Wilson Laboratories v. Webster-Warnock Chemical Co.
| Decision Date | 30 March 1926 |
| Docket Number | (No. 10.) |
| Citation | 291 S.W. 835 |
| Parties | WILSON LABORATORIES v. WEBSTER-WARNOCK CHEMICAL CO. |
| Court | Tennessee Supreme Court |
Certiorari to Court of Appeals.
Suit by the Wilson Laboratories against the Webster-Warnock Chemical Company. Decree for complainant, and defendant appealed to the Court of Appeals and filed an appeal bond. The Court of Appeals entered a decree against the defendant and the Indemnity Insurance Company, which was surety on its appeal bond, and the Insurance Company brings certiorari. Writ denied.
Siveley, Erans & McCadden, of Memphis, for plaintiff.
Stickley & Fitzhugh, of Memphis, for defendant.
Wilson, Gates & Armstrong, of Memphis, for Indemnity Insurance Co. of North America.
On December 28, 1925, complainant obtained a final decree against defendant for the sum of $1,524. From this decree defendant prayed and was granted an appeal to the Court of Appeals, and on January 4, 1926, filed an appeal bond in the sum of $2,000, with the Indemnity Insurance Company as surety thereon, conditioned to "pay and satisfy the amount of the judgment, damages, all such costs as shall be awarded against it by said Court of Appeals." The Court of Appeals concurred in the findings of the chancellor, and on July 31, 1926, entered a decree against the defendant and the Indemnity Insurance Company in the sum of $1,524, together with interest thereon, and the costs of the cause. The Indemnity Insurance Company alone brings the cause to this court, and assigns one error, viz.:
"This was error because the condition of the bond which was signed by petitioner as surety was to pay such judgment as `shall be awarded against it' or the Webster-Warnock Chemical Company, and no judgment or decree could be entered against said Webster-Warnock Chemical Company because of its intervening bankruptcy, and therefore no judgment or decree could be entered against petitioner as its surety."
The complainant concedes: That on May 22, 1926, the defendant filed a voluntary petition in bankruptcy, and on the same day was adjudged a bankrupt. That on June 8, 1926, F. M. Robertson was elected and qualified as trustee in bankruptcy of defendant company. That on June 21, 1926, said trustee, pursuant to his petition, obtained from the district court the following order: "It is further ordered that the complainant in said cause, Wilson Laboratories, is hereby allowed and granted leave to prosecute said cause to final judgment or decree in the appellate courts, but in the event of such decree, shall not cause execution to issue thereon against the bankrupt." That said trustee thereupon filed a petition in the Court of Appeals pursuant to which that court entered the following order, which was approved by counsel, to wit:
"That F. M. Robertson, as trustee in bankruptcy of Webster-Warnock Chemical Company, be, and he hereby is, allowed to intervene herein and defend said suit on behalf of the said Webster-Warnock Chemical Company, bankrupt, and appellee is allowed to prosecute this suit against said bankrupt to final judgment."
In this state of the record the cause was heard in the Court of Appeals upon the merits, with the result heretofore stated.
The only question raised by the assignment of error is as to the jurisdiction and power of the Court of Appeals to enter a decree against the defendant after it was adjudged a bankrupt but before its discharge, the bankruptcy court expressly authorizing such a decree.
Section 11 of the Bankruptcy Act of 1898 (U. S. Comp. St. § 9595), is as follows:
This provision provides for a stay until after an adjudication of bankruptcy after which time such action may be further stayed (italics ours); that is, the court is given a discretion to further stay the action. But the court, exercising its discretion, instead of further staying the action, authorized the trustee to enter his appearance and defend the pending suit, as provided in section 11, subsec. (b), and in the same order authorized the complainant to prosecute its suit to judgment. If the purpose of the act were to permanently stay pending actions in other courts, and compel the creditors to begin their contests anew in the bankruptcy court, then section 11, subsec. (b) would be in conflict with subsection (a), and to so hold would violate the familiar rule of statutory construction, which provides that every part of the act must be given effect.
The construction which we have given the act is strengthened by the language employed in section 63 (U. S. Comp. St. § 9647), as follows:
"Debts Which may be Proved. — a. Debts of the bankrupt may be proved and allowed against his estate which are * * * (5) founded upon provable debts reduced to judgments after the filing...
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