Court Opinion

ID: 8804587
Source: CourtListenerOpinion
Date Created: 2022-11-26 14:43:35.140964+00
Date Added: 2024-06-11T17:04:02.882317
License: Public Domain

Mr. Justice Brown delivered the opinion of the court. If the question raised in this appeal as before stated, is to be answered on logical grounds, without reference to ulterior results or to the authority of cited cases, it would seem that there- cannot be much difficulty in its solution. The National Bankruptcy Act in its first section expressly provides that the word “discharge” as used in the act “shall mean the release of a bankrupt from all of his debts which are provable in bankruptcy, except such as are excepted by this Act.” Section 17 of the act provides that “A discharge in bankruptcy shall release a bankrupt from all his provable debts,” with certain exceptions not relevant in this case. A discharge in bankruptcy must be pleaded, but where it is pleaded it is in bar, and a good plea in bar sustained by proof naturally entitles the defendant to -a judgment of nil capiat. It is true that “a debt discharged is not a debt paid,” and consistently with that idea it is the law that a moral consideration remains after the “discharge” or “release” that will support a new promise to pay. It has therefore sometimes been loosely said that “the discharge goes only to the remedy. ’ ’ But while it requires no precedent or argument to show that a discharged bankrupt ought in conscience to see to it that if he afterwards becomes able, his former creditors should be reimbursed for their losses by his bankruptcy, it cannot be called a precise use of words to say that a debt remains legally in existence from which the debtor is “discharged” and “released.” It would seem more proper to say “It is due in conscience, although discharged in law.” And it is not in the forum of conscience but of law that the question must be decided, whether, in the face of the discharge pleaded and without evidence of a new promise, a judgment at law can be rendered against the defendant. That logically it cannot,, would seem plain, and that this is the law in the absence of peculiar circumstances has certainly been stated in Illinois by this court and by the Supreme Court. Friedman v. Verchofsky, 105 Ill. App. 414; Leseure v. Weaver, 108 Ill. App. 616; Phelps v. Curts, 80 Ill. 109. Counsel in effect say that the statements to this effect in these cases are obiter dieta, but they express at all events, very plainly, the thought of the judges writing the opinions. Indeed, there can be no serious denial of the proposition without declaring inconsistent with correct procedure the constant practice of the courts of Illinois. When a discharge is pleaded and sustained, the judgment is denied. If it is not sustained in the opinion of the lower court, and the reviewing court holds that it was so sustained, the latter tribunal reverses and wipes out the judgment that has been given. If the Supreme Court of the state is' adjudged by the Supreme Court of the United States mistaken in upholding lower courts in sustaining such a judgment, the judgment is finally reversed and vacated in accordance with the decision of the Federal Supreme Court. The objection of the defendant is not in these cases limited to the issuance of an execution, but to the judgment itself, and if the objection is sustained, his rights are in accordance therewith. It is plain indeed from their argument that whatever plaintiffs may think of their general right to a judgment without execution against the defendant, they would not have insisted on it except for the ulterior purpose of bringing about a breach of the condition in the bond filed with the justice on the appeal to the Circuit Court, and thus holding the surety on that bond for the amount of the judgment. Why in reason should the court depart from what would otherwise be considered its plain duty in order to bring about this result? The judgment before the justice was obtained within .four months and indeed within three weeks of the filing of the petition in bankruptcy by the defendant. By the express terms of section 67f of the Bankruptcy Act (which has been held in this district and by the great weight of authority elsewhere to apply to both voluntary and involuntary bankruptcies) the judgment, as well as any execution and levy under it, was rendered null and void by the adjudication in bankruptcy. The undertaking of Emma Leroux, the surety in the bond which was given on the appeal, was not to pay the debt, or see that the debt was paid; it was to pay whatever judgment should be rendered against the defendant in a trial de novo, or, if there were no such trial, to pay the judgment of the justice. A surety’s liability is not to be enlarged by construction; it is strictly limited to the express undertaking. There was a trial de novo; the defendant had come into a new defense since the plaintiffs’ judgment before the justice, and he presented that defense to the Circuit Court. Why should the Circuit Court depart from that which it must be conceded would be, except for the liability of this bondsman, its natural, proper and usual method of procedure, in order to fasten a liability on the bondsman? Counsel