Bank of Commerce v. Elliott

• Decision Date: 19 March 1901
• Citation: 109 Wis. 648,85 N.W. 417
• Parties: BANK OF COMMERCE v. ELLIOTT ET AL.
• Court: Wisconsin Supreme Court

109 Wis. 648

85 N.W. 417

BANK OF COMMERCE

v.ELLIOTT ET AL.

Supreme Court of Wisconsin.

March 19, 1901.

Syllabus by the Judge.

1. An order having been made in bankruptcy proceedings in the federal court, directing the trustee under section 11b of the bankrupt act to intervene in a suit pending in a state court to which the bankrupt is a party, the latter court will be governed, in deciding an application to permit such intervention, by state laws and judicial policy.

2. If such an application to intervene is denied, only a party actually aggrieved by the adverse decision can be heard on appeal therefrom; and the trustee cannot be so heard unless he shall have first applied to the state court, failed in his application, and appealed specially from the decision.

3. A discharge of a debtor in bankruptcy does not extinguish for all purposes a debt upon which it operates, so as to displace the jurisdiction of the state court in a pending action to enforce it. Notwithstanding the discharge, the cause of action to recover the debt continues, unless the bankrupt insists upon his discharge by pleading it in bar of further proceedings in the suit.

4. If a person is discharged from his debts in bankruptcy, pending a suit against him to recover a debt upon which such discharge operates:

(a) The plaintiff, by leave of court, and before answer setting up the discharge, may discontinue the action without costs, and will generally be permitted to do so;

(b) The suit may proceed to judgment notwithstanding the discharge, if the defendant does not, by a proper proceeding, insist upon it as a defense;

(c) Upon the defendant applying to the court for leave to plead his discharge in bankruptcy, the court may, as terms of granting such application, require a waiver of any costs up to the time of setting up the new defense;

(d) The right to plead the discharge in bankruptcy may be waived by unreasonable delay to the plaintiff's prejudice or by answering without setting up the discharge;

(e) If the defendant pleads his discharge as a defense to the plaintiff's claim, no terms being imposed, the cause will stand for trial like any other. If the defendant recovers he will be entitled to costs the same as in other cases, and plaintiff will be entitled to costs if he recovers.

5. If a debt is discharged in bankruptcy pending an action in the state court to recover the same, and there is a lien created by law incident to such debt, a plea in bar of further proceedings in the case will not preclude the court from rendering such a judgment as may be necessary to enable the plaintiff to enforce the lien, if, notwithstanding the discharge, it is preserved by the bankrupt act.

6. The interest which the plaintiff in a garnishee action obtains in the property or credits of the defendant, by the due service of a garnishee process upon the person liable to such defendant as a debtor or custodian of his property, is a lien created by law within the meaning of the bankrupt act, and an action pending to recover an indebtedness which has been discharged in bankruptcy, having a garnishee action incidental thereto, will survive the discharge and defense on that ground, so far as to permit a judgment in form against the defendant, enforceable as to the equitable lien secured in the garnishee action.

7. The defendant in an action to which a garnishee action is incident, in which issue has been joined, is a joint defendant with the garnishee in the latter action, and under circumstances coming within the last clause of section 2772, Rev. St. 1898, a judgment for costs may be rendered in favor of the two jointly.

8. Where a cause of action, existing at the time an action was commenced to enforce it, has been fully extinguished, the action cannot proceed for the mere purpose of the recovery of costs.

9. The principle last announced does not apply to the status of an action, to recover a debt after it has been discharged in bankruptcy, commenced before such discharge.

10. An appeal from a judgment will not bring up for review an order entered denying a motion to set the judgment aside and grant a new trial.

11. Where a judgment is reversed and a new trial granted, this court has discretionary power under section 2949, Rev. St. 1898, to direct that the costs taxed in this court in favor of the prevailing party shall abide the final result in the court below.

12. Where the amount in controversy, exclusive of costs, is only $3.11, and the party appealing fails to take such proceedings in the court below as will render it probable that in case of a reversal a more favorable judgment will be obtained than before, and a new trial is required, the costs taxed in this court in favor of the prevailing party will be made to abide the final result.

Appeal from circuit court, Douglas county; A. J. Vinje, Judge.

