Court Opinion

ID: 8634593
Source: CourtListenerOpinion
Date Created: 2022-11-24 19:43:06.99099+00
Date Added: 2024-06-11T16:55:53.279947
License: Public Domain

BENEDICT, District Judge.
The twenty-first section of the bankruptcy act declares that “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.” This is a very clear provision, the object of which is to prevent a race of diligence between creditors, and to protect the bankrupt from being harassed with suits pending the question of his discharge. It seems to apply to all cases where the personal liability of the debtor is sought *173to be fixed or ascertained by a final judgment pending the determination of the question of bis discharge, and, in my opinion, it applies to a case like the present, where an action against one of the bankrupts is pending in the court of appeals of the state, to which an appeal had been taken by him prior to the filing of the petition in bankruptcy. In such a case there is no final judgment within the meaning of the bankruptcy act; the debtor’s liability has not been finally determined, and there being no final judgment, the bankruptcy act declares that the suit shall stop, pending the determination of the question of the bankrupt's discharge. This option to endeavor to obtain a discharge in bankruptcy, and, failing in that, to defend all undetermined personal actions, is a right given a debtor by the bankruptcy act under the constitution of the United States, and he is entitled to be protected in that right by this court. But it is said that the motion for further security, which has been noticed by the creditor in the actions pending in the court of appeals, is not strictly a proceeding against the bankrupt. I think otherwise. It is just the proceeding which will compel the bankrupt to determine, pending his application for his discharge, whether to defend the suit or allow a final judgment. But the bankruptcy act does not permit him to be forced to decide that question now. It declares that no such suit shall be allowed to proceed until he has had a reasonable time to obtain his discharge, if he can, and the mandate of the act to this court is to stay such a proceeding in whatever court it may be pending. My opinion, therefore, is, that it is the clear duty of this court to maintain the injunction heretofore granted against the petitioners until the bankrupt shall have had a reasonable time to obtain his discharge. What effect the discharge, if obtained, will have upon the proceedings pending in the state courts, I do not undertake to decide. The motion must be denied.