First Int'l Bank of Portal v. Lee

• Decision Date: 23 April 1913
• Citation: 25 N.D. 197,141 N.W. 716
• Parties: FIRST INTERNATIONAL BANK OF PORTAL v. LEE.
• Court: North Dakota Supreme Court

25 N.D. 197

141 N.W. 716

FIRST INTERNATIONAL BANK OF PORTAL

v.LEE.

Supreme Court of North Dakota.

April 23, 1913.

Syllabus by the Court.

The effect of a discharge in bankruptcy is personal to the bankrupt.

The Federal Bankruptcy Act of July 1, 1898, c. 541, § 67f, 30 Stat. 565 (U. S. Comp. St. 1901, p. 3450), only avoids liens upon property which passes to the trustee in bankruptcy, and over which the bankruptcy court could and has assumed jurisdiction. By setting aside property as exempt, such court is held to have disclaimed any intention of ever assuming or having ever assumed jurisdiction over it, and it cannot be said to have passed, at any time, to the trustee in bankruptcy. Where, therefore, property is seized upon a writ of attachment, and thereafter bankruptcy proceedings are instituted and said property is scheduled, but in said proceedings is set apart as and for the exemptions of the debtor, the lien of the attachment writ will not be considered to have been avoided.

The exemptions given by section 7115 to section 7129, inclusive, of the Rev. Codes 1905, are primarily for the benefit of the family as a whole, and not of the husband, or even the wife. Though, therefore, section 7124 in terms prescribes that the principal debtor, his attorney, agent, wife, or child, must make demand for the benefit of the exemptions allowed within three days after notice from the officer of the levy, such statute is construed as applying merely to the principal debtor and to the other persons when served as agents of such principal debtor, while section 7122, which gives to the wife, or, in case of the refusal of the wife, to the children, the right to claim the said exemptions in case the principal debtor neglects or refuses so to do, and which contains no limitation as to time, will be construed to permit the exercise of that right within a reasonable time, which is not limited by the three days allowed to the principal debtor.

Appeal from District Court, Ward County; Leighton, Judge.

Action by the First International Bank of Portal, a corporation, against John J. Lee. From an order granting defendant's motion for new trial, plaintiff appeals. Affirmed and remanded.

This is an appeal from an order of the district court of Ward county granting the defendant's motion for a new trial. The action was one which was brought against the defendant, John J. Lee, as sheriff of Ward county, to recover damages resulting from his failure to levy upon and sell certain personal property which had been attached by the plaintiff bank in an action against one John Schuler. The case was before this court on appeal in Bank v. Lee, 19 N. D. 10, 120 N. W. 1093, Ann. Cas. 1912D, 731, and now comes before us for the second time.

