National Sur. Co. of New York v. Medlock

• Decision Date: 22 October 1907
• Docket Number: 478.
• Citation: 58 S.E. 1131,2 Ga.App. 665
• Parties: NATIONAL SURETY CO. OF NEW YORK et al. v. MEDLOCK.
• Court: Georgia Court of Appeals

58 S.E. 1131

2 Ga.App. 665

NATIONAL SURETY CO. OF NEW YORK et al. v. MEDLOCK.

No. 478.

Court of Appeals of Georgia

October 22, 1907

Syllabus by the Court.

A liability on account of a libel is not released by a discharge in bankruptcy.

[Ed Note.-For cases in point, see Cent. Dig. vol. 6, Bankruptcy § 787.]

A corporation is not dissolved by an adjudication that it is bankrupt.

[Ed Note.-For cases in point, see Cent. Dig. vol. 12 Corporations, § 2388; vol. 6, Bankruptcy, § 142.]

When the plaintiff in an action for libel sues out process of garnishment as ancillary thereto, and the garnishee admits by answer sufficient funds, upon a verdict and judgment being obtained against the defendant in the main case, the plaintiff may proceed to take judgment against the funds caught by the garnishment, and, when the garnishment has been dissolved by the filing of a statutory bond, may also enter up judgment against the surety, notwithstanding the fact that pending the suit the defendant has been adjudged bankrupt, if the filing of the petition in bankruptcy occurs more than four months after the summons of garnishment has been served and the dissolving bond given.

(a) The bankruptcy of the defendant does not discharge the surety in the dissolving bond.

(b) Irrespective of whether the lien upon the funds impounded by the service of the summons of garnishment attaches before final judgment or not, the service of the summons of garnishment so far places the funds found in the hands of the garnishee (especially when the money is paid into court, or in lieu thereof a dissolving bond given) into the custody and control of the court administering the case that it will be entitled to hold and subject the fund, despite the subsequent bankruptcy of the defendant, if the petition in bankruptcy be filed more than four months after such custody is obtained.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 24, Garnishment, § 457; vol. 6, Bankruptcy, § 786.]

Error from City Court of Atlanta; H. M. Reid, Judge.

Action by Carrie E. Medlock against the Atlanta News Publishing Company for libel, in which the Maddox-Rucker Banking Company was summoned as garnishee. The National Surety Company of New York gave a bond for the dissolution of the garnishment, and the garnishee answered, admitting sufficient assets, after which the defendant publishing company became a bankrupt and pleaded its bankruptcy as a discharge, which was denied, and judgment rendered in favor of plaintiff for $1,000. Judgment was also rendered against the surety company on the dissolving bond, and the publishing company and surety company bring error. Affirmed.

On February 4, 1904, Carrie E. Medlock instituted suit against the Atlanta News Publishing Company on account of the malicious publication of a libelous article concerning her. Ancillary to this action she sued out garnishment and caused summons to be served on the Maddox-Rucker Banking Company. On February 6, 1904, the defendant, for the purpose of dissolving the garnishment, filed a statutory bond, with the National Surety Company of New York as surety. The section of the Civil Code of 1895 (section 4718) under which this bond was given is as follows: "In any case when garnishment has been issued, the defendant may dissolve such garnishment upon filing in the clerk's office of the court, or with the justice of the peace, where suit is pending or judgment was obtained, a bond with good security, payable to the plaintiff, conditioned for the payment of the judgment that shall be rendered on said garnishment. The plaintiff may enter up judgment upon such bond against the principal and securities, as judgment may be entered against securities upon appeal, whenever said plaintiff shall obtain the judgment of the court against the property or funds against which garnishment was issued." On May 2, 1904, the garnishee answered, admitting sufficient assets. No traverse was filed to this answer. On February 18, 1907, the Atlanta News Publishing Company was adjudged bankrupt, and a trustee appointed. On March 27, 1907, the original action came up for trial. The defendant offered an amendment to its plea, alleging its bankruptcy, and praying an abatement of the suit (alleging as a basis therefor that the effect of the adjudication in bankruptcy was to end its corporate existence), and also praying a stay of the suit. On motion of the plaintiff this plea was stricken and disallowed. The case proceeded to trial, and a verdict was rendered in favor of the plaintiff for $1,000. After the verdict and judgment against the defendant, the plaintiff moved the court for a judgment against the fund so admitted by the Maddox-Rucker Banking Company, and also for a judgment against the defendants, the Atlanta News Publishing Company as principal, and the National Surety Company of New York as security on said dissolving bond, for the sum of $1,000 and costs.

