Case Name: James M. Brown, Executor of Edward L. Kroh, deceased, v. Charles L. Kroh, Executor of Elizabeth Kroh, deceased
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1877-12
Citations: 31 Ohio St. 492
Docket Number: 
Parties: James M. Brown, Executor of Edward L. Kroh, deceased, v. Charles L. Kroh, Executor of Elizabeth Kroh, deceased.
Judges: 
Reporter: Ohio State Reports, New Service
Volume: 31
Pages: 492–499

Head Matter:
James M. Brown, Executor of Edward L. Kroh, deceased, v. Charles L. Kroh, Executor of Elizabeth Kroh, deceased.
1. A discharge in bankruptcy, duly granted under the act of March 2,1867, when pleaded in bar to an action for prior indebtedness, can not he impeached in a state court, notwithstanding the bankrupt purposely omitted the indebtedness sued upon from the schedules, and-purposoly omitted giving the creditor notice of the pendency of the proceedings.
2. A failure to demur to a reply that does not contain matter sufficient to avoid a defense set up in the answer, is not a waiver of the right to object to the sufficiency of the reply, and will not affect the judgment to he rendered.
Motion for leave to file petition in error to reverse the judgment of the District Court of Lucas county.
The original action was brought by Elizabeth Kroh against James M. Brown, executor of Edward L. Kroh, deceased.
The petition contained four causes of action.
The first being for money lent in October, 1865—$200.
The second on an account stated in January, 1866—$80.
The third for money lent in November, 1866—$256.
The fourth was on an account for boarding, lodging, washing, mending, etc., from January 1, 1865, to September, 1868, and for boarding, lodging, nursing, care, etc., in last sickness, from December 10,1870, to January 20,1871; which, in the aggregate, it is alleged, was reasonably worth $1,000.
To the first three causes of action, and so much of the fourth as accrued prior to September 19, 1868, the defendant, by answer in bar thereof, set up the discharge of Edward L. Kroh in bankruptcy, which was operative from the date last above named.
To this defense the plaintiff replied that Edward L. Kroh, well knowing of her claims and the amount thereof, purposely omitted her name from the schedules and proceedings, and purposely omitted giving her notice as required by the bankrupt law; that she was not notified of the proceedings, and did not appear therein; that, consequently, the bankrupt court had no jurisdiction of the plaintiff, or of the several causes of action sued on, and that her rights were not affected or impaired by the proceedings and discharge in bankruptcy.
On the ti’ial the jury was instructed by the court to bring in a general and also a special verdict. The general verdiet was for the plaintiff for $1,654.55.
By the special verdict, returned in writing, it was found : 1. That of the amount found due to the plaintiff on the fourth cause of action, $200 had accrued after September 19, 1868 ; and, 2. That the plaintiff had no knowledge of the pendency of the proceedings in bankruptcy while they were pending.
The defendant moved to set aside the verdict and for a new trial on the ground, among others, that the verdict was against the law of the case.
The motion was overruled by the court, and the defendant excepted.
Thereupon the court rendered judgment in favor of the plaintiff for the amount found in the general verdict.
On error the district court affirmed the judgment.
' After the judgment in the district court, Elizabeth Kroh died,-and Charles L. Kroh, her executor, is made party defendant in error.
The plaintiff in error moves for leave to file a petition in error to reverse the judgments of the courts below. The errors assigned are that the district court erred in affirming the judgment of the court of common pleas, and in not reversing the judgment and rendering the judgment that the court of common pleas should have rendered.
Lee, Brown $ Hueston, for the motion :
1. The validity of an order of discharge in bankruptcy, under the act of 1867, can not be inquired into either directly or collaterally, in a state court. Bankrupt Act, sec. 34 ; Smith v. Ramsey, 27 Ohio St. 339 : Rayl v. Lapham, 27 Ohio St. 452 ; Howland v. Carson, 28 Ohio St. 625 ; Cory v. Ripley, 57 Me. 69; Ocean Bk. v. Olcott, 46 N. T. (Ct. Appeals) 12-15 ; Oates v. Parish', 47 Ala. 157; Parker v. Atwood, 52 N. H. 000; Way v. Howe, lOBMass. 503 : Thurmond v. Andrews, 10 Bush (Ky.), 400 ; Thomas v. Jones, 39 Wis. 124; Hudson v. Bingham, Term. This case is reported in Am. Law Reg., Oct. 1873, and in 18th Yol. N. B. 494.
2. A discharge releases the bankrupt from all debts, that are in their nature proveable in bankruptcy, whether contained in the schedule of creditors furnished by the bankrupt or not. Bankrupt Act, secs. 32, 33, 34.
