Talbott v. Suit , 68 Md. 443 ( 1888 )

Bryan, J.,

after stating the case as above, delivered the-opinion of the Court.

The bankrupt law is set, forth in the Bevised Code of the United States. By sec. 5119 of this Code it is provided that, subject to certain limitations which are not now im question, a discharge in bankruptcy shall release the bankrupt from all debts, claims, liabilities and demands which were or might have been proved against his estate in bankruptcy. A creditor whose name 'is omitted from the schedule may, nevertheless, prove his debt and is, therefore, barred by the discharge. This question has been so ruled in a great number of cases, as may be seen in the notes to this section of the statute in Bump’s Bankruptcy. It is, however, provided in sec. 5110 that a discharge shall not be valid in either of the ten cases therein specified. One of these excepted cases is where the bankrupt has wilfully sworn falsely in his affidavit annexed to his petition, schedule or inventory in relation to any material fact. In ■sec. 5120, it is provided that any creditor who has a provable debt may at any time within two years after the discharge, contest its validity on the ground that it was fraudulently obtained. He must apply to the Court which granted it, and set forth in his application the grounds of avoidance ; and if the Court finds that the alleged fraudulent acts are proved, and that the creditor had no knowledge of them until after the granting of the discharge, then it must be annulled; but otherwise its validity is to remain unaffected. Independently of the general rule that a judgment of a Court of competent jurisdiction cannot be collaterally impeached in another Court, it seems clear that Congress intended by this section to designate the rhode by which the discharge might be impeached, and to exclude all other modes. Its authority over the subject of bankruptcies, and everything connected with obtaining, authenticating and invalidating a discharge is confessedly paramount. Not to dwell on the manifest propriety and convenience of appointing a special tribunal where the validity of the discharge might be decided once for all, and the great hardship and injustice of requiring the bankrupt to meet and contest allegations in every Court where his discharge should be pleaded, with the probability of conflicting decisions in different Courts, it maybe sufficient do say, that the authorities are quite uniform in maintaining the exclusive jurisdiction of the bankrnpt Court on this question. Many of them are collected in the notes on this section in Bump’s Bankruptcy. It, therefore, seems to us that on the supposition that the claim sued on was a provable debt, it was absolutely barred by the defendant’s discharge, and that the Court’s ruling was unduly favorable to the plaintiffs.

The remaining question is whether this claim is a provable debt. If the bankrupt was guarantor of the single bill, it could not have been proved; unless his liability had become absolute before the final dividend was declared. Sec. 5069. The testimony on the part of the plaintiffs tends to prove that the defendant “told them that if Brown did not pay the note, he would do so himself, and that his endorsement would make it as good as gold,” and that the defendant endorsed the note in blank, and transferred it to the plaintiffs. The first section of the ninth Article of the Code, authorizes the assignment of bonds and dioses in action by writing, signed by the person authorized to make the same. And if the assignment is under the hand and soal of the obligee, the eighth and ninth sections of this Article authorize, under the circumstances therein mentioned, an action by the assignee against the assignor. No action, however, is given by the Article against the assignor, where he merely makes the assignment in writing without seal. Now it is well settled that the legal effect of an endorsement in blank, made on a single bill by the obligee, is to confer on the holder the power to fill up the blank with a full assignment of the interest to himself. Chesley vs. Taylor, 3 Gill, 251; Shriver vs. Lamborn, 12 Md., 170. This mode of assignment, as we have seen, cannot subject the assignor to the consequences of a guaranty. The parol contract alleged in the evidence cannot impose these responsibilities upon him; because a contract to pay the debt of'anothef is void under the Statute of Frauds, unless it be in writing. We conclude, therefore, that the evidence does not tend to show any cause of action against the defendant, and that the ruling ought to have been in his favor, peremptorily without reference to the bankrupt proceedings.

(Decided 14th March, 1888.)

We have not overlooked the decisions which have been made on transactions, which Judge Story describes as irregular endorsements of promissory notes. In consider-: ing the liabilities incurred by an endorsement on a promissory note, made by a third person, who is not the payee, he states the rule which has met with general acceptance; the . interpretation of the liability ought to be such as will carry into effect the true intention of the parties, which may be made out by parol proof of the facts and circumstances which took place at the time of the transaction. Story on Promissory Notes, sec. 419. But the. endorsement by the payee is a matter which requires a very different determination. We do not consider it necessary to pursue the subject, because a single bill is not a commercial instrument like a promissory note. The assignment is entirely statutory and the liabilities incurred depend on the statute, and not on the principles of mercantile law.

The ruling of the Court worked no injury to the plaintiffs, but gave them advantages to which the law did not entitle them.

Judgment affirmed.