House v. Schnadig

• Decision Date: 18 June 1908
• Citation: 235 Ill. 301,85 N.E. 395
• Parties: HOUSE et al. v. SCHNADIG.
• Court: Illinois Supreme Court

235 Ill. 301

85 N.E. 395

HOUSE et al.

v.SCHNADIG.

Supreme Court of Illinois.

June 18, 1908.

Appeal from Appellate Court, First District, on Appeal from Circuit Court, Cook County; G. A. Carpenter, Judge

Action by Evertt House and others against Louis M. Schnadig. From a judgment for plaintiff in a justice court, defendant appealed to the circuit court, and, pending such appeal, he filed a petition in bankruptcy, and obtained his discharge therein. From a judgment of the Appellate Court for defendant, affirming a judgment of the circuit court, plaintiffs appeal. Affirmed.

Musgrave, Platt & Lee, for appellants.

Benjamin Samuels, for appellee.

FARMER, J.

Appellants sued appellee before a justice of the peace in the city of Chicago on May 4, 1906, and on May 21 obtained judgment for $81.50 and costs. On the 31st day of May, 1906, appellee appealed the case to the circuit court, giving the usual bond, with security. On the 8th day of June, 1906, appellee filed a voluntary petition in bankruptcy in the District Court of the United States for the Northern District of Illinois, and on October 5, 1906, obtained from the presiding judge of that court an order restraining appellants from proceeding in any manner with the prosecution of their suit. On the 24th of December, 1906, the appellants obtained from the United States District Court an order modifying the restraining order of October 5th and allowing them to proceed to judgment, but perpetually restraining them from taking out execution against appellee on said judgment, ‘so that the plaintiffs herein might asserttheir rights against the surety on the appeal bond.’ The cause was thereafter tried by the court; a jury being waived by agreement. Appellants introduced evidence to prove their claim in the sum demanded. Appellee offered in evidence a certified copy of his discharge in bankruptcy, and no other evidence. Thereupon appellants moved the court for judgment against appellee for $81.50 and costs, with a perpetual stay of execution. The court denied the motion, and rendered judgment in favor of appellee and against appellants for costs. This judgment has been affirmed by the Appellate Court, and the case is brought here on appeal from the judgment of that court; a certificate of importance having been granted by the Appellate Court.

The real contention in this case is as to the effect of appellee's discharge in bankruptcy upon an appeal bond given by him in appealing the case from the justice of the peace to the circuit court. It is not contended by appellants that they were entitled to a judgment in the circuit court upon which an execution could issue, but their claim is that they were entitled to a judgment, with a perpetual stay of execution, in order to establish a liability against the surety on the appeal bond. This is, perhaps, a statement of appellants' object in seeking to secure such a judgment against appellee in more direct terms than is stated by them in their brief, but is none the less a correct statement of the object of this litigation. It is assumed that, in order to hold the appeal bond liable, there must first be a recovery of a judgment against the principal of the bond. A judgment with a perpetual stay of execution could be of no value to appellants for any other purpose. It thus appears that while the liability of the surety on the appeal bond is not directly before us it is incidentally, and that is the principal object sought to be effected in this case.

The sixteenth section of the bankruptcy act (Act. July 1, 1898, c. 541, 30 Stat. 550 [U. S. Comp. St. 1901, p. 3428]) provides that ‘the liability of a person who is a co-debtor with, or guarantor, or in any manner a surety for a bankrupt, shall not be altered by the discharge of such bankrupt.’ Appellants contend that the effect of the discharge of appellee in bankruptcy was not a satisfaction of the debt, but operated to release or suspend the right of action against him personally therefor, and that such release could not affect his surety. Appellee's contention is that the surety on the appeal bond was not a surety for the debt; that the undertaking of the surety on the appeal bond was that if the principal did not prosecute his appeal with effect and pay whatever judgment might be rendered against him in the court to which the appeal was taken, or, in case the appeal was dismissed, pay the judgment rendered against him by the justice of the peace, the surety would pay it. In such case it is insisted the discharge in bankruptcy is a bar to the rendition of a judgment against the bankrupt, and the surety's liability not being for the debt, but contingent upon a judgment being rendered against the principal in the bond, the discharge in bankruptcy released...