Crook Horner Co. of Baltimore City v. Gilpin

• Decision Date: 12 January 1910
• Citation: 75 A. 1049,112 Md. 1
• Parties: CROOK HORNER CO. OF BALTIMORE CITY v. GILPIN.
• Court: Maryland Court of Appeals

75 A. 1049

112 Md. 1

CROOK HORNER CO. OF BALTIMORE CITY v. GILPIN.

Court of Appeals of Maryland

January 12, 1910

Appeal from Baltimore Court of Common Pleas; Thos. Ireland Elliott Judge.

Action by the Crook Horner Company of Baltimore City against Charles Gilpin.From a judgment for defendant, plaintiff appeals.Affirmed.

Argued before BOYD, C. J., and BRISCOE, PEARCE, SCHMUCKER, BURKE and THOMAS, JJ.

J Craig McLanahan and Robert H. Smith, for appellant.

Charles F. Harley, for appellee.

OPINION

BRISCOE, J.

The plaintiff sued out of the court of common pleas of Baltimore city, on the 19th day of December, 1905, an attachment against the defendant, a nonresident of the state, to recover the sum of $3,906, due and owing for work done and materials furnished in the erection of the heating apparatus of the Hotel Caswell, Baltimore city.The defendant appeared to the suit, and on the 28th day of December, 1905, a bond was filed by the Scranton Trust Company as surety, and the attachment was dissolved.On the 26th day of February, 1906, the defendant was adjudicated a bankrupt by the District Court of the United States for the Eastern District of Pennsylvania sitting in bankruptcy, and on the 11th day of January, 1909, by an order and decree of that court, was discharged from all debts owing by him and provable under the bankrupt act.The declaration in the short-note case is in assumpsit, and contains the usual money counts.The precise question is presented on the pleadings, and it arose in this way: The defendant, on the 28th day of December, 1905, pleaded to the declaration in the short note case the usual pleas of never indebted as alleged, and did not promise as alleged, and issue was joined thereon.On the 13th day of January, 1909, the defendant by leave of court filed an additional plea to the declaration, wherein he sets up and pleads his discharge in bankruptcy by a court of competent jurisdiction from all his debts, and that the adjudication was upon a petition filed less than four months after the issuing of the attachment.In other words, it appears that the attachment was issued on the 19th day of December, 1905, and the decree in bankruptcy was passed on the 26th day of February, 1906, so it is clear that the attachment proceeding was begun against the defendant within four months before the commencement of the proceedings in bankruptcy.To this plea of discharge in bankruptcy the plaintiff replied: "That the adjudication of the defendant a bankruptcy, and his discharge in bankruptcy by order or decree of the United States District Court for the Eastern District of Pennsylvania, does not release or discharge the surety on the bond, filed in this case by the defendant to dissolve the attachment which had been previously issued and levied by the plaintiff on the moneys and credits of the defendant, which bond had been executed and filed in the case before the filing in the District Court of the defendant’s petition to be adjudged a bankrupt; that the judgment sought to be obtained in this case against the defendant is solely and exclusively to bind the surety in the bond filed to dissolve the attachment issued and levied on the moneys and credits of the defendant, and if a judgment is had in this case against the defendant, the court will be asked by the plaintiff by its order to restrain the plaintiff from ever issuing an execution on said judgment against the defendant."The defendant demurred to this replication, and the court below sustained the demurrer, and gave judgment thereon in favor of the defendant.And from this judgment the plaintiff has appealed.

