Berry Clothing Co.  v. Shopnick

• Decision Date: 14 June 1924
• Parties: BERRY CLOTHING CO., Inc., v. SHOPNICK.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

249 Mass. 459

144 N.E. 392

BERRY CLOTHING CO., Inc.,

v.SHOPNICK.

Supreme Judicial Court of Massachusetts, Suffolk.

June 14, 1924.

Exceptions from Superior Court, Suffolk County; A. R. Weed, Judge.

Action of contract by the Berry Clothing Company, Inc., against Hyman Shopnick, as surety on bond to dissolve attachment. Court found for plaintiff, and defendant brings exceptions.

Exceptions overruled.

B. Levin, of Roxbury, for plaintiff.

I. H. Fox, of Boston, for defendant.

RUGG, C. J.

This is an action of contract to recover from a surety on a bond given to dissolve an attachment, made in an action by the plaintiff against three defendants who were principals on the bond, the amount of the judgment recovered in the original action. The relevant facts are that the plaintiff brought the original action against three defendants doing business as copartners on a writ bearing date December 27, 1920, and returnable into court January 29, 1921. There was delivered to the plaintiff on December 29, 1920, a bond to dissolve the attachment (on which the present action is brought) made in the original action signed by the three defendants therein as principals and by the defendant in the present action and two others as sureties. The original action was on an account annexed for goods sold. On April 14, 1921, a petition in bankruptcy was filed against the defendant copartners and they were adjudicated bankrupts on April 28, 1921. The bankrupts duly filed their schedules and included the plaintiff among their creditors. The plaintiff filed its proof of claim in bankruptcy ‘without prejudice to its rights' in the original action. That original action was placed upon the special list for trial in January, 1922, whereupon the defendants filed a ‘suggestion of the bankruptcy of said defendants' and a certified copy of the adjudication. On January 18, 1922, the defendants in the original action were defaulted and judgment was rendered against them in favor of the plaintiff on its declaration on January 30, 1922. Thereafter, by agreement of parties, a stay of execution was granted until further order of the court. Discharges in bankruptcy were granted to two of the copartner defendants on May 23, 1922, and to the third on May 31, 1922. The condition of the bond to dissolve the attachment, on which the present action is brought, was that, if the principals ‘shall pay to the plaintiff in said action the amount, if any, that it may recover therein within thirty days after the final judgment in said action; and also shall pay to the plaintiff in said action within thirty days after the entry of any special judgment in said action, in accordance with chapter 177 of the Revised Laws of the commonwealth of Massachusetts the sum, if any, for which said judgment shall be entered; and also if the above named sureties shall pay to the said plaintiff within thirty days after the entry of any special judgment in said action in accordance with section 25 of said chapter, the sum, if any, for which said judgment shall be entered; then the above-written obligation shall be null and void, otherwise it shall remain in full force and virtue.’

The cause of action in the original action was founded upon a claim from which a discharge in bankruptcy would be a release. The Bankruptcy Act of July 1, 1898, c. 541, § 63a (4), 30 U. S. Stats. at Large 562 (U. S. Comp. St. § 9647).

The original action was pending when the petition in bankruptcy was filed against the defendants therein. It was in fact stayed until after they were adjudicated to be bankrupts, but was thereafter put upon the list for trial and went to judgment within twelve months after the adjudication and before the granting of the discharges.

It is provided in the Bankruptcy Act:

Section 11a. ‘A suit which is founded upon a claim from which a discharge would be a release, and which is pending against a person at the time of the filing of a petition against him, shall be stayed until after an adjudication or the dismissal of the petition; if such person is adjudged a bankrupt, such action may be further stayed until twelve months after the date of such adjudication, or, if within that time such person applies for a discharge, then until the question of such discharge is determined.’ U. S. Comp. St. § 9595.

The words of this section do not require a peremptory stay of a pending action after adjudication in bankruptcy. The state court has jurisdiction of such action and may proceed to judgment. As pointed out in Boynton v. Ball, 121 U. S. 457, 467, 7 Sup. Ct. 981, 30 L. Ed. 985, substantial reasons may make it desirable to proceed to trial and to judgment in such a case. It was decided in Rosenthal v. Nove, 175 Mass. 559, 56 N. E. 884,78 Am. St. Rep. 512, with reference to section 11a, the court in which is pending a suit against a bankrupt is not after the adjudication bound to stay proceedings further therein until the termination of the bankruptcy proceeding, although it may do so and to such extent as justice may require. The action is not barred and the court has power to proceed to judgment. There are numerous decisions to the same effect. Feigenspan v. McDonnell, 201 Mass. 341, 346, 87 N. E. 624;Rogers v. Abbot, 206 Mass. 270, 274, 92 N. E. 472,138 Am. St. Rep. 394;Parker v. Murphy, 215 Mass. 73, 74,102 N. E. 85;Smith v. Miller, 226 Mass. 187, 188, 115 N. E. 243.

That this must be the law is plain from section 63a (5) of the Bankruptcy Act (U. S. Comp. St. § 9647), to the effect that among the debts provable against the estate of a bankrupt are those ‘founded upon provable debts reduced to judgments after the filing of the petition and before the consideration of the bankrupt's application for a discharge. * * *’

The provisions of G. L. c. 223, § 124, requiring peremptory stay, are confined in terms to proceedings in insolvency under the laws of this commonwealth. Those laws are superseded by the federal...