R. C. Mahon Co. v. Molin

• Decision Date: 02 December 1930
• Docket Number: No. 86.,86.
• Citation: 252 Mich. 606,233 N.W. 431
• Parties: R. C. MAHON CO. v. MOLIN et al.
• Court: Michigan Supreme Court

252 Mich. 606

233 N.W. 431

R. C. MAHON CO.

v.MOLIN et al.

No. 86.

Supreme Court of Michigan.

Dec. 2, 1930.

Error to Circuit Court, Wayne County; Adoph F. Marschner, Judge.

Action by R. C. Mahon Company against Jacob Molin, doing business as the Realty Cornice Company. Judgment against defendant, with perpetual stay of execution, and against Max Dunitz, surety on bond to release garnishment, and they being error.

Affirmed.

Argued before the Entire Bench.

Shapero & Shapero, of Detroit, for appellants.

Griffin, Heal & Emery, of Detroit, for appellee.

NORTH, J.

Plaintiff sold to defendant Jacob Molin goods on an open account. Defendants claim that some of the articles purchased from plaintiff were unsatisfactory. There was an unpaid balance due plaintiff on December 14, 1926, amounting to $5,340. On that day plaintiff's representative called upon defendant and obtained from him $1,340 to apply on account, thus leaving a balance of $4,000. Defendant Molin claims that as a result of an agreement between himself and plaintiff's representative this balance at the time of the payment was converted into an account stated which was not to become due and payable until the following month. Without waiting until the following month plaintiff began this suit December 27, 1926. At the hearing before the circuit judge without a jury one of the defenses was that the suit was prematurely brought. Plaintiff denied defendant's claim that the open account was transformed into an account stated which would not mature until the following month. While the circuit judge did not make a specific finding of fact on this issue, he did hold against defendants' contention and render a judgment of $4,000 in favor of plaintiff. Defendants review by writ of error the issue above noted and others to which we will call attention later.

Notwithstanding suit was started in December, 1926, the case was not heard on its merits until March, 1930. The defense above noted was not made until defendant filed a second plea with an amended notice a few days prior to the hearing. We think there is a conflict in the testimony on this question, and that the record is such that we would not be justified in overturning the determination of the trial court. Even if it be conceded that as a result of the conference on December 14, 1926, between plaintiff's representative and defendant Molin, the open account became an account stated, it does not necessarily follow that it was further agreed that this account stated was not to be due and payable until the following month. We think the testimony would not justify the conclusion that there was a meeting of minds on this point. The circuit judge was right in holding against defendants' contention that this suit was prematurely brought.

The defense is also urged that both Molin and Max Dunitz are released because of the former's discharge in bankruptcy. Incident to bringing this suit plaintiff garnisheed Molin's bank account. Release of garnishment was obtained by a bond dated December 30, 1926, and filed January 17, 1927. The defendant Max Dunitz was a surety on this bond. The petition in the involuntary bankruptcy against Molin was not filed until September 8, 1927. It is conceded that his discharge in bankruptcy foreclosed plaintiff's right to recover from Molin. While judgment was entered in the circuit court against him in this suit, simultaneously there was entered a perpetual stay of execution. Judgment in the circuit was also rendered against Dunitz as surety on the garnishment bond. We think his contention that he is released from liability on the bond by reason of defendant's discharge in bankruptcy cannot be sustained. The bond in garnishment is statutory; and the statute (vol. 3, § 13165, Comp. Laws 1915) provides that it shall be conditioned ‘to pay any judgment obtained against the defendant or defendants in such action, and abide the order of the court therein.’ The bond given was conditioned in the words of this statute. It is urged by Dunitz that, since plaintiff's claim could not be collected from the principal defendant, no valid judgment could be rendered against him, and hence there is no judgment rendered in the case for the payment of which the surety is liable. This, we think, is a strained construction of the bond. It entirely eliminates the provision in both the statute and in the bond that the parties bound thereby will ‘abide the order of the court’ in the suit in which it is given. Further, defendants' contention would entirely defeat the purpose of this bond and result in a miscarriage of justice in the instant case. From the dates above noted it is apparent that the lien obtained by plaintiff on Molin's bank account antedated the proceeding in bankruptcy more than four months and it was not affected thereby. The lien was released solely by the giving of the garnishment bond. By an indirect method the defendants would make this bond an instrumentality by which the bankruptcy proceeding would defeat plaintiff's garnishment lien. Such a result is not contemplated by the Bankruptcy Act (11 USCA). The exact question under consideration was passed upon in National Surety Co. v. Medlock, 2 Ga. App. 665, 58 S. E. 1131, 1132, wherein the garnishment antedated the bankruptcy proceeding more than four months, and the court held: ‘The bankruptcy of the defendant does not discharge the surety in the dissolving [garnishment] bond.’

In Re Albrecht, 17 N. B. R. 287, Fed. Cas. No. 145, a case which arose in this state, Judge Brown, later Justice of the United States Supreme Court, said: ‘I deem it inconsistent with the general purpose of the [Bankruptcy] act to hold that the lien of a creditor, lawfully acquired by his diligence, shall be lost by the debtor giving a bond to satisfy the judgment, an action entirely beyond the control of the creditor, and one which was designed to secure, not to defeat, the ultimate payment of his debt.’

In a case involving a judgment creditor's bill, Chief Justice Fuller, speaking for the United States Supreme Court,...