Court Opinion

ID: 4892597
Source: CourtListenerOpinion
Date Created: 2021-09-02 23:52:19.61226+00
Date Added: 2024-06-11T08:09:46.293219
License: Public Domain

Reeves, Associate Justice.
The appellees contend that Booth’s discharge, in bankruptcy satisfied or extinguished the debt due from him to Elliott, and that the vendor’s lien, which was but an incident to the debt, was thereby extinguished.
The tract of land on which the lien is claimed was sold and conveyed by William Elliott and wife to Z. Booth on the 28th day of December, 1866. The note on which the suit was brought bears the same date, is payable to William Elliott or bearer, and was given for the balance of the purchase-money on the land. The original petition was filed June 23,1870, about six months after Booth was discharged in bankruptcy.
Booth demurred to the petition and pleaded his certificate of discharge.
The plaintiff, by a supplemental petition, alleged the sale and conveyance of the land by Booth to B. C. H. Johnson on January 26, 1867, and averred that Johnson had agreed and bound himself in writing to pay Booth’s note to Elliott. The alleged agreement was set out in the petition, but not offered in evidence on the trial. Johnson is charged with notice that the note for the purchase-money was unpaid, and a lien on the land at the time of his purchase from Booth. The plaintiff, in his petition, admitted the discharge of Booth, but averred that Booth was not the owner of the land at the time he made his application for bankruptcy, and charged that he had not reported the land as any part of his estate to the bankrupt court, and that he had also failed to report Johnson’s obligation to pay the note sued on.
Johnson answered by a general demurrer, and specially that the plaintiff’s remedy was against Booth or his as*187signec, or .against him, Johnson, in the bankrupt court, denying the jurisdiction of the State court, and by a separate plea denied the allegations of the plaintiff’s petition.
The demurrer being overruled, the cause was submitted to a jury, under instructions from the court to return a special verdict. The jury returned the following verdict on the special issues submitted by the court:
1. We, the jury, find the amount of the note described in the petition, principal and interest to May 7, 1873, twelve hundred and five dollars and seventy-six cents.
2. We, the jury, find that said note was executed and delivered and promised to be paid as described in said petition.
3. We, the jury, find that said note was given to secure the purchase-money for the land described in the petition.
4. We, the jury, find that Johnson did have notice when he purchased said land that the purchase-money from Booth to Elliott was not paid.
5. We, the jury, find that Booth was discharged in bankruptcy on the 9th day of December, 1869.
The judgment of the court on the verdict was for the defendants ; and the plaintiff’s motion to render judgment for him and his motion for a new trial being overruled, he appealed.
The discharge of Booth in bankruptcy, and which the plaintiff admitted, was a protection as to Booth. The effect of the discharge on Elliott’s lien is the only question in the case.
A discharge in bankruptcy, with certain exceptions, releases the bankrupt from all debts and liabilities which were or might have been proved against his estate. It does not, however, release any person liable for the same debt for or with the bankrupt, either as partner, joint contractor, indorser, surety, or otherwise.
Under this provision of the bankrupt act (sec. 33) it has been held that a creditor may sue any one liable for the *188same debt, and that the suit is not affected by the bankruptcy proceeding. (In re Levy et al., 1 B. R., 66; Payne et al. v. Able, 4 B. R., 67; Citizens’ National Bank v. Leming et al., 8 I. R. R., 282.)
It clearly appears that the discharge is limited in its effect to the bankrupt, and that it cannot avail as a defense to another who may be bound with him for the debt.
It is urged by appellee Johnson that if Elliott had foreclosed his lien in the bankrupt court that he, Johnson, would have been subrogated to Elliott’s rights against Booth, and might have protected himself out of Booth’s estate. The failure of Elliott to proceed against Booth in the bankrupt court did not prevent Johnson from doing so. Johnson by paying the debt would have stood in the place of Elliott, and might have enforced all his remedies against Booth.
The appellees further contend that the bankrupt court having acquired jurisdiction over Booth and his estate, and all persons and questions connected with it, and as Elliott failed to enforce his lien in that court either against Booth or his assignee, that the discharge of Booth was a bar to a proceeding in rem to enforce the lien on the land.
Appellees refer to the case of Jones v. Leach et al., 1 B. R., 165, and the case of Davis v. Anderson, 6 B. R., 146, in support of the jurisdiction of the bankrupt court. In the case of Jones v. Leach, the bankrupt proceedings were pending when the case was decided. An execution from a State court had been issued after the petition in bankruptcy was filed, and which was enjoined until the question of the bankruptcy was disposed of by the bankrupt court. In Davis v. Anderson the court said a secured creditor must prove his demand and obtain the aid of the bankrupt court, and cannot wait until the bankruptcy proceedings are closed and then enforce his lien through the State courts. In this case a judgment had been rendered against the bankrupt before his bankruptcy, and execution had been issued after his petition had been filed and the suit was brought by the *189assignee against the purchaser. The court said a sale of the debtor’s land by virtue of an execution issued and levied after the tiling of the petition in bankruptcy will not pass the title of the land as against the assignee, although the judgment was entered and the lien created prior to the bankruptcy.
