American Exchange Bank v. Brandreth

The American Exchange Bank recovered a judgment upon a promissory note against Benjamin Brandreth, and others, on the 12th February, 1861, for $15,771.72. On the 30th June, 1868, Brandreth was discharged from all debts and claims provable agains¡ his estate and which existed on the 29th February, 1868, excepting such as are excepted by the bankrupt act.

In January, 1877, Austin Corben, who was then the owner of the. judgment by assignment from the bank, commenced an action against Brandreth and another to enforce this judgment and collect the same from land conveyed by Brandreth before the discharge in bankruptcy was obtained. In the case of the Ocean Bank v. Olcott (46 N. Y., 12), the Court of Appeals have decided that a judgment creditor who had what is termed an equitable lien on lands at the date of the discharge of the debtor in bankruptcy, based on the statute of uses and trusts, but which rested on the judgment alone, had no such lien as was protected from the operation of the discharge. That to have a lien which would be protected, the judgment creditor must have commenced his action thereon and filed his notice of pendency of action before the discharge.

*386Neither the plaintiff or its assignee, Corben, therefore, had any debt in January, 1877, upon which to base an action. The judgment was satisfied as to Brandreth by the bankrupt discharge. Chapter 52, Laws of 1875, authorized the court in which a judgment was rendered against a defendant, who has been discharged under the United States bankrupt laws from the payment of that judgment, to order the same canceled of record. As we have seen (Ocean Bank v. Olcott, supra), that judgment is discharged by the discharge in bankruptcy. Section 1268 of the new Code of Civil Procedure makes it imperative upon the court to make the order, while the law of 1875 made it permissive. If the new Code was not in effect at the date of the making the order in question, the order ought to have been granted if the facts called for the exercise of the power. These laws were passed to meet a necessity, deeply felt by those who had been discharged under the bankrupt law. There was no way by which the judgment against them could be removed from the record. The value of the lands of the bankrupt, acquired after the discharge, seemed to be subject to liens which, in reality, were not liens, and thus the merchantability and value of the lands were injured. The order should be reversed and an order granted that the clerk discharge the judgment of record.

Order denying motion to discharge judgment of record reversed and motion granted.