French v. Morse , 68 Mass. 111 ( 1854 )

Metcalf, J.

A discharge under the insolvent law of this commonwealth (St. 1838, c. 163) does not extend to debts founded on contracts made before it was passed, unless the creditor elects to prove such debts, under that law. And as the contract, for breach of which this action is brought, was made nearly two years before the statute of 1838 went into operation, and the plaintiff did not prove any claim against the defendant, for breach of this contract, it is clear that the defendant’s discharge under that statute is not a bar to this action. Besides; if the plaintiff had presented his claim for proof, nominal damages only, and not the actual damages since sustained, and now sued for, could have been proved. Prescott v. Trueman, 4 Mass. 630. Sleeper v. Miller, 7 Cush. 594, note. For this reason also, the defendant’s discharge under the insolvent law cannot avail him.

Is the defendant’s discharge under the Bankrupt Act of 1841 a bar to this action 1 By the fourth section of the act, a “ 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 a/re provable under this act, and shall and may be pleaded as a full and complete bar to all suits brought in any court of judicature whatever.” By the fifth section, “ all creditors whose debts are not due and payable until a future day, all annuitants, holders of bottomry and respondentia bonds, holders of policies of insurance, sureties, indorsers, bail, or other persons having uncertain or contingent demands against such bankrupt, shall be permitted to come in and prove such debts or claims, under this act, and shall have a right, when then debts and claims become absolute, to have the same allowed them.” The question in this case therefore is, whether the plaintiff’s claim, now in suit, was an uncertain or contingent demand provable under the bankrupt act.

If the meaning of “ uncertain or contingent demands ” had been settled by an adjudication of the supreme court of the United States, we should be bound by such adjudication; the judicial department of every government being the rightful expositor of its own laws. But that court has not made any decision which determines this case. It has decided that a surety on a promissory note, made by one who became bank rapt after it was payable, might prove his claim against the principal, without first paying the note; and therefore that the discharge of the principal was a bar to an action brought against him to recover the money paid on the note, by the surety, after the discharge was granted. Mace v. Wells, 7 How. 272, reversing the judgment of the supreme court of Vermont, reported in 17 Verm. 503. This decision, however, was not made on the ground that the plaintiff’s claim was an uncertain or contingent demand, but on the ground that he was a surety for the payment of an existing debt, and was," in terms, provided for by the fifth section of the bankrupt act. And perhaps the decision would have been the same, even if the note had not become payable until after the bankruptcy of the principal; as has since been held by.the supreme court of Pennsylvania. Fulwood v. Bushfield, 2 Harris, 90. But it has never been decided that sureties on a penal bond, given to secure performance of official duty, or other collateral acts, (like the keeping of the peace, &c.) are authorized by this section of the bankrupt act, to prove demands against their principal, before he is in default. The contrary has repeatedly been adjudged.

It is to be noticed that the demands against the bankrupt, which are termed uncertain or contingent, in § 5 of the bankrupt act, are not the demands of holders of policies of insurance, sureties, indorsers, bail, &c. previously mentioned, but the demands of 11 other persons.” Therefore, however contingent and uncertain the demands of bail, sureties, &c. may in fact bo, the decisions as to them do not greatly assist us in ascertaining what demands of other persons, which are denominated contingent or uncertain, are provable against the "bankrupt, and barred by his discharge.

The supreme court of New York, in Jemison v. Blowers 5 Barb. 686, decided that a covenant for quiet enjoyment inserted in a deed conveying land, although not broken until after the grantor was declared bankrupt, was a contingent demand provable under the bankrupt act, and that the grantor’s discharge under that act was a bar to an action brought against him for breach of the covenant. And the counsel for the present defendant was warranted in saying that this case cannot be distinguished, in principle, from that. Our views of the law, however, differ from those taken by the court in that case. We are of opinion that, in the bankrupt act, “ uncertain or contingent demands ” should be held to mean, not demands whose existence depends on a contingency, but existing demands upon which the cause of action depends on a contingency. Cases have been adjudged upon this understanding of those terms. Recently, in Loring v. Kendall, 1 Gray, 305, it was decided that a surety on an administrator’s bond was not discharged, by a certificate in bankruptcy, from his obligation to answer for a breach of the condition of the bond, subsequently committed by the administrator. The same view of the bankrupt act had been previously taken in Woodard v. Herbert, 24 Maine, 358; Ellis v. Ham, 28 Maine, 385; Dole v. Warren, 32 Maine, 94; Goss v. Gibson, 8 Humph. 197 ; Bennett v. Bartlett, 6 Cush. 225. See also Goodwin v. Stark, 15 N. H. 220. And this is conformable to the decisions under the English St. 6 Geo. 4, c. 16, § 56, which authorizes the proof of a bankrupt’s debts payable on a contingency which shall not have happened before the issuing of the commission against him. A claim like that here in suit cannot be proved under that statute, and is not barred by the defendant’s discharge. Contingent liabilities of a bankrupt are not provable, but only certain debts, contracted by him before bankruptcy, and payable after it on a contingency. South Staffordshire Railway v. Burnside, 5 Exchequer Reports, 138. Hankin v. Bennett, 8 Exchequer Reports, 107. Hinton v. Acraman, 2 C. B. 409. Bac. Ab. Bankrupt, E. Archb. Bankr. (9th ed.) 124, 125, and cases there cited.

In the present case, the defendant’s covenant against incumbrances on the land conveyed by him to the plaintiff was not, until after the defendant’s discharge, so broken as to give the plaintiff a cause of action thereon against him, for actual damages. Whether such cause of action would ever exist was uncertain and contingent at the time when the defendant went into bankruptcy, and also at the time when he was discharged. At neither of those times had the plaintiff any existing demand upon which the cause of action depended on a contingency; but the very existence of his demand depended on a contingency. Since that discharge, the contingency has happened. The plaintiff has been obliged to pay $924, to remove the incumbrance on his land; and he is entitled to recover that sum in this action. Judgment for the plaintiff.