Cogburn v. Spence & Elliott , 15 Ala. 549 ( 1849 )

DARGAN, J.

When this cause was first submitted to the court, I was of opinion that the action could be maintained on the evidence contained in the record. Subsequent reflection however, aided by the argument of counsel, has satisfied me that the law is otherwise.

1. The bankrupt act does not intend, nor in any manner undertake to restrain a creditor, who has a cause of action against a bankrupt, from suing him, although the bankrupt may have obtained his final certificate of discharge. It only gives the bankrupt a complete defence against the cause 6f action when sued.

The language of the act, tobe found in the fourth section, is, “ And such discharge, and certificate, when duly granted, shall in all courts of justice, be deemed a full, and complete discharge of all debts, contracts, and other engagements of such bankrupt, which are provable under this act, and shall be, and may be pleaded, as acomplete bar to all suits brought in any court of judicature whatever; and shall be conclusive evidence of itself, in favor of such bankrupt, unless impeached for fraud, &c.”

That the whole scope of the act, was to furnish the bankrupt with a complete defence to suits brought against him, is still more apparent, from the fact, that the certificate is not a bar, if the debt is of .a fiduciary character, or if the discharge be obtained by fraud.

The act therefore, only intends to arm the bankrupt with a perfect defence, against all debts discharged by the certificate obtained, in pursuance of the act.

The creditor may however, sue on his demand, otherwise he could not dispute the bona fides óf the certificate, arid the bankrupt must rely on his certificate in bar of the suit.

2. But if the demand of the creditor was reduced to judgment, before the certificate was granted, the act does not compel him to bring an action of debt on the judgment, in order to test the .question, whether the certificate of discharge is a bar to his demand, or not; and as he is not compelled to sue again on his judgment, he may proceed with his suit, as it stood before the certificate was granted, and issue his execution, at the risk however, of having to set it aside, or quash= ed, by an application to the court on the part of the bankrupt.

.This seems to be the natural construction of the act, and accords with decisions made upon this subject.

In the case of Mabry, et al. v. Herndon, 8 Ala. Rep. 848; an execution issued against a bankrupt, who had obtained his certificate; he filed his petition for a supersedeas, and set up his certificate in bar of the execution, and prayed to have it quashed, and the levy made by virtue of the suit, set aside.

The plaintiff impeached the certificate for fraud, and filed specific allegations, of what the fraud consisted. This court held, that the plaintiffs might make up the proper issues, in bar of the motion to quash the writ, and thus try the validity of the certificate; indeed, all the decisions, both English and American, hold that the creditor, who has obtained a judgment before the certificate of discharge is obtained, may sue out execution afterwards, and the remedy the bankrupt has, is to move the court to set it aside.

3. There being then a judgment, to which there are proper parties, and upon which the plaintiff may proceed, until arrested by the act of the bankrupt, the execution issued thereon is not absolutely void, but voidable only ; that is, it is a valid writ until the bankrupt shows it to be erroneous. Tarleton v. Fisher, Douglas’s Rep. 646; 7 Metc. 247; 8 ib. 103; 2 W. Black. Rep. 1190 1 Bos. &Pull. 426; 4 Taunton, 631.

4. The execution being voidable only, and not void, it affords a full and ample protection to the officer, who merely obeys the mandate of the law in executing it. The books not only abound with decisions to this effect, but I have found no case that holds a contrary doctrine.

5. It is however urged, that though the writ may protect the sheriff, it cannot afford protection to Elliott, for whose use it was issued, and who directed the levy to be made. The correct rule on this subject, is, that if the writ is voidable only, and not void, it will afford to the officer executing it, full protection. It also affords protection to the party issuing it, until it is avoided.

6. When the defendant has caused it to be set aside, or annulled, as erroneous, then the party issuing the process, is responsible, for all the injury resulting to the defendant, from its execution. 4 Wharton, 339; 7 Metc. 257; 2 Douglas, 671.

7. It has, however, been urged, with much force, that this construction of the bankrupt act, will, or may frequently deprive the bankrupt of that full protection, intended to be secured to him; for if the writ is voidable only, and not void, and the sheriff should sell before it is set aside, the title of the purchaser would be complete, and thus the defendant divested of his property, when he has a full discharge from the debt. The answer must be, that the act designed to furnish the bankrupt with a full defence against all his debts, save those excepted by the act, and if before he has had an opportunity to make this defence, he has been injured by the act of the plaintiff, through the medium of the process of the court, the law will give him redress by way of .'damages, after he has shown to the court that the process is erroneous, and has obtained a judgment setting it aside.

Whether a purchaser, would obtain, however, a title to property sold under process that is voidable,' after it has been set aside, or under what circumstances, if any, his title would be held defective, it is unnecessary to enquire.

The ruling of the circuit court was in conformity to the view here taken, and the judgment must be affirmed.