Crystal Laundry & Cleaners, Inc. v. Continental Finance & Loan Co.

• Decision Date: 29 May 1958
• Docket Number: No. 37126,Nos. 1,2,37126,s. 1
• Citation: 104 S.E.2d 654,97 Ga.App. 823
• Parties: CRYSTAL LAUNDRY & CLEANERS, INC. v. CONTINENTAL FINANCE & LOAN COMPANY
• Court: Georgia Court of Appeals

Page 654

104 S.E.2d 654

97 Ga.App. 823

CRYSTAL LAUNDRY & CLEANERS, INC. v. CONTINENTAL FINANCE & LOAN COMPANY.

No. 37126.

Court of Appeals of Georgia, Division Nos. 1, 2.

May 29, 1958.

Rehearing Denied July 8, 1958.

Syllabus by the Court

1. The right to avoid the lien of a garnishment proceeding attaching as a lien on a bankrupt's funds earned before bankruptcy and otherwise subject to garnishment is solely in the trustee in bankruptcy. The lien is not automatically voided by bankruptcy.

2. An in personam judgment elected in a trover action is dischargeable by bankruptcy, unless it comes within the exceptions stated in the Bankruptcy Act, in so far as it has no application to the specific property upon which its lien is caused to attach. A garnishee must urge such a discharge in the bankrupt's behalf if it knows of the bankruptcy in time to do so.

3. The burden of proof to show that a provable and listed debt comes within the exceptions stated in the Bankruptcy Act as to dischargeability is upon the creditor asserting the exception. Kreitlein v. Ferger, 238 U.S. 21, 35 S.Ct. 685, 59 L.Ed. 1184. There was no such showing in this case.

On July 8, 1957, Continental Finance & Loan Company instituted a trover action against Mary Lee Lymon and Eugene Lymon to recover eight pieces of furniture 'as described in a certain bill of sale to secure debt.' On August 8, 1957, the finance company elected to take a money judgment against Eugene Lymon and his wife, the case being in default. On August 20, 1957, the finance company instituted garnishment proceedings naming Eugene Lymon as defendant and Crystal Laundry & Cleaners, Inc., as garnishee. The garnishee was served on August 21, 1957. On September 27, 1957, Eugene Lymon was adjudicated a bankrupt and subsequently granted a discharge. The above judgment was scheduled in the bankruptcy petition. On September 30, 1957, the garnishee filed its answer in the Civil Court of Fulton County showing that as of September 27, 1957, it had withheld from the wages of the debtor a certain sum which was subject to the process of garnishment, alleged the adjudication of the debtor as a bankrupt and stated that it would hold the money subject to the orders of a court with jurisdiction to control its disposition. On October 3, 1957, and December 12, 1957, the garnishee was served with two additional summonses and filed answers showing additional sums withheld from the wages of the debtor and noted his bankruptcy. The finance company filed a money rule petition requiring the garnishee to show cause why it should not be compelled to pay it the sums withheld by the garnishee. The trial judge entered orders subjecting the money withheld by the garnishee to the lien of the finance company less attorney's fees for filing the answers and costs of court. On the hearing it was stipulated by the parties that the court should determine whether the garnishee could answer said funds into court when the debtor had been adjudicated a bankrupt. The exception here is made by the garnishee to the judgment finding the sums answered into court subject to the finance commpany's lien.

Smith, Kilpatrick, Cody, Rogers & McClatchey, Thomas C. Shelton, James P. McLain, Jr., James A. Bagwell, Atlanta, for plaintiff in error.

Joel J. Fryer, Atlanta, for defendant in error.

Moise, Post & Gardner, J. William Gibson, Atlanta, for parties at interest.

FELTON, Chief Judge.

1. It was not error for the court to subject to the finance company's lien so much of the debtor's earnings in the hands of the garnishee as were earned prior to the debtor's adjudication as a bankrupt. A lien obtained within four months of adjudication of bankruptcy is voidable only at the instance of a trustee in bankruptcy. Since the debtor could under no circumstances be entitled to such funds if not claimed as an exemption, it is no concern of his or the garnishee's whether it be applied to the lien here asserted or be recovered by the trustee for the benefit of all creditors. Morris Plan Bank of Ga. v. Simmons, 201 Ga. 157, 39 S.E.2d 166, and cases cited; McLean v. G. T. Duke Co., 95 Ga.App. 135, 97 S.E. 537.

2. If the wages earned by the debtor subsequently to his adjudication as a bankrupt were discharged by bankruptcy and the debtor had not waived the discharge it was the duty of the garnishee to set up in its answer the proposition that the wages earned after adjudication were not subject to the finance company's lien. Armour Packing Co. v. Wynn, 119 Ga. 683, 46 S.E. 865. The answer to this question rests upon whether a money judgment in a trover action is dischargeable by bankruptcy where the discharge is not waived by the bankrupt. When we use the term 'money judgment' in the present context we mean a personal general judgment. The question of the force of a judgment of any kind as it relates to particular encumbered property is not here contemplated. Every case in this State has held that a money judgment in a trover action is not dischargeable except one, Walker Bros. Co. v. Capital City Grocery Co., 28 Ga.App. 531, 112 S.E. 157, which was disapproved in several cases from this court to be cited later. The Federal law on this question governs, and the Supreme Court in our opinion has settled the question in Davis v. Aetna Acceptance Co., 293 U.S. 328-335, 55 S.Ct. 151, 79 L.Ed. 393, and this case takes precedence of all cases in Georgia decided by the Supreme Court of Georgia and by this court prior to its date. We are faced, however, with several cases from this court which hold that the Davis case is on its pecullar facts not inconsistent with the rulings of the courts of this State above referred to. In the Davis case the debtor was an automobile dealer. He obtained loans from the creditor to finance his operations. Among the various transactions he borrowed $1,181.87 on July 10, 1929, procuring title thereby to an Auburn sedan. This amount represented 90 percent of the cost of the car. Upon receipt of the car he executed and delivered to his creditor four instruments: a promissory note for the amount stated due in sixty days; a mortgage covering the car and securing the payment of the note; a trust receipt, agreeing to hold the car in trust and not to dispose of it without the creditor's written consent; and finally, a bill of sale, absolute in form. On August 3, 1929, the automobile then on exhibit in the debtor's showroom, was sold by one of his salesmen in good faith and without concealment but without the creditor's written consent. The debtor promised to make prompt remittance but instead filed a petition in bankruptcy on September 13, 1929, obtaining his discharge after duly listing the creditor in his schedule of creditors. The creditor then instituted its action in trover. The trial judge overruled the special plea of discharge by bankruptcy and rendered judgment against the debtor for damages and costs and the Illinois Appellate Court affirmed. 273 Ill.App. 628. The United States Supreme Court reversed the judgment holding: (1) that the debt was a provable debt; that the liability back of the debt was not within any of the excepted classes (Bankruptcy Act, § 17, U.S.C.A., title 11, particularly § 17, sub. a, (2-4)); that the liability was...