Sample v. Jackson

• Decision Date: 19 September 1945
• Docket Number: 21
• Citation: 35 S.E.2d 236,225 N.C. 380
• Parties: SAMPLE v. JACKSON et al.
• Court: North Carolina Supreme Court

35 S.E.2d 236

225 N.C. 380

SAMPLE v. JACKSON et al.

No. 21

Supreme Court of North Carolina

September 19, 1945

See also 223 N.C. 335, 26 S.E.2d 876.

Civil action to restrain levy and sale under execution.

On 20 June 1932 judgments were rendered in favor of the defendant Jackson and against the plaintiff in two actions pending in the Pasquotank Superior Court. One was for $300 interest and costs, and the other for $1,000, interest and costs. The judgments were duly docketed in Pasquotank County.

On 19 October 1932, within four months after the docketing of said judgments, plaintiff filed a voluntary petition in bankruptcy and was duly adjudged bankrupt. The bankruptcy proceeding was adjudged a 'no assets' case. The real property (110 acres in Pasquotank County) owned by plaintiff and described in the complaint was set apart to him as his homestead, subject to existing liens, and plaintiff was discharged. No trustee was appointed.

Defendant Jackson, about 1 January 1944, procured the issuance of execution on said judgments and defendant Williams as constable levied upon and proceeded to advertise said land for sale under execution. Plaintiff instituted this action and obtained a temporary restraining order.

Plaintiff pleads the invalidity of the judgments rendered within four months of bankruptcy proceeding. The defendant alleges in defense fraud in the contract upon which the judgments were rendered and no notice of bankruptcy.

When the cause came on for hearing issues were submitted to and answered by the jury in favor of defendant.

Thereupon the court perpetually restrained any further proceeding under the judgment for $300 and further decreed 'that the said defendant, Lem Jackson, be likewise restrained and enjoined from causing the land described in the complaint to be levied upon and sold under execution issued upon that certain judgment for $1,000, entered and docketed in favor of the defendant, Lem Jackson, and against the plaintiff on June 20 1932, and referred to in the complaint, until the expiration of the Homestead allotted to the plaintiff in said lands in the course of the bankruptcy proceeding aforesaid or until a Homestead is re-allotted under a new execution or as provided by law.'

The quoted provision is substantially in the language of a judgment tendered by plaintiff.

Plaintiff excepted and appealed.

J B. McMullan and J. W. Jennette, both of Elizabeth City, for plaintiff appellant.

M. B. Simpson and Robert B. Lowry, both of Elizabeth City, for defendant appellees.

BARNHILL Justice.

Whether the personal liability of plaintiff on the judgments described in the pleadings was discharged by the bankruptcy was not adjudicated in the court below. The court held only that the judgment lien is not enforceable during the existence of the homestead but is enforceable against the homestead land after the expiration of the exemption. The correctness of this ruling is the crucial question presented on this appeal.

The purpose of bankruptcy legislation is to effect an equitable distribution of the bankrupt's property among his creditors and discharge the debtor from his obligations.

Exempt property is expressly excepted from the operation of the Act, 11 U.S.C.A. s 110, and the trustee must set apart and allot to the bankrupt such exemptions as are allowed by the State law. 11 U.S.C.A. s 75, sub. a. When there is no trustee, this may be done by the court itself. Smalley v. Laugenour, 196 U.S. 93, 25 S.Ct. 216, 49 L.Ed. 400.

Except as expressly stated in the Act, the bankruptcy statute does not serve to discharge liens upon the property of bankrupt. It does provide that 'all * * * judgments * * * obtained through legal proceedings against a person who is insolvent, at any time within four months prior to the filing of a petition in bankruptcy against him, * * * shall be deemed null and void in case he is adjudged a bankrupt, and the property affected by the * * * judgment * * * shall be deemed wholly discharged and released from the same, and shall pass to the trustee as a part of the estate of the bankrupt.' 11 U.S.C.A. s 107, sub. f.

While there is some conflict of State authority, it is generally held that this section does not avoid liens as against all the world but only as...