district court of the United States in the bankruptcy case, referred to in the said motion.

H. The allegations of fact contained in the motion, as hereinbefore stated, seem to be fully sustained by the record of the proceeding in bankruptcy. When the plaintiff was adjudged to be a bankrupt he became civiliter mortuus as to his property and the title thereto, except as to that exempted by statute, which passed by operation of law to the trustee of his estate thereafter appointed. It became the duty of the trustee, under the bankruptcy law, to collect and reduce to money, the property of the bankrupt estate. It was the further duty of the trustee, under the direction of the bankruptcy court, to prosecute the present appeal. But it does not appear that the trustee was apprised of the existence of the debt here claimed, by anything appearing in the inventory or schedule of the bankrupt’s assets. It seems from the record that this debt was concealed or at least nowhere disclosed in the bankruptcy proceedings. The appeal was taken before the date of the adjudication, but it appears to have remained dormant .until after the final discharge of both the trustee and the bankrupt, when its active prosecution was renewed by the plaintiff.

It is made manifest by the record of the proceeding of the Federal court in the bankruptcy case, that the interest of the plaintiff in the debt sued for in the present action, was, by operative law, transferred to the trustee of his estate. Bankrupt Laws of 1898, sec. 70; E. S. U. S. 1875, sec. 5044. The interest of the plaintiff in the said debt having been divested by the .bankrupt proceedings, his right to prosecute this action for the recovery thereof, was at an end. Unless that interest has. been revested he can have no locus standi in the present appeal.

Will the fact that the said debt is not enumerated or referred to anywhere in the proceeding in bankruptcy as a part of the assets of the bankrupt’s estate, or that the trustee took no steps to reduce it to possession, nor to have himself substituted as plaintiff in this suit, have the effect, after his discharge, and'that of the plaintiff as a bankrupt, to revest in'the latter, the interest -that was divested by the bankrupt proceedings? That such would be the effect is.inconceivable. The record in the bankruptcy proceedings show that the plaintiff, at the time of the adjudication was largely indebted. It further shows that no assets of his estate were scheduled or came into the hands of the trustee, so that his creditors were paid nothing on their claims. And can it be that his right to sue for the recovery of the debt, which existed at the time of the adjudication but of the ownership of which he was deprived by that adjudication, may be restored by the discharge of the trustee and the bankrupt? Can it be that in a case where a bankrupt has not enumerated in his schedule or surrendered a chose in action due to him at the time of the filing of his petition in bankruptcy, or when by fraud and perjury he is enabled to withhold such chose from the administration of his estate by the trustee, that his title and interest in such chose survives in him and the bankruptcy proceeding and can be asserted by him in a indicated proceeding after his discharge in bankruptcy; or, if such title and interest does not survive the adjudication, is it ipso facto revived by the discharge ? To answer these queries in the affirmative would be to invite the commission of the gravest fraud and perjury, which it is safe to assume was never intended by the bankrupt law. The debt sued for, under the bankrupt law, passed to the trustee, whose duty it was to collect it and pay it over to the- creditor of the bankrupt. It is difficult to see what claim the plaintiff would have to it even after his discharge, and especially so, since it was not scheduled by him, and his creditors whose debts, have been discharged have not received one farthing from his estate.

It may be that if his estate had been more than sufficient to pay his debts and the debt in question had been left after his discharge, that under the law or perhaps an order of the court, the title might be restored to him; but no such case is before us. The plaintiff is suing on a chose, the title to which was divested by the adjudication and which has never been in any way restored. These views are, as we think, in accord with reason and the great weight of authority. Malone v. Martin, 2 S. W. 909; Pickens v. Dent, 106 Fed. Rep. 653; Vanslyke v. Shryer, 98 Ind. 126; Boyd v. Olms, 82 Ind. 294; Berry v. Gillis, 17 N. H. 9; Seaton v. Hinneman, 50 Iowa 395; Dessan v. Johnson, 66 How. Prac. 6; Atwood v. Thomas, 60 Miss. 162; Peters v. Wallace, 4 S. W. 914; Foraast v. Hyman, 28 N. E. 801.

Contra, vide: Frazier v. Desha’s Adms., 40 S. W. 678.

It results from the foregoing considerations that the motion of the defendant must be sustained.

All concur.