The validity of the plaintiff’s replication to the defendant’s plea, it will be seen, must depend upon the effect to be given, and the proper construction to be placed on section 67f of Bankr. ActJuly 1, 1898, c. 541,30 Stat. 565(U. S. Comp. St.1901, p. 3450).The language of the act is to this effect: "That all levies, judgments, attachments or other liens, obtained through legal proceedings against a person who is insolvent, at any time within four months prior to the filing of a petition in bankruptcy against him, shall be deemed null and void in case he is adjudicated a bankrupt, and the property affected by the levy, judgment, attachment or other lien shall be deemed wholly discharged and released from the same, and shall pass to the trustee as a part of the estate of the bankrupt, unless the court shall, on due notice, order that the right under such levy, judgment, attachment, or other lien shall be preserved for the benefit of the estate; and thereupon the same may pass to and shall be preserved by the trustee for the benefit of the estate aforesaid, *** provided that nothing herein contained shall have the effect to destroy or impair the title obtained by such levy, judgment, attachment or other lien, of a bona fide purchaser for value who shall have acquired the same without notice or reasonable cause for inquiry."

On the part of the plaintiffs it is contended that they are entitled to a judgment against the defendant, with a perpetual stay of execution, in order to establish a liability against the surety, notwithstanding the fact that the bankruptcy proceeding was begun within four months after the attachment was instituted, because a bond was given to dissolve the attachment, and the lien was released, before the proceedings in bankruptcy were commenced, and, further, as no lien existed when the petition was filed, there was nothing upon which the bankrupt law was to act.On the other hand, the defendant contends that, the proceedings in bankruptcy having been instituted within four months after the issuing of the attachment, the courts of this state have no jurisdiction to enter up a qualified judgment, with stay of execution against the defendant, to bind the surety, because under the bankrupt act, supra, such attachment proceedings are declared to be null and void.

While the main question here raised has not been heretofore passed upon by this court, it is, at least, answered in part by the recent case of Kendrick & Roberts v. Warren Bros.,110 Md. 47, 72 A. 461.In that case, the plaintiff had issued an attachment against the defendant, which was dissolved upon giving a bond.It appears that more than four months thereafter proceedings were had in bankruptcy against the defendant, and he was discharged.We there held that this discharge in bankruptcy did not prevent the plaintiff from obtaining a judgment in the attachment suit against the defendant, with a perpetual stay of execution.The object of the judgment was to allow the plaintiff to proceed against the sureties on the bond given to dissolve the attachment.It was further held, and we here quote from the opinion: "But it is earnestly insisted upon the part of the appellant there is no such practice in this state as to warrant a special or qualified judgment, to wit, a judgment with a perpetual stay of execution, and the courts are without power to so render them.We are unable to agree with this contention.A sufficient warrant, we think, can be found in section 14, art. 26, Code Pub. Gen. Laws 1904, wherein it is provided: ‘The court shall give judgment in all actions according as the very right of the cause and matter in law shall appear to them, without regarding any matters of mere form, so as sufficient matter shall appear in the proceedings, upon which the court shall proceed to give judgment, and it shall appear that the action has been commenced after the cause thereof did accrue.’ When it appears a good and sufficient reason exists for a qualified judgment as in this case, such a judgment can be rendered.2 Evans’ Harris, 345, 364;Peck v. Jenness,48 U.S. 612[12 L.Ed. 841];Doe ex dem. v. Childress,88 U.S. 642[22 L.Ed. 549];Hill v. Harding,130 U.S. 702[9 S.Ct. 725, 32 L.Ed. 1083]."

The ultimate inquiry, then, in the case at bar, and wherein it differs from Kendrick & Roberts v. Warren Bros. Case, supra properly comes to this: Can the courts of this state enter a judgment, with a perpetual stay of execution, against a defendant in an attachment suit, instituted within four months before the defendant has filed a petition to be adjudicated a bankrupt, and when he is subsequently discharged as a bankrupt, for the purpose of allowing the plaintiff to proceed against the surety on the bond given to dissolve the attachment?The decision of this question, as we have said, must depend upon the language and the effect to be given to section 67f of the bankrupt act, herein cited.The language of this section, we think, is quite clear and comprehensive, and broad enough to include within its terms the defendant and the surety we are here dealing with.It provides in terms that all levies, judgments, attachments, or other liens obtained against a person who is insolvent, at any time within four months prior to the filing of a petition in bankruptcy against him,...