Court Opinion

ID: 6673244
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:13:59.352745+00
Date Added: 2024-06-11T16:00:36.859944
License: Public Domain

The opinion of the Court was delivered by
Willard, A. J.
It will not be necessary to consider the question, whether the pendency of proceedings in bankruptcy in the District Court of the United States destroys or .impairs the jurisdiction of the State Courts over an action commenced prior to the filing of the petition in bankruptcy, either for or against the bankrupt. The Act of Congress, under which such an interference with the ordinary jurisdiction of the State Courts is alleged to exist, should admit of no other reasonable construction before that conclusion is arrived at. It is doubtful whether such is the intent of the bankrupt law. The very clause of that Act, hereafter recited as controlling the results of the present appeal, impliedly admits the continuance of that jurisdiction after the commencement and .during the pendency of proceedings of that nature. Section 21 of the Bankrupt Act of 1867 bears upon the question now to be considered, and contains the following clause: “ And no creditor, whose debt is provable under this Act, shall be allowed to prosecute-to final judgment any suit at law or in equity therefor, against the bankrupt, until the question of the debtor’s discharge shall have been determined, and any such suit or proceeding shall, upon the application of the bankrupt, be stayed to await the determination of the Court in bankruptcy, on the question of the discharge.” Then follows a proviso, intended to secure due diligence in the prosecution of the bankruptcy proceedings, and also to enable the District Court to authorize the parties to the suit in the State Courts to proceed for a specific purpose, notwithstanding the provisions of the Section already recited. As no question is made here, under the terms of this proviso, it need not be further considered at this time.
The object of the above recited clause is apparent, and needs no resort to implications. That object is to harmonize the respective jurisdictions of the District and State Courts, and not to destroy that of the latter.
It is manifestly proper that provision should be made for suspending, temporarily, proceedings based upon provable debts of the bankrupt, or affecting his assets in jurisdictions independent of the Court proceeding in bankruptcy, unless such extrinsic jurisdiction can be brought to act in aid of that Court. Between the filing of the petition in bankruptcy and the final discharge, proceedings in *515the State Courts will ordinarily be useless, if not detrimental, to the mutual interests of the bankrupt and his creditors. The status of the liabilities of the bankrupt is fixed with reference to the commencement of bankrupt proceedings, and it is not within the power of the State Courts to alter the state of relations, as affecting the liabilities or estate of the bankrupt, after the jurisdiction in bankruptcy has attached, so as to modify, in any way, the mode of distribution or the effect of a discharge.
We must regard, then, the proper effect of the clause of Section 21, above quoted, to be to make it the duty of the State Courts, in which the action or other proceeding is pending, to grant, on the demand of the defendant, a, stay of all proceedings before judgment, or until the determination of the proceeding in bankruptcy, where it appears that there is a proceeding in bankruptcy pending against the defendant, and that the demand on which such action or proceeding is brought is capable of being proved against the bankrupt in such proceeding in bankruptcy.
In the present case, the plaintiffs had a judgment in the Circuit Court prior to the commencement of the proceedings in bankruptcy; but under the law, as it then stood, such judgment did not, in itself, and independently of the issue of an execution thereunder, operate as a lien on the real estate of the judgment debtor. Subsequently the plaintiffs proceeded, in accordance with Section 14 of the Act of November 25, 1873, (15 Stat., 498,) by summons, to make such judgment a lien on the real estate of the judgment debtor. The defendant objected to this proceeding, on the ground that proceedings in bankruptcy were pending against him. The Court refused to allow the objection of the defendant, and proceeded to set up the judgment as a lien against the defendant’s estate.
The question to be considered is, whether the case is one contemplated by the above cited clause of Section 21 of the Act of Congress.
Section 14 of the Act of November 25,1873, after providing that future judgments should be a lien upon real estate, provided as follows: “ And in cases where judgments have been obtained since the first day of March, A. D. 1870, a like lien may be obtained by the service of the summons upon the judgment debtor, or, if he be dead, upon his heirs, executors or administrators, to show cause, if any he or they may have, why said judgment should not be and become a lien, in accordance with the provisions of the Act; and *516if no sufficient cause can be shown to the contrary, said judgment shall be and become a lien on all the real property of the judgment debtor in the County where entered, for ten years from the date of the filing of such summons, with proof of service thereof, in the office of the Clerk of the Court of Common Pleas of the County where such judgment has been entered.”
The proper effect of this proceeding is to give that which is precisely equivalent to a judgment entered originally, as of the day when the original judgment is revived. The revived judgment has, in two respects, characteristics substantially differing from that which is the foundation of the proceeding. It constitutes a lien on real estate in the County, and it runs for ten years from its entry. The proceeding is, then, one based upon an existing judgment, and having for its end the obtaining of a judgment having certain attributes distinct from that on which the proceeding is founded, including a more efficient means of procuring satisfaction and a longer duration of its efficiency. It must, therefore, be considered, as within the intent and meaning of the Act of Congress, a final judgment, and the proceedings to obtain such judgment are subject to be stayed, on the application of the debtor. That application having been duly made, it was the duty of the Court to stay the proceedings on the part of the plaintiff to renew the judgment, until the question of discharge is finally adjudicated.
It is ordered and adjudged that the order of the Circuit Court, and the judgment entered thereon, be set aside, and that the proceedings of the plaintiffs to renew the judgment be stayed until the District Court shall have finally adjudicated the right of the defendant to a discharge in bankruptcy, or shall authorize the parties to such proceeding to further prosecute the same.
Moses, C. J., and Wright, A. J., concurred.