To the rendition of judgment against them, or either of them, the Atlanta News Publishing Company as principal, and the National Surety Company of New York as security on said dissolving bond, objected on the following grounds, to wit: "(1) Because, the defendant being in bankruptcy, the court was without authority of law to try and render judgment in the case against the Atlanta News Publishing Company, for which reason the verdict and judgment against the defendant was null and void, and hence no judgment could be rendered against the bond, or the surety thereon, given for the dissolution of the garnishment. (2) Because the adjudication of the defendant the Atlanta News Publishing Company as a bankrupt within four months of the verdict and judgment against it in the main case rendered the bond to dissolve the garnishment null and void under the bankruptcy law, and hence no judgment could be entered thereon. (3) Because, the defendant being in bankruptcy, no legal judgment could be entered against the fund in the hands of the garnishee, and hence no judgment could be entered against the defendant and security on the bond to dissolve the garnishment. (4) Because, the defendant being in bankruptcy, no legal judgment could be rendered against the funds in hands of garnishee, had same been paid in court, without creating a preference in favor of plaintiff against all other creditors of defendant, as against said fund, in violation of the bankruptcy law; and hence no judgment could be entered against defendant and security on the dissolution bond; the only obligation therein being to answer such judgment as might be rendered on the garnishment. (5) Because, in order to render judgment on the dissolution bond, the same would have to be entered against both the defendant, as principal, and the security, in order to do which a second judgment, based on the judgment in the main case, would have to be entered against the defendant, which the defendant being in bankruptcy, the court could not legally do, as this would be in violation of the bankrupt law; and, without judgment against the principal in the bond, no judgment could be entered against the security thereon. (6) Because in Georgia no lien is created in favor of the plaintiff by service of simple garnishment issued upon a pending, ordinary, common-law action, and without lien, the defendant being in bankruptcy, no judgment could be entered against the funds in the hands of garnishee to the exclusion of other creditors of the defendant; and hence no bond could be entered against the bond dissolving the garnishment."

Each and all of these objections the court overruled, and allowed the plaintiff to take an order adjudging the funds in hands of Maddox-Rucker Banking Company, as garnishee, subject to the garnishment in plaintiff's favor, and also entered judgment in favor of said plaintiff against the defendant the Atlanta News Publishing Company as principal, and the National Surety Company of New York as security on the dissolving bond, in the sum of $1,000 and costs. To the judgment rendered upon the bond the Atlanta News Publishing Company and the National Surety Company both except, and this is the only exception taken in the record.

McDaniel, Alston & Black, Dorsey, Brewster, Howell & Heyman, Westmoreland Bros., and L. P. Skeen, for plaintiffs in error.

Rosser & Brandon and Walter T. Colquitt, for defendant in error.

Powell J.

1. A discharge in bankruptcy does not release the bankrupt from liability for "willful and malicious injuries to the person or property of another." Bankr. Act July 1, 1898, c. 541, § 17 (2), 30 Stat. 550 [U. S. Comp. St. 1901, p. 3428]. A libel is a willful and malicious injury to the person of another. Johnson v. Bradstreet Co., 87 Ga. 79, 13 S.E. 250; Cole v. A. & W. P. Ry. Co., 102 Ga. 479, 31 S.E. 107; Cox v. Strickland, 120 Ga. 106, 47 S.E. 912. Only suits which are "founded upon claims for which a discharge would be a release" are to be stayed by reason of an adjudication in bankruptcy. Bankr. Act July 1, 1898, c. 541, § 11, 30 Stat. 549 [U. S. Comp. St. 1901, p. 3426]. Other actions may properly proceed to judgment. A judgment so obtained is to be given as full and extensive force and effect as if bankruptcy had not intervened.

2. A corporation, by being adjudicated bankrupt, is not thereby civilly dead. It is not thereby dissolved. Holland v. Heyman, 60 Ga. 181. To use the sententious language of Judge Bleckley in the case just cited: "'Your money,' not 'your life,' is the demand made by the bankruptcy act."

3. Having legally obtained a judgment against the defendant corporation, the plaintiff was further entitled to pursue its enforcement by every means known to the law of the state...