Eberhardt v. Wood
Eberhardt v. Wood
Opinion of the Court
— This is a motion by a surety against 'a co-surety for contribution, the defence relied on being a discharge in bankruptcy under the bankrupt act of congress of 1867.
In the year 1860, Elizabeth Earhart was appointed administratrix of her husband’s estate, and gave bond for the faithful discharge of her duties, with the plaintiff and defendant as her sureties. She was afterwards removed as administratrix, and O. F. Noel was appointed administrator de bonis non in her place. On the 30th of April, 1861, Noel, as administrator de bonis non, filed his bill in this court against Elizabeth Earhart as administratrix, and against the complainant and the defendant as sureties on her administration bond, to hold them liable for a devastavit of the assets of the estate. Such proceedings were had that, on the 21st of December, 1870, a decree was rendered in said cause declaring the defendants liable for the personal assets -of the estate which came, or might have come, to the hands of the defendant Elizabeth as administratrix, and ordering an account to ascertain the amount with which she was properly chargeable. From this decree an appeal was taken to the supreme court, where it was affirmed, and the account taken. On the 17th of January, 1874, a final decree was rendered by that court in favor of Noel, against all of the defendants, for $1,362.25 and costs. On this decree execution issued, and was levied upon the property
The defendant, Wood, pleads in bar of this motion his certificate of discharge in bankruptcy, which bears date the 15th of September, 1871, and forever discharges him “ from .all debts and claims which by said (bankrupt) act are made provable against his estate, and which existed on the 22d day of April, 1871, on which day the petition for adjudication was filed by him, excepting such debts, if any, as are by said act excepted from the operation of a discharge in bankruptcy.”
By the 34th section of the bankrupt act of 1867, ch. 176, and, now, by the Revised Statutes of the United States, § 5119, a discharge in bankruptcy duly granted shall, subject to certain limitations not material to be noticed, release the bankrupt from all debts, claims, liabilities, and demands which were, or might have been, proved against bis estate in bankruptcy.”
By 1867, 176, 19 (Rev. Stat. U. S. § 5067), “ all debts due and payable from the bankrupt at the time of the commencement of proceedings in bankruptcy, and all debts then existing but not payable until a future day, * * * may be proved against the estate of the bankrupt.”
By the same section (Rev. Stat. §§ 5068, 5069) it is provided: “If the bankrupt shall be bound as drawer, endorser, surety, bail, or guarantor upon any bill, bond, note, or any other specialty or contract, or for any debt of another person, and his liability shall not have become absolute until after tbe adjudication of bankruptcy, tbe ereditor may prove tbe same after sucb liability shall have become fixed, and before the final dividend shall have been declared. In all cases of contingent debts and contingent liabilities contracted by the bankrupt, and not herein otherwise provided for, the creditor may make claim therefor, and have his claim allowed, with the right to share in the dividends, if the contingency shall happen before the order
If the defendant’s “debt or liability” was provable-under the proceedings in bankruptcy, the fact that the-decree of the 19th of January, 1874, was rendered against-him would not affect his right to the benefit of his discharge. For the decree of the chancery court was had, and the appeal therefrom was taken, before the filing of the petition in bankruptcy, and the benefit of the discharge could not be-had in the supreme court. Longley v. Swayne, 4 Heisk. 506, note; Cornell v. Dakin, 38 N. Y. 253. Strictly speaking, the defendant should have set up the new matter by supplemental and cross-bill in this court, enjoining the proceedings under the appeal until the merits of the defence-could be heard. Hayne v. Hayne, 3 Ch. 19 ; Miller v. Fenton, 11 Paige, 18; Searight v. Morrison, Sup. Ct. Tenn., December term, 1874. But this course was, it seems, not indispensable. The judgment or decree rendered under Such circumstances is said to be ‘ ‘ null and void. ’ ’ Riggs v. White, 4 Heisk. 504. And, at any rate, the defendant has his remedy, either at law by quashing the execution, pleading the discharge in bar of any suit upon the decree, or in equity by bill. Boyd v. Vanderkemp, 1 Barb. Ch. 289; Johnson v. Fitzhugh, 3 Barb. Ch. 360; Dick & Co. v. Powell, 2 Swan, 632. The question then is : Was the “ debt or liability ’ ’ on which the present motion is based provable under the proceedings in bankruptcy ?