for plaintiffs suggest, and counsel for defendant repudiate, the theory that the debtor took the appeal and the bondsman executed the bond for the purpose of tying up the creditor until a petition in bankruptcy could be filed. Assume, however, that this is true—where is the moral obliquity? The judgment would have been rendered void, and the execution and levy with it, by the bankruptcy proceedings. "Why should not the expense and annoyance of the execution and the levy be prevented, for the nonce, while the bankruptcy petition was being prepared? For the reasons which we have indicated it seems to us that logically the action of the Circuit Court in refusing to render a judgment against the defendant is justified. The appellants, however, insist that the Branch Appellate Court of this District and the Supreme Court of this state have spoken on this question and given a different answer, and cite and quote at length from Flack v. Moore, 117 Ill. App. 551, and Hill v. Harding, 116 Ill. 92, and 130 U. S. 699, to establish their contention. The opinion in Flack v. Moore is, of course, only authority for us in the case in which it was rendered, and the same may be said of a dictum by Judge Windes of this court in Elder v. Prussing, 101 Ill. App. 655, which is quoted in the argument filed for appellants. However, this is not material, for the law as laid down in Hill v. Harding, 116 Ill. 92, is of course absolutely binding on us. If we could not, as we think, clearly distinguish the situation in that case from the one at bar, in a manner which shows the opinion in the former inapplicable to the latter, we should be obliged to reverse the judgment here complained of. We are not at liberty to heed the suggestion of counsel for appellee that the case of Hill v. Harding has not announced the law correctly. It is conclusive evidence of the law to us. But if Hill v. Harding can be properly distinguished from the case at bar, it cannot be held applicable, and in that case the citations from the Appellate Court, even if they were binding on us, would fail of relevancy herein, for the same distinction can be found in them as in Hill v. Harding. In that case an attachment had been made of the defendant’s goods more than four months before the bankruptcy petition had been filed by him. The lien in favor of the attaching creditor would therefore have been valid as against the other creditors and the assignee in bankruptcy of the deféndant. A bond to release the attachment under the statute had been given. By this the security of the bond had been substituted for what would have been the valid lien of the attachment. By pleading the discharge in bankruptcy, the defendant sought to destroy the substituted security which had already superseded, by force'of the statute, the valid lien which was good against the bankruptcy proceedings. This the Supreme Court of Illinois refused him permission to do, directing the court below to enter a judgment against the bankrupt with a stay of execution, with the evident purpose "of protecting what were plain equities of the attaching creditor both under the state and the federal law. Hill v. Harding, 116 Ill. 92; 107 U. S. 631. The Supreme Court of the United States said, not that there was anything in the Bankrupt Law which compelled such a course, but that there was nothing in the law which forbade it, and therefore no right on its part to interfere with the judgment rendered by the Illinois Court, although in other jurisdictions the question had been decided differently. Hill v. Harding, 107 U. S. 631; 130 U. S. 699. We do not think that this case justifies the claim of the appellants here; and if it is not applicable, neither are the cases cited from the Appellate Court. The cases from other jurisdictions which are cited by the appellants as favoring their contention can be still more easily distinguished, we think, while there are many such, as is conceded by appellants’ counsel, which hold to the contrary view. Such also is the doctrine of a dictum of Chief Justice Waite in Wolf v. Stix, 99 U. S. 1. Section 16a of the Bankrupt Act—that the liability of a surety for a bankrupt shall not be altered by the discharge of such bankrupt—does not seem to us to have any application here, because, so far as the liability of the surety isun question here, the dispute is upon what that liability was. It was not altered by the action of the court in rendering judgment against the plaintiffs. The contention of the appellee is, in the language of Chief Justice Waite in Wolf v. Stix (supra), “the act has not happened on which the liability of the surety was made to depend.” The statement is made by the appellants’ counsel in their argument, that “When the defendant obtains a discharge in bankruptcy after filing an appeal bond, such as the one in this case, and pleads his discharge in bar of further proceedings in the State Court, he has not ‘prosecuted his appeal with effect. ’ ” It is not necessary for us to pass on the soundness of this position. It is manifest, however, that if it be sound, the liability of the sureties does not depend on the action of the court in this suit. The judgment of the Circuit Court is affirmed. Affirmed.