Virginian-pilot. (Norfolk, Va.) 1898-1911, 1900-03-27
COURT DECISIONS.
DlGESTED BY W. B. MARTIN.
EXCLUSIVELY FOR
vIRcINlAN-PlLoT.
Notes Of Cases Recently Decided,
Which are Of Interest to
Our People.
CARTER v. NATIONAL BANK.

CARTER v. NATIONAL BANK.
Supreme Court of Georgia.
January q, 1900.
THE FORECLOSURE OF a MORT
GAGE WILL NOT BE STAYED ON
THE GROUND THAT THE MORT
GAGOR WAS A BANKRUPT AND
HAD NOT BEEN DISCHARGED.
This was an action to foreclosc
mortgage.
The point decided will appear from
the decision of the court.
The court says:
At the return term of the rule nsi
the defendant amended his plea, and
averred that since 1t was filed, aud
during the tendency of the proceed
ingS to foreclOSe the mortgage, he had
been adjudicated BANKRUPT. the adj
Indication having been made on Janu-
airy IA, 1899. and he prays that the
proceedings to foreclose the mortgage
may be stayed as provided In the bank
rupt act of 1898. He further alleged
that 10 trustee had been appointed,
and no meeting OF his creditors held.
This plea was demurred to, and the
demurrer was sustained, and the plea
stricken. and he excepted. 1t will be
noted that The mortgage was executed
about six years before the plaintiff
in error was adjudica ted bankrupt.
and also that no question arose i'll re-
lution to the validity of the debt. nor
the proper execution and record of the
mortgage which was given to secure
1t. Section II of the bankrupt act APP
proved July l. 1895, declares that "A
suit which is founded unon n claim
from which n discharge would be re-
lease. and which is pending against
person ut the time of the filing a petit
ton against him, shall be stayed until
after an adjudication or the dismissal
of the petition: IL such person is adj
Indicated a bankrupt, such action may
be further stayed until twelve months
after the date of such adjudications,
or. If within that time, such person APP
plies for discharge, then until the
question of such discharge Is deter
mined 1t appears from this provi-
sion that stay Of a pending suit
against the person adjudged n bank
rupt VIII, in any event, only be grant
cd when such suit is founded on n
claim from which Il discharge in bank
ruptcy would be q release. Assuming
that the mortgage was regular, and
created Il valid lien on the property of
the BANKRUPT under the provisions of
the bankrupt act. the mortgagee be-
came preferred creditor OF the bank
ruDt. 1t must be evident that 1t was
the intention of congress in the enact
ment OF the bankrupt law to permit q
legally secured creditor to hold to his
security. and that its value should be
Appropriated to his claim, in prefer
ence to general creditors. Now, If
suit against Il bankrupt can only be
stayed when it is founded unon n
claim from which IL discharge would be
n release and preferred creditor is
not allowed, unless he surrenders his
preference, to prove his entire claim.
but proof of his debt otherwise con
N IA u tr1f,t hi o1, :. t.,
DEBT exceeds the value OF the sccurI-
ties. 1t would seem to follow that there
should be no stay OF a proceeding
winch does not seek general or per-
Soiiai Judgment against the bankrupt,
Dut IS only instituted TO foreclose and
establish his lien on property. which
IN no event. unless he surrenders his
uen. can be applied to any other debt
But tIere is another view of the
question. under which we think this
cours is committed to the doctrine that
the state court has jurisdiction to fore
close mortgage after the .mortt,a cor
mas been ajudiCated a bankruDt undor
such provisions of law as are found
IN the act of 1898. So far rs the rights
OF preferred creditors are concerned
there seems to us to be but little diff
Terence between the act of 1898 and
that Of 1897. Under section 5O75 of the
heNlseu statutes OF the United States
which WAS compiled from the last-men-
llo'ieu act. IL is provided that a credi-
tor who has mortgage or pledge of
real or personal property made by the
bankrupt for the purpose of securing
debt shall BE- admitted only as
creditor for the balance of the debt
aite" dcducting the value of the pro-
perry. and. as in the present act, there
is II provision that this value NAV be
ascertained by agreement, and also
that the creditor might release or con-
Vey his claim to the assignee. and be
permitted to prove his whole debt
Practically, the provisions of the two
acts in this regard are the same. I'm
der the act OF 1867 in the case of Toler
V. Passmore, where, pending a pro-
cecding to fOreclose mortgage on
real estate. a plea was interposed that
the mortgasor had been adjudicated a
bankrupt, and a motion made to con-
tinue the case to await the discharge
in bankruptcy. this court held that the
motion to continue was properly over
ruled. because the discharge when had
would not effect the mortgage lien;
and similar ruling was made in
BRADY V. Brady. and in the case of
I'roach V. Powell, 1t was held that the
fact that mortgaged property is sub
Ject TO be administered in bankruptcy
did not entitle the mortgagor to resist
the administration of 1t by foreclosure
and sale under proceedings In the APP
propriate court of this state Affirmed.
ECKER v. LINDSKOG.