In re Anton

• Decision Date: 16 July 1935
• Citation: 11 F. Supp. 345
• Parties: In re ANTON (two cases).
• Court: U.S. District Court — District of Minnesota

11 F. Supp. 345

In re ANTON (two cases).

District Court, D. Minnesota, Fourth Division.

July 16, 1935.

Leonard, Street & Deinard, of Minneapolis, Minn., for bankrupt.

Harold Cox, of Minneapolis, Minn., for objector.

MOLYNEAUX, District Judge.

These two bankruptcy matters are before the court upon the petition of the bankrupts to review the order of the referee in bankruptcy, and the bankrupts assign as error that the referee sustained objections to evidence offered by them to the claim of E. Curie, based upon a judgment obtained by Curie against them, and that the referee erred in holding that they were not entitled to contest the merits of the claim of E. Curie, based upon a judgment entered against the defendants subsequent to the adjudication of bankruptcy, and without notice to the trustee or objecting creditors.

A statement of facts has been agreed upon by the parties and filed herein, which shows that prior to the 5th day of November, 1934, E. Curie sued the two bankrupts, Domout Anton and Josephine Anton, in the district court of Hennepin county, Minn., upon a promissory note; that the defendants appeared and interposed an answer to such action and in due course the action was brought to trial before the court and jury, and the plaintiff recovered judgment against the defendants as prayed for in his complaint; that at the request of the defendants the state court ordered a stay of judgment for 30 days, and after the expiration of the stay judgment was entered in said action against the defendants at the request of the plaintiff.

It appears from the statement of facts that subsequent to the bringing and trial of said suit and after said verdict was rendered against said defendants, on their voluntary application they were declared bankrupts in these proceedings.

It also appears that the said judgment was entered on said verdict without notice to the trustee in bankruptcy or to the said defendants.

Curie duly filed said judgment as a claim in said bankruptcy proceedings against said bankrupts and the same was objected to by the trustee and the bankrupts. Upon the hearing on said objections, the referee in bankruptcy held that the trustee and bankrupts were not entitled to contest the merits of the claim upon which the judgment was based and sustained objections to evidence of that character.

His ruling in that respect is assigned as error in this petition to review.

Section 103, subsec. (a), subd. 5 of the Bankruptcy Act (11 USCA), permits the proof and allowance of debts "founded upon provable debts reduced to judgments after the filing of the petition and before the consideration of the bankrupt's application for a discharge, less costs incurred and interest accrued after the filing of the petition and up to the time of the entry of such judgments."

The district court of Hennepin county, in which the suit was brought by Curie against the defendants, the present bankrupts, had jurisdiction of the case by the due service of process upon the defendants; also by the appearance of the defendants and their answering in the case. They appeared at the trial, defended the action, and had their day in court, and the verdict was rendered against them. The defendants were not entitled to notice of the entry of judgment. Under the practice in this state, in the absence of a stay (and in this case the stay had expired) the plaintiff had a right to have the clerk of court enter judgment without notice to the defendants.

Under the authorities this judgment so rendered was a valid and subsisting judgment against the defendants, the present bankrupts.

Nothing that was done in the bankruptcy court had ousted the jurisdiction of the court to enter judgment on the verdict rendered, and such judgment was provable in the bankruptcy court. It was so held in the case of Boynton v. Ball, 121 U. S. 457, 7 S. Ct. 981, 984, 30 L. Ed. 985, and speaking of this decision, with reference to subdivision 5, Collier on Bankruptcy (13th Ed.) 1923, vol. 2, p. 1417, says: "This clause gives statutory recognition to the doctrine of Boynton v. Ball, which settled a controversy under the law of 1867, that outlasted the statute itself. The contention was that the debt, being merged in the judgment, and the latter post-dating the bankruptcy, became a new debt which could not be proved, and was, therefore, not discharged. There can now be no doubt. The debt, whether merged or not—and it seems it is not—may be proved in the form of the judgment, provided costs and interest after the bankruptcy are credited."

It is clear from the foregoing authorities that the debt of the bankrupts to the plaintiff was entitled to be proved in the form of the judgment.

The law of 1867 (14 Stat. 526, § 21) had the following provision: "No creditor whose debt is provable * * * shall be allowed to prosecute to final judgment any suit at law or in equity therefor against the bankrupt, until the question of the debtor's discharge shall have been determined; and any such suit or proceedings shall, upon the application of the bankrupt, be stayed to await the determination of the court in bankruptcy on the question of the discharge, provided there be no unreasonable delay on the part of the bankrupt in endeavoring to obtain his discharge, and provided, also, that if the amount due the creditor is in dispute, the suit, by leave of the court in bankruptcy, may proceed to judgment for the purpose of ascertaining the amount due, which amount may be proved in bankruptcy, but execution shall be stayed."

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