The main grounds of the defendant's motion for a new trial are accident and surprise and newly discovered evidence. The surprise is said to consist in the fact that on the second trial the testimony showed: “That John Schuler went into bankruptcy after the attachment and before judgment was rendered, and at the time the action was commenced defendant had no knowledge of any bankruptcy proceedings on the part of the said John Schuler, and that he heard of such bankruptcy proceeding for the first time during the trial of the action, and H. S. Blood, the attorney who appeared for the defendant, was called on unexpectedly to try the case for the defendant, and, at the time the action was called for trial, he did not know that the said John Schuler had ever instituted a proceeding in bankruptcy, and that during the trial he learned for the first time that bankruptcy proceedings of some kind had been had, and that he had no means at hand of determining their nature, and that the record of the said proceedings were with the clerk of the United States District Court at Fargo, and that Le Sueur & Bradford, composed of Arthur Le Sueur and B. H. Bradford, were retained by the defendant in this action, and that Mr. B. H. Bradford retired from the practice of law on or about the 10th day of January, 1911, and that the firm of Noble, Blood & Adamson succeeded to the law practice of Arthur Le Sueur, successor to the firm of Le Sueur & Bradford; that the proceedings in said bankruptcy court, as shown in the statement, showed that the property involved in the action was claimed as exempt by the said John Schuler in the bankruptcy court, and the same was set over to the said John Schuler as his exempt property in said bankruptcy proceedings, and said proceedings in said bankruptcy court were a complete bar to the recovery of any judgment in the case against John Schuler, and are a complete bar to the recovery of the plaintiff in this action.” The discovery of the new evidence is alleged as follows: “Newly discovered evidence material to the defendant, which he could not with reasonable diligence have discovered and produced at the trial, and the defendant would specify as newly discovered evidence the fact that, since he has learned that after the property involved in this action had been attached in an action by this plaintiff against one John Schuler, the said John Scuhler filed a petition in bankruptcy on the 17th day of January, 1905, and that he made a claim for exemptions in said bankruptcy proceedings of the identical property for the value of which the said action has been instituted, and that in the schedule of property and petition of the said John Schuler is listed the claim of the plaintiff, for which claim the plaintiff subsequently secured judgment against the said John Schuler, and that the plaintiff listed and filed in said bankruptcy court the claim for which said judgment was procured against the said John Schuler, and on the 17th day of February, 1905, appeared in said bankruptcy court and proved said claim before Guy L. Wallace, referee in bankruptcy, and that on the 10th day of May, 1905, the property involved in this action was set over in said bankruptcy court to said John Schuler as and for his exemptions; that the defendant has learned since the trial that the property involved in this action was set over to the said John Schuler as exempt, while the attachment action between the plaintiff herein and the said John Schuler was pending in the district court of Ward county, wherein judgment was rendered against John Schuler, and that his petition in bankruptcy was filed in the bankruptcy court, and that the claim of the plaintiff involved in said action was listed and filed, and the plaintiff appeared in said bankruptcy court and proved said claim and the property was claimed as exempt and was set over to the said John Schuler as exempt, and the said John Schuler was adjudged a bankrupt while this action was pending, and the said newly discovered evidence shows that the said bankruptcy proceedings was a complete bar to the maintenance of the action in attachment and the rendition of the judgment against the said John Schuler, and that the same is a complete bar to the recovery of any judgment against this defendant for any alleged wrongful release of the said property.”

Palda, Aaker & Greene, of Minot, for appellant. Noble, Blood & Adamson, of Minot, for respondent.

BRUCE, J. (after stating the facts as above).

[1][2] The defense of pending bankruptcy proceedings or of a discharge in bankruptcy is personal to the bankrupt. 5 Cyc. 405; Palmer v. Merrill, 57 Me. 26; Moyer v. Dewey, 103 U. S. 301, 26 L. Ed. 394;In re Burton (D. C.) 29 Fed. 637. There is nothing in the record that tends to show that the principal debtor ever sought to avoid the attachment proceedings in this case by pleading the proceedings in bankruptcy. It is true he alleges that the principal defendant filed a petition in bankruptcy on the 17th day of January, 1905, and in such proceedings claimed as exempt the identical property for the value of which said action has been instituted, and that in the schedule of property and petition of the said Schuler is listed the claim of the plaintiff, for which claim the plaintiff subsequently secured judgment against the said John Schuler, and that the plaintiff listed and filed in said bankruptcy court the claim for which the said judgment was procured against said John Schuler, and on the 17th day of February, 1905, appeared in said bankruptcy court and proved said claim before Guy L. Wallace, referee in bankruptcy, and that on the 10th day of May, 1905, the property involved in this action was set over by said bankruptcy court to the said John Schuler as and for his exemptions. In the case of Burcell v. Goldstein, 136 N. W. 243, however, we held that section 67f of the Feberal Bankruptcy Act of 1898 (Act July 1, 1898, c. 541, 30 Stat. 565 [U. S. Comp. St. 1901, p. 3450]) only avoid liens upon property which passes to the trustee in bankruptcy, and over which the bankruptcy court could and has assumed jurisdiction. We further held that by setting aside the property as exempt such court will be held to have disclaimed any intention of assuming or of having ever assumed jurisdiction over it, and that it cannot be said to have passed at any time to the...