Clark v. Badgley, 88.

• Decision Date: 19 October 1931
• Docket Number: No. 88.,88.
• Citation: 156 A. 433
• Parties: CLARK et al. v. BADGLEY et al.
• Court: New Jersey Supreme Court

156 A. 433

CLARK et al.

v. BADGLEY et al.

No. 88.

Court of Errors and Appeals of New Jersey.

Oct. 19, 1931.

CASE, DALY, DONGES, VAN BUSKIRK, and KAYS, JJ., dissenting.

Appeal from Circuit Court, Essex County.

Suit by Charles Clark and others against Leroy D. Badgley and others. Judgment for defendants, and plaintiffs appeal.

Affirmed.

The opinion of Judge Dungan is as follows: Under the agreed state of facts in this case, it appears that the defendant was adjudicated a bankrupt; that prior to the adjudication, and within four months of such adjudication, a judgment has been obtained against him. Subsequent to the adjudication in bankruptcy the defendant purchased a property, which he agreed to sell to the plaintiff, and upon which the plaintiff paid $500. At the time fixed for the taking of title, it was agreed between the plaintiff and the defendant that the time should be extended, but, at the time to which the closing of the transaction had been extended, the defendant had not yet been discharged in bankruptcy.

The plaintiff claims that, by reason of that fact, and the possibility that the defendant might not thereafter be discharged, this constituted a cloud upon the title, which permitted him, under the New Jersey statute of 1915, to require the defendant to repay the deposit, including any search fees, and fees for survey. In this case there was no survey.

This suit is brought to recover the $500 deposited, with interest from the date of its payment, which was July 12, 1928, and also search fees, amounting to $147.41.

The question, therefore, is, what the status of the judgment as to this property was between the date of adjudication and the date of discharge, the plaintiff claiming that since, upon failure of discharge, the judgment-creditor might enforce his judgment against an after-acquired property, the plaintiff was justified in refusing to take the title; the defendant claiming that between the adjudication and the discharge in bankruptcy, if applied for within the time required by the Bankruptcy Act (11 USCA), no lien could attach on a judgment obtained within four months of bankruptcy, until after the discharge had been denied.

Regardless of the effect of section 67f (11 USCA § 107 (f), whether for the benefit of the creditors or both the creditors and the debtor, I think we ought to consider the beneficent purposes of. the Bankruptcy Act. There seem to be some decisions that 67f is for the benefit of the creditors only; some to the effect that it is for the benefit of both the creditors and the debtor, that section holding that any judgment obtained within four months is absolutely void as to such...