Bray v. Cobb

• Decision Date: 15 March 1900
• Parties: BRAY et al. v. COBB et al.
• Court: U.S. Court of Appeals — Fourth Circuit

100 F. 270

BRAY et al. v. COBB et al.

United States District Court, E.D. North Carolina.

March 15, 1900

E. F Aydlett, for claimant.

G. W Waed, for trustee in bankruptcy.

PURNELL District Judge.

On petition of the trustee, the referee certifies for review the following record:

'Geo W. Cobb, and B. M. Culpepper, surety, executed a bond in the sum of three thousand dollars, on the 28th day of April, 1897, to Maria C. Cobb, the terms of which are as follows: (1) To pay her, Maria C. Cobb, twenty-five dollars ($25.00) per month during her life; (2) to pay twelve dollars and fifty cents rent monthly for the bank building during Geo. W. Cobb's life; (3) to pay the taxes upon the property during Mrs. Cobb's life; (4) to keep the property insured; and (5) to keep the property in repairs. Geo. W. Cobb failed in October, 1898, and since the 1st of October, 1898, nothing has been paid on the contract marked 'Exhibit a' in the evidence. Mrs. Cobb is fifty years of age; Geo. W. Cobb is fifty-six years of age; and, as provided in section 1352 of the Code of North Carolina, Mrs. Cobb's expectancy is 20 9/10 years, and G. W. Cobb's expectancy is 16 7/10 years. M. B. Culpepper, the surety on the bond, is insolvent. The contract is for value. The amount admitted to be due on this contract from October 1, 1898, at which time the payments stopped, to February 1, 1900 (16 months), amounts to four hundred dollars. There is due for rent twelve dollars and fifty cents per month, which amounts to two hundred dollars. There is to be credited upon these amounts $81.25, rents paid, and monthly payments of twenty-five dollars to Maria C. Cobb, leaving due $618.75. And the court further finds that Mrs. Cobb is entitled to prove her claim in the case of Cobb, bankrupt, for two thousand seven hundred and eighty dollars and twenty-three cents ($2,780.23), being the amount allowed as the value of her contract under the agreement to pay her twenty-five dollars per month during her lifetime, and the sum of one thousand and two dollars ($1,002.00) is the amount allowed her for the rent of the building during Geo. W. Cobb's lifetime, making a sum total of $3,782.23. $518.75 is the amount due up to February 1, 1900, as covered by the contract, which, together with the other two items, makes a sum total of $4,300.98, and for this amount she will be allowed to prove her claim against the estate of Geo. W. Cobb, bankrupt.'

To this record and decision several exceptions are filed, most of which it will not be necessary to consider, as the decision of the main question involved disposes of them. They will be noticed later, however.

The record presents one of those hardships of the law which often occur, and sometimes, by appealing to the sympathies, always enlisted for the unfortunate, the widow, and the orphan, make it hard to decide impartially. That this seems to have been the case on the hearing is a credit to the humanity and kindly feeling of all who participated. It is stated that the claimant and her children signed receipts for seven thousand dollars, and conveyed valuable real estate, as a consideration for the contract upon which the claim under consideration was allowed. This statement, while it presents the hardships to them, is but another case in which, trusting to a man then in apparent prosperous circumstances, honorable, and of excellent report among men, business reverses, failure and bankruptcy have come, and rendered him unable to perform his contract, entered into with the highest motives and purposes,-- a misfortune to him which must fall heavily upon others (creditors with whom he treated and traded at arm's length, as well as the unfortunate widow and orphan, who gave him their confidence). The consideration for the claim, though, cannot enter into the decision of the case at bar. The court must consider the contract and its status under the bankrupt law,-- a law under which all creditors of the bankrupt have well-defined rights.

This is an involuntary proceeding, and the claim, if claim at all, in the enumeration of claims or debts which may be proved in bankruptcy, must be considered under section 63a, subd. 1: 'A fixed liability as evidenced by a judgment or instrument of writing, absolutely owing at the time of the filing of the petition against him, whether then payable or not,' etc. The provision requires the debt to be absolutely owing, and includes those debts which are payable at a subsequent date. It is sufficient if the debt is a fixed liability absolutely owing when the petition in bankruptcy was filed. It is the actual value of the debt owing at the commencement of the proceedings that is provable. In re Bartenbach, Fed. Cas. No. 1,068; In re Haake, Fed. Cas. No. 5,883; In re New Brunswick Carpet Co. (D.C.) 4 Fed. 514. The liability must be ascertained at the date of filing the petition. Accrued interest is a part of the debt provable, but interest to accrue is not provable. Sloan v. Lewis, 22 Wall. 150, 22 L.Ed. 832.

The basis of the claim is a contract, with security to pay certain sums of money for certain stated purposes, and must be considered as a contract, without giving it any greater dignity than that to which it is entitled as a contract. The surety is admittedly insolvent, and the fact that there was a surety does not give to the contract any priority or special dignity. The covenants of the contract are that the bankrupt shall pay to claimant during her life the sum of $25 per month-- $12.50 per month as rent for the bank building formerly occupied by the bankrupt-- during the life of...