Actions by the Bank of Commerce against John E. A. Elliott and others. The actions were tried together. Judgment for defendants, and plaintiff appeals. Judgments in the main action and the first garnishee action reversed, and in the second garnishee action affirmed.

A main and two garnishee actions. The main action was to recover on a promissory note of $200. Defendant Elliott pleaded that the debt, as to him, had been discharged in bankruptcy proceedings prior to the commencement of the action. The three actions were submitted to the court for determination at the same time, on a stipulation of facts of which the following is the substance:

The first garnishee action was commenced March 8, 1898. The Northwestern Coal Railway Company answered, disclosing an indebtedness to defendant Elliott of $57.50 for wages earned in February, 1898, and $17.50 for wages earned in March, 1898, up to the time of the commencement of the garnishee proceedings, and claiming that such indebtedness was exempt as Elliott's wages, he having a family dependent upon him for support. A second garnishee action was commenced December 9, 1898. The garnishee answered disclosing indebtedness to Elliott of $72.10 as wages earned in November, 1898, and $24.60 as wages earned in December up to the time of the garnishment. Issue was taken by plaintiff on the answer of the garnishee in each case. December 29, 1898, Elliott was adjudged a bankrupt in the United States district court for the Western district of Wisconsin. The indebtedness sought to be recovered in the main action, at the time of the commencement thereof, was due plaintiff as alleged in the complaint, and no part thereof had been paid, but Elliott was subsequently discharged therefrom in the bankruptcy proceedings. An order was entered in such proceedings, upon objection made to the discharge of Elliott, authorizing the trustee therein, George E. Dietrich, to prosecute the garnishee action, commenced by plaintiff, for the benefit of the bankrupt's estate. February 17, 1899, in the bankruptcy proceedings, there was duly set apart for Elliott, as exempt property, his wages prior to March 8, 1898, amounting to $71.89, held by the garnishee, and also $45.23 earned by Elliott and held by the garnishee in the second garnishee action, said amounts representing the balance of the bankrupt's earnings of $60 per month for three months before the dates of the respective garnishments, and not exceeding $180 in all for each of the garnishments. The amount earned by Elliott for the three months preceding the first garnishment was $183.11, and for the three months preceding the second garnishment $231.67. The amount left after deducting $180 for each three months is $54.78. $96.90 represents the amount earned by the bankrupt, held by the garnishee at the time of the second garnishment, December 9, 1898. November 1, 1898, an order was drawn on the garnishee by John E. A. Elliott requesting payment of his wages for November to James T. Elliott, which said order was accepted by the garnishee November 2, 1898. December 10, 1898, $72.10 was paid upon said order. Thereafter James T. Elliott paid to defendant Elliott $50. James T. Elliott is a creditor of defendant Elliott and is represented in the bankruptcy proceedings. No part of Elliott's earnings, mentioned as held by the garnishee, has been paid to the trustee in bankruptcy or paid into court. Defendant Elliott is an unmarried man, but has a family dependent upon him for support. He is entitled to $60 per month as exempt under the statute. No judgment has been entered in this action against either of the defendants.

A bill of exceptions in each case shows that on the pleadings and the stipulation of facts motions were made by the plaintiff, in each of the garnishee cases, for an order making the trustee in bankruptcy a party to represent the estate. A motion was also made in the main action for a special judgment against Elliott, one not recognizing the existence of any personal liability but enforceable against the credits in the hands of the garnishee. The motions were denied, and due exception was taken to each ruling. A motion was made on behalf of defendant Elliott for a dismissal of the main action as to him, and a motion was also made in each of the garnishee actions to dismiss the same. All of such motions were granted, due exception to each ruling being taken. Judgment was thereupon entered in the main action, and subsequently costs were taxed and inserted therein, the amount being $24.63. Papers are in the record on the appeal in such action, relating to subsequent proceedings as to costs, but they all relate to proceedings in the garnishee actions. Judgment was entered in the first garnishee action dismissing the same and in form for costs in favor of Elliott and the garnishee jointly. Two cost bills were presented to the taxing officers and were taxed, one in favor of the garnishee defendant for $23.53, and one in favor of the defendant Elliott and the garnishee for $31.23. Only the smaller cost bill as taxed was entered in the judgment. Objection was made before...