Ruhl-Koblegard Co. v. Gillespie

• Decision Date: 19 March 1907
• Citation: 56 S.E. 898,61 W.Va. 584
• Parties: RUHL-KOBLEGARD CO. v. GILLESPIE et al.
• Court: West Virginia Supreme Court

56 S.E. 898

61 W.Va. 584

RUHL-KOBLEGARD CO. v. GILLESPIE et al.

Supreme Court of Appeals of West Virginia.

March 19, 1907

Submitted February 13, 1907.

Syllabus by the Court.

A discharge in bankruptcy releases the bankrupt from all debts and claims which are made provable against his estate and which existed on the day the petition was filed, except such debts as are by the bankruptcy act of 1898 (Act July 1, 1898 c. 541, 30 Stat. 551 [U. S. Comp. St. 1901, p. 3428]) excepted from a discharge in bankruptcy.

A creditor of one discharged in bankruptcy cannot maintain a suit to set aside an alleged fraudulent transfer of the property of the bankrupt, although such transfer may have been made more than four months prior to the filing of the petition in bankruptcy. The right to sue for and subject to the payment of the bankrupt's debts such property is vested alone in the trustee, and the failure of the trustee to bring such suit within the time prescribed by law does not transfer the right to do so to the creditor.

Appeal from Circuit Court, Webster County.

Bill of the Ruhl-Koblegard Company against J. M. Gillespie and others. Decree for defendants, and plaintiff appeals. Affirmed.

C. C Higginbotham, E. A. Brannon, and J. M. Hoover, for appellant.

Morton & Wooddell and Mollohan, McClintic & Mathews, for appellees.

SANDERS P.

The Ruhl-Koblegard Company complains of a decree of the circuit court of Webster county dismissing its bill filed for the purpose of setting aside two alleged fraudulent conveyances of lots of land situate in the town of Addison to Maggie E Gillespie, the wife of James M. Gillespie, and seeking to subject the same to the payment of a debt claimed to be due to it from the last-named defendant. The record of the cause discloses that by two certain deeds dated the 18th day of August, 1894, and the 16th day of October, 1897, re spectively, for certain considerations therein named Benjamin Hamrick and his wife conveyed to the female defendant two lots of land situate in the town of Webster Springs; that the defendant James M. Gillespie was a merchant, and as such opened an account in his own name with the plaintiff in 1896, which ran along with debits and credits until the 17th day of December, 1898, when a balance of $668.75 was found due the plaintiff, and which remains unpaid; that on the 12th day of February, 1901, the defendant James M. Gillespie filed his petition in voluntary bankruptcy in the District Court of the United States for the Northern District of West Virginia, and such proceedings were had therein that on the 22d day of October, 1901, he was discharged from all his debts and claims provable by the bankruptcy act, including the plaintiff's debt. The lots here sought to be subjected to sale were not given in by the bankrupt in said bankruptcy proceeding, and this suit was instituted on the 16th day of December, 1902. The defendants demurred to and answered the bill, denying all allegations of fraud, and denying that the lots were purchased and paid for by the defendant James M. Gillespie, or that they belonged to him, and as an additional defense the defendant James M. Gillespie pleaded his discharge in bankruptcy.

There are several reasons advanced by the appellees in support of the decree of the circuit court; but the main questions arising are whether or not the discharge in bankruptcy of the defendant James M. Gillespie is a bar to the plaintiff's claim, and whether or not after the adjudication in bankruptcy only a trustee appointed therein could maintain a suit to set aside fraudulent conveyances. The determination of both of these questions depends entirely upon the construction of the bankruptcy act of 1898 (Act July 1, 1898, c. 541, 30 Stat. 551 [U. S. Comp. St. 1901, p. 3428]). By section 17 of that act it is provided that a discharge in bankruptcy shall release a bankrupt from all his provable debts, except a certain specified class. Therefore, there are only two inquiries to make: First, is the plaintiff's debt a provable one in bankruptcy, and, second, is such debt included in the specified exceptions? There certainly can be no question, and in fact it is not otherwise contended, but that it is a provable debt, and it is equally as plain and undeniable that it is not embraced within either of the exceptions. Loveland on Bankruptcy, § § 109-289. When this conclusion is reached, there seems to be nothing left upon which the plaintiff can predicate its suit. "A discharge in bankruptcy discharges the bankrupt from all debts and claims which are made provable against his estate and which existed on the day the petition was filed, excepting such debts as are by law excepted from the operation of a discharge in bankruptcy." Loveland on Bankruptcy, § 288. The plaintiff's claim being a provable simple contract debt, and not falling within either of the exceptions, it is perfectly patent, under the plain letter of the act, that the discharge clearly operates as a complete release thereof. It is difficult indeed to conceive how a debt completely released and discharged can form the basis of a suit. There can be no personal decree against James M. Gillespie, and there is no specific lien upon the property sought to be charged. As to when a lien against a bankrupt will be discharged is not presented by the record, and will not be dealt with. "The effect of a discharge is to release the personal liability only. It does not affect liens upon his property. If they are valid under the laws of the state and the bankrupt act, they may be enforced after a discharge is granted. Thus a judgment which has become a lien on property will continue to be so; but if the judgment is merely a personal liability, it is released by a discharge. In an action to enforce a mechanic's lien or mortgage the discharge will not bar the proceedings, except as to a personal judgment for a deficiency. A vendor's lien for the purchase price of property sold may be enforced after a discharge, provided such lien is recognized by the state laws." Loveland on Bankruptcy, § 285.

And again, the right of the creditor to prosecute this suit is challenged, it being contended that such right is vested solely in the trustee. At the outset it may be well to remark that it is urged by the appellant that no trustee was elected. Whether this is so or not we cannot determine because certain orders of the bankruptcy proceeding, copied into the record, by which it is claimed this fact appears, upon examination, are found to form no part thereof. We assume such trustee was appointed, but however this may be we deem it immaterial, because under section 44 of the bankruptcy act the creditors of the bankrupt's estate are required at their first meeting after the adjudication or after a vacancy has occurred in the office of ...