In the case at bar there are no questions to he settled with the assignee. The assignee is not a party to the suit. The bankruptcy has been closed, at least a discharge has been granted. The other creditors are not interested in the result of this suit. Booth having conveyed the land on which the lien is claimed to Johnson about one year and eleven months before he filed his petition for adjudication in bankruptcy, he had no interest in the property at that time. The property was never reported to the bankrupt court as any part of his estate, and the bankrupt court never had any jurisdiction over it, as Booth had parted with his title long before the court had acquired jurisdiction over him or his estate or his creditors, and which was not questioned by the assignee or any other party pending the proceedings in bankruptcy. As between Booth and Johnson there may have been a question of indebtedness growing out of Johnson’s purchase from Booth, in which Booth’s other creditors or his assignee may have been interested. But that question is foreign to the present inquiry, and cannot affect Elliott or his right to enfore the lien if it has not been lost in some other way.
If the cases of Taylor v. Bonnett, 38 Tex., 521, and Johnson v. Poag, 39 Tex., 92, overruling Garner v. Smith, are to be taken as deciding that the State courts can in no case enforce a lien after an adjudication in bankruptcy, the decision is not in harmony with the current of authority on this question.
In the case of Jones v. Lellyett and Smith, 39 Ga., 64, it was held that a creditor having a judgment lien may enforce it upon property purchased from a bankrupt after the judg*190ment was rendered and before the filing of his petition for bankruptcy, when the judgment and the property had not been before the bankrupt court for adjudication. Also, Truitt et al. v. Truitt, 38 Ind., (Black,) 16, 26, 27. In this case the court said: “A discharge in bankruptcy does not release a mortgage or other lien on property created prior to the commencement of proceedings, nor prevent the enforcement of the lien. ’ ’
A lien created by the levy of an attachment from a State court more than four months prior to the commencement of the proceedings in bankruptcy does not oust the State court of jurisdiction to enforce the lien by a sale of the property, although a discharge has been granted. (Bates v. Tappan, 3 B. R., 159; 99 Mass., 376; Bowman v. Harding, 4 B. R., 5; Leighton v. Kelsey et al., 4 R. R., 155; Vaillant, Lessee, v. Childress, 21 Wall., 643.)
In Vaillant v. Childress, the court said: “ Where the power of a State court to proceed in a suit is subject to be impeached, it cannot be done except upon an intervention by the assignee, who shall state the facts and make the proof necessary to terminate such jurisdiction. This rule obtains, whether the four-months’ principle is applicable or whether it is not applicable.” This case was not published when the cases of Taylor v. Bonnett (38 Tex.) and Johnson v. Poag (39 Tex.) were decided.
The cases here referred to are judgment liens, attachment liens, and mortgage liens. The case at bar is a vendor’s lien, and unless there is some distinction in this respect between the cases the rule of construction should be the same.
The bankrupt act recognizes mortgages and liens generally on real or personal property by providing for the payment of the balance of the debt after deducting the value of the property. (Sec. 20.)
A vendor’s lien for the purchase-money attaches to the land and follows it into the hands of a subsequent purchaser *191with notice. (Briscoe v. Bronaugh, 1 Tex., 326; Neel v. Prickett, 12 Tex., 138; McAlpin v. Burnett, 19 Tex., 497.)
The bankrupt law does not discriminate between liens of different kinds, and certainly it does not discriminate against a vendor’s lien, but protects it as other liens are protected. When the property is sold by the assignee, the purchaser takes it subject to the lien, and acquires no better right than the bankrupt has. (In re Nebane, 3 B. R., 91; In re McClellan, 1 B. R., 91; Kelley v. Strange, 3 B. R., 2.)
It clearly appeared from the evidence on the trial of this cause that the note on which the suit was brought was given in part payment for the land sold by Elliott to Booth before his bankruptcy, and that Johnson had actual notice that the note was unpaid, and that Elliott had a lien on the land when he, Johnson, purchased from Booth, and that this was prior to the bankruptcy. It further appeared that the land was never reported to the bankrupt court for adjudication, and that Booth was discharged in bankruptcy before the institution of the suit. The verdict of the jury was in accordance with the evidence. The amount of the note, principal and interest to May 7, 1873, the time of the trial, as found by the jury, was $1,205.76.
We are of opinion that the court erred in rendering judgment on the special verdict for the defendants. The judgment should have been entered for appellant for the sum found by the jury to be enforced against the land, hut not to be enforced as a personal judgment against Booth nor Johnson, or any other property. (See Vaillant, Lessee, v. Childress, 21 Wall., 643.)
The judgment is reversed, and judgment is here rendered for appellant on the special verdict of the jury in accordance with this opinion as should have been done by the District Court.
Judgment reversed and rendered.
Reversed and rendered.