Tbe well known distinction between proceedings in personam and in rem is apparent in this bankrupt act. The proceeding it provides for is in rem wholly, and in nothing in personam; there is no actual service provided for to auy creditor at any stage of the proceedings. As in divorce, there is provision for mailing a notice to the creditor where he is supposed to be, but it matters nothing whether he gets that notice or not.
We may lay it down as a proposition, we think, that the bankrupt act of 1867 makes the proceedings matters of public record, and public notice of them, required by the act, having been given, the creditors can not impeach the decree of bankruptcy, but are bound thereby as by a decree in rem. ■
See. 38, 2d clause, says: “The proceedings in all cases of bankruptcy shall be deemed matters of record.”
Shaiohan v. Wherritt (7 Howard, Sup. Court.), 17 Curtis, 328 ; Mitchell v. Singletary, 19 Ohio, 291.
Scribner, Hurd $ Scribner, contra:
If the demurrer to the reply had been overruled, the defendant, by failing to submit to final judgment upon the demurrer, and going to trial upon the issues made in the pleadings, would have waived his right to insist upon alleged error of the court in overruling the demurrer. Ellison v. Allen, 8 Florida, 206; Hooker v. Johnson, 8 Florida, 453 ; Sheppard v. Shelton, 34 Ala. 652 ; Duncan v. Hobart, 8 Clarke, 337; United States v. Boyd, 5 How. H. S. 29, 51 ; Baileys v. Swope, 4 Ind. 217 ; Harbert v. Dumont, 3 Ind. 346; Stallings v. Newman, 1 Minn. 134 ; Becker v. Sandusky, etc., Bank, 1 Minn. 314 ; Moore v. Bess, 1 Morris, 401; Frink v. The State, 1 Eng. 141; Veeder v. Wrights, 1 Eng. 416; Smith v. Taylor, 41 Iowa, 214; Warner y. McGoon, 2 Scam. 74.
There is nothing ih the statutes of Ohio changing this rule of the common law. The act of March 12,1845 (43 Ohio L. 80, sec. 4), was repealed on the adoption of the Code. S. & C. 1143.
"We insist that as to the plaintiff'below, the discharge in bankruptcy is inoperative, for the reason that she never had her day in court, and was in no manner a party to the proceedings. We do not propose, in any manner to impeach the discharge. We assume that as to all creditors who had notice in the manner prescribed by the bankrupt act, or who were in court, the discharge is effective; as to all others it has no effect. Batchelder v. Low, 43 Vt. 662 ; Commercial Bank of Manchester v. Buckner, 20 Howard, 108, 120-1. Bump’s Bankruptcy, 4th ed. 51-3 ; 7th ed. 26 and 642-3; Anonymous, 1 Bank. Reg. Supp. xxvii; octavo ed. 122,124; Banner v. Moore, 2 Bank. Reg. 174 ; octavo ed. 573; Beards-lee v. Hull, 36 Conn. 270, 277; Suyclam, et al. v. Walker, 16 Ohio, 122, 125; In Be Penn., 3 Bank. Reg. 145; octavo ed. 582 ; In Be Goodfellow, 3 Bank. Reg. 114 ; octavo ed. 452; Berlins v. Gay, 3 Bank. Reg. 189 ; octavo ed. 772 ; Card v. Walbridge, 18 Ohio, 411.
The bankrupt act of 1841 contained no provision for notifying the creditors except by publication. See U. S. Stat. at Large, p. 441, sec. 1, and p. 446, sec. 7.
The assignee was appointed by the court at its discretion. See U. S. Stat. at Large, p. 443, sec. 3.
The only notice to creditors personally was on application for the discharge. See U. 'S. Stat. at Large, p. 443, sec. 4.
The act of 1867 requires personal notice, as well as notice by publication, of the application. And it secures to creditors the important right of participating in the selection of an assignee. Act of 1857, secs. 11, 12, 13.

Opinion:
Gilmore, J.
1. The first question presented in this case is : Was the discharge in bankruptcy, as pleaded, a bar to the first three causes of action, and so much of the fourth cause of action as accrued prior to September 19, 1868 ?
At the time the judgment was rendered in the court of common pleas and affirmed in the district court, this question had not been authoritatively decided in this state under the bankrupt act of 1867.
