Court Opinion

ID: 6673636
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:14:12.787268+00
Date Added: 2024-06-11T16:00:37.545769
License: Public Domain

.The opinion of the Court was delivered by
Moses, C. J.
The position assumed for the appellant, David Kibler, that his discharge in bankruptcy operated as a full release of his obligation to the respondent of 16th September, 1856, cannot be maintained. It regards the bond as creating a debt against all the obligors through its penalty, which could only be enforced at law by an action of debt, in which a final judgment would be obtained for its full amount, and therefore it is urged that proof of any existing demand under it, in a Court of bankruptcy, extends to, covers and discharges the whole obligation, though, even at law, the amount to be collected would be restricted to the sum really *315due. But an action on a bond, though only for the payment of money, is not' necessarily confined to one of debt on the penalty. Covenant may be brought on the condition. In 2 Robinson’s Pr., p. 58, it is said: “Covenants the performance whereof is secured by a penalty are susceptible of a two-fold remedy. 1st. An action of debt for the penalty, after the recovery of which the plaintiff' cannot resort to the covenant, because the penalty is a satisfaction of the whole. 2d. An action of covenant in which the plaintiff, waiving the penalty, proceeds on the covenants and may recover more or less than the penalty — -toties quoiies.” If the respondent had offered, in the Court of Bankruptcy, proof of the liability of the appellant as surety on the bond for the faithful discharge by the principal of the duties incumbent bn him as such agent, its extent would not have been measured by the penalty but by the amount then due through the default of the said L. B. Maffett, for whom the said Kibler stood bond as surety.
By Section 3719 of the Revised Statutes of the United States, (corresponding with the 34th Section of the bankrupt Act,) “ a discharge duly granted shall, subject to the limitations imposed by the two preceding Sections, release the bankrupt from all debts, claims, liabilities and demands which were or might have been proved against <his estate in bankruptcy.” If the debt is provable, it has been uniformly held that the action is barred although it was not actually proved. ■ •
By Section 5014 of Revised Statutes,' “the filing of the petition shall be an act of bankruptcy and the petitioner shall be adjudged a bankrupt.”
It is laid down, both in James and Bump, the latter at page 232, referring to the authorities so deciding, “ that a certificate of discharge is a bar only to debts and demands which were or might have been proved, but not as against personal covenants and engagements which were not provable. If a demand is not provable it is not barred by the certificate.”
At the time of the adjudication of Kibler ás a bankrupt a present right of action accrued to the company for the defalcation in the account of the agent by which a certain sum due could be ascertained. This was provable. It was “ a legal debt subsisting before the bankruptcy.” If the other surety had on the same day offered to pay to the company whatever sum was then due by reason of the said bond, could any further amount have lawfully been de*316manded of him? If the company could have then proved for more than such amount, by what form of oath could the claim have been verified ? For what was the bankrupt actually liable when he filed his petition ? Not for the penalty of the bond, but the loss in money to the company by the default of the agent. Even in an action of debt on a penalty of a bond other than for the payment of money the plaintiff may be required to submit the condition to a jury to assess the debt or damages actually due, and the execution shall be levied accordingly, though the judgment for the penalty shall stand as a security for the sum so assessed with costs. — 7 Stat. at Large, 280. The company could have proved whatever demand it then had against the bankrupt, and the Circuit Judge properly held that as to these he was discharged.
We do not, however,-concur with him in holding thatKibler was liable to the extent fixed by the decree. If it was competent for the company to have proved, before the final discharge, claims against the bankrupt, through his bond, though arising after his adjudication, on the same principle by which he is held released from the claims existing at the time of filing his petition he will be discharged from such after-accruing demands.
The 5069th Section of the Revised Statutes provides that “ when the bankrupt is bound as a drawer, endorser, surety, bail or guarantor upon any bill, bond, note or any other speciality or contract, or for any debt of another person, and his liability has not become absolute until after the adjudication of bankruptcy, the creditor may prove the same after such liability has become fixed and before the final dividend has been declared.” The bond in question created a continuing liability. It did not stipulate for payment of specified sums at stated periods. It was to endure while Maffett was retained as agent at the depot named, or until notice from Kibler or his co-surety that he would not be further bound. Each and every succeeding default created a new demand, from which arose a new cause of action.
The debts actually due at the time of filing the petition created an absolute liability. Those wherein the bankrupt was bound in the character specified in the said Section, and which became absolute after his adjudication but “ before the final dividend was declared,” are provable by the force and effect of the provision referred to. Not so, however, with a debt fixed by a default after *317such time. The discharge cannot operate upon it, because it arises after the period within which claims are allowed by the Act to be proved.
In re Loder (4 B. R., 190,) it was held that “a claim against a bankrupt or drawer, endorser, surety, bail or guarantor cannot be proved before the liability has become fixed. Until that time it,is not regarded as a debt due and payable, or even- as a debt existing, but not payable until a future day, so as to be provable.”
In Loring vs. Kendall, (1 Gray, 305,) Fowler vs. Kendall, (44 M., 448,) [we quote from Bump on Bankruptcy, 735,] it is said: “ The discharge does not release a surety from liability on a bond given by an officer for the faithful performance of his duties where the breach occurred after the discharge was granted.”
In the same case of Fowler vs. Kendall it was held that “ a bond to secure the faithful performance of official duties is a continuing indemnity, and every breach of it is a good cause of action, affording a remedy when, and only when, each severally occurs.”
It appears by the brief that on the 31st August, 1870, the deficit of Maffett, the agent, amounted to $1,250.86. In the following month the estate of the bankrupt (Kibler) was settled up by the assignee. To that time, in our view, the claim was provable, and the bankrupt is, therefore, released from it by his discharge.
The deficiency for which the sureties were liable on the removal of Maffett in February, 1872, was $1,803.47. Of this amount, the bankrupt is discharged from the said $1,250.86, the sum which was provable before the last dividend was declared, leaving $552.61, with interest from 29th February, 1872, for which, with the costs, the respondent may take judgment.
The decree below is so accordingly modified.
Wright, A. J., and Willard, A. J., concurred.