The liability of the plaintiff and defendant, as sureties of Elizabeth Earhart, dates from the execution of the' administration bond, and became fixed upon the default of the administratrix. Craythorne v. Swinburne, 14 Ves. 169; Boyd v. Brooks, 34 Beav. 7; Jones v. Knox, 46 Ala. 53; Wayland v. Tucker, 4 Gratt. 268. The final decree shows that the breach must have occurred previous to the decree
It is argued, however, that although this may be true as to the creditor, yet the plaintiff had no debt or claim against the defendant, as his co-surety, until he paid the decree of the 19th of January, 1874, and could not, therefore, prove against the estate of the bankrupt in 1871. But the obligation had become fixed as a debt before the petition in bankruptcy, and the extent of that liability was ascertainable, and the proportion of such liability which such surety might be compelled to pay was contingent upon the ability of the principal. Every surety has a demand against his principal which is contingent' upon his being compelled to pay any part of the debt, and such a demand is provable. Mace v. Wells, 7 How. 272. Every joint debtor has a demand against Ms co-debtor, contingent upon his being compelled to pay more than his share of the debt, and such demand is
It may be added that the equity of a surety against his co-surety, for contribution, grows out of his right to be subrogated to the rights of the creditor so far as it may be necessary to his protection. Dering v. Farl of Winchelsea, 1 Cox, 318, Lidderdale v. Robinson, 2 Brock. 160; Burrows v. McWhann, 1 Desau. 409; Cuyler v. Ensworth, 6 Paige, 32. And, consequently, the surety is entitled to compel the creditor to prove his debt under the proceedings in bankruptcy, with a view to his right of subrogation on future payment. Ex parte Rushforth, 10 Ves. 409; Matter of Babcock, 3 Story, 393.
There seems to be no direct adjudication upon the precise point before us under the act of 1867, but the weight of authority under the bankrupt act of 1841 is, perhaps, against the conclusion to which I have come. That act, by its 5th section, authorized all persons having “uncertain or contingent demands” against the bankrupt, including “ sureties,” to prove their claims. It was doubted whether, under this provision, a principal debtor would be released, by his discharge in bankruptcy, from the claim of a surety on an obligation in existence at the filing of the petition, who had afterwards paid the debt. This doubt was resolved in favor of the bankrupt by the Supreme Court of the United States overruling a decision of the supreme court of Vermont to the contrary, the former court holding the question to be “clear of all doubt.” Mace v. Wells, 7 How. 272. Several of the state courts, and among others our own, had previously reached the same conclusion. Hardy v. Carter, 8 Humph. 153; Morse v. Hovey, 1 Sandf. Ch. 187; Crafts v. Mott, 4 N. Y. 604; Lipscomb v. Grace, 26 Ark. 231,
The reason given for the decisions cited is that the liability between co-sureties does not exist as a matter of contract,
The bankruptcy act of 1867 expressly makes provable “ all existing debts,” although contingent and payable at a future day, and all obligations of the bankrupt as “ surety ” upon any bond, specialty, or contract, whether the liability be absolute or contingent, provided the obligation has given rise to an actual liability, and the extent of the liability is capable of being ascertained. United States v. Throckmorton, 8 B. R. 309; Riggin v. Magwire, 15 Wall. 549. And the contingency, as we have seen, is as clearly predicable of a liability to pay as of actual payment. The statute has changed the old rule, which certainly prevailed before the bankrupt act of 1841. Roosevelt v. Mark, 6 Johns. Ch. 286, and cases cited. And I am inclined to think the old rule, based upon the words of the earlier statutes of bankruptcy, was allowed too much weight in giving reasons for
The motion must, therefore, be disallowed.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.