Since that time the following cases involving the question have been decided by the supreme court commission : Smith v. Ramsey, 27 Ohio St. 339; Rayl v. Lapham, 27 Ohio St. 452, and Howland v. Carson, 28 Ohio St. 625. It is held in all these cases, .in effect, that the jurisdiction of the United States court, in which the bankrupt proceedings were had, is exclusive, and that the discharge can not be impeached in a state court.
In Rayl v. Lapham, the plaintiff below was not notified of the proceedings in bankruptcy, and notice to him was prevented from being given by reason of the fraud of the bankrupt, in representing in his schedule of creditors filed in said proceedings, that the plaintiff's residence was unknown to him, while in fact it was well known. It was held that this did not furnish a ground for collaterally impeaching the discharge in a state court. In the ease before us, the plaintiff below was not notified of the proceedings in bankruptcy, because the bankrupt well knowing .of her claims and the amount of them, purposely omitted her name from the schedules, and purposely omitted giving her notice of the proceedings. The difference in the facts in this respect, will not make the cases distinguishable from each other in principle.
It is contended in argument that the intentional omission of the plaintiff's name from the schedules was not fraudulent. It is said that the plaintiff was the bankrupt's mother, and that he purposely omitted her name, because he did not intend that her claims against him should be barred by the proceedings, as he intended, in good faith, to pay her claims'in full from his subsequent earnings. . It is further said that this was no fraud upon the other creditors of the bankrupt, because it lessened the aggregate amount of his indebtedness, and thereby increased the dividends that they would receive. If the question, was one of morals or filial duty, the- argument would be at least plausible; but it is without force in the face of the bankrupt law, the first clause of the twenty-ninth section of which requires the bankrupt to make out and file, under oath, schedules containing a true statement of all his debts, etc. This is required in order that all his creditors'may receive a pro rata share of his estate. The intentional omission of the plaintiff's name was, therefore, not only a fraud upon her, but was also a fraud upon the law itself.; and would have constituted a goód ground, under the thirty-fourth section of the law, for .setting aside the discharge in the court that- granted it. Rayl v. Lapham is approved and followed.
The discharge as pleaded was, therefore, a bar to all claims of the plaintiff that had accrued prior to September 19,1868.
The cases above cited are fully sustained by the great weight of authority. See Bump's Law and Practice of Bankruptcy (10th ed.), 286, 287, 751, 778, and the cases there cited. Contra, Batchelder v. Low, 43 Vt. 662; Beardsley v. Hall, 36 Conn. 270.
2. Prom what is said above, it is apparent that the matters set up in the reply were not sufficient in law to avoid the defense well pleaded in the answer. But it is contended by counsel for defendant in error, in effect, that by failing to demur to the reply, and going to trial on the issues made by the pleadings, the defendant below waived his right to object, after verdict, to the sufficiency of the reply. In this'view we do not concur.
Inasmuch as the matters set up in the reply were insufficient in law to avoid the defense set up in the answer which went to the first three, and all the fourth cause of action, except that portion that accrued after September 19, 1868, as to which no defense was made, the defendant was entitled to judgment on the pleadings, as to all the plaintiff's causes of action, except that portion of the fourth cause which stood admitted; and if the defendant had moved for judgment before the trial, it would have been the duty of the court to have rendered judgment as above indicated, leaving the uncertain amount of that portion of the plaintiff's fourth cause of action that was admitted, alone to be ascertained. Such a judgment was not asked for by the defendant, and the cause was tried, and a general verdict, which was unauthorized by the pleadings, was rendered in favor of the plaintiff for the aggregate amount •of all the causes of action set out in the petition, and in .addition, the jury, by a special verdict, found $200 to be the amount admitted to be due to the plaintiff on her fourth eause of action.
By failing to. demur to the insufficient reply in avoidance of his defense, the defendant did not waive his right to insist upon the proper judgment after the verdict.
The court was bound to give judgment on the whole record, and, therefore, to examine the sufficiency in law of all allegations through the whole series of the pleadings, and then to adjudge either for the plaintiff or defendant, according to the legal right, as it might, on the whole, appear, without regard to the issues that were raised and decided between the parties. Code of Civil Procedure, § 89, 370, 382-384.
The pleadings and special verdict in the case entitled the plaintiff to a judgment for $200 and proper interest, and no more.
The judgment renderéd in favor of the plaintiff in the court of common pleas is erroneous, and the error is apparent on the record, without the aid of a bill of exceptions. The judgment of the district court is, therefore, reversed, and this court proceeding to render the judgment the district court ought to have rendered, reverses the judgment of the court of common pleas, and remands the cause to the latter court with instructions to render judgment in favor of the plaintiff below for $200, with proper interest and costs.
Judgment .accordingly.