In re McBryde , 99 F. 686 ( 1899 )

PURNELL, District Judge.

This canse coming on to be heard this, the 4th day of December, 1899, and being heard, after argument by counsel, it is ordered and adjudged :

1. That there having been no levy on the property of the bankrupt by the sheriff, George B. McCleod, or his deputy, W. F. Henderson, or John Leach, nor any interference with said property after the adjudication in bankruptcy, but simply a threat to levy, said George B. McCleod, W. F. Henderson, and John Leach have not been guilty of a contempt of this court or its process.

2. That the homestead of the bankrupt, laid off some years ago under process of the state court, having enhanced in value beyond that allowed by and under the law of North Carolina, be reallotted by the trustee, as provided by the act of July 1, 1898, § 47, subsec. 11, allowing said bankrupt real estate of the value of §¡1,000 and no more.

3. That the costs incurred in consequence of the contempt proceedings be paid by the trustee out of the estate; said costs to be taxed by the clerk of this court.

4. D. E. McBryde is entitled to a discharge in bankruptcy when the homestead is reallotted, and the granting of the same is deferred for this purpose. The former order in the contempt proceedings, requiring the sheriff, his deputy, and Leach to show cause, is modified in accordance herewith, and this cause retained for further order.

Subsequently (December 28, 1899) the following opinion was rendered by the court:,

PUBNELL, District Judge.

On the exceptions to the rulings of the referee certified for review, it is held, adjudged, and ordered:

That the first exception be, and the same is, sustained. While a judgment in a state court after or within four months of an adjudication creates no lien and. confers no additional rights, the statute recognizes two classes of judgment debts which may be proved: First, a debt evidenced by judgment obtained prior to the commencement of bankruptcy proceedings (section 63a, subd. 1); and, second, a debt founded on a provable debt reduced to judgment pending bankruptcy proceedings (Id. 5). The latter class of debts are provable, ‘‘less costs incurred and interest accrued after the filing of the petition and up to the time of the entry of such judgment.” This is not a new debt created during bankruptcy, but retains the character of the indebtedness out of which it arose. Boynton v. Ball, 121 U. S. 457, 7 Sup. Ct. 981, 30 L. Ed. 985. And the conflict of opinion which arose under the act of 1867 on the question of merger could not arise under the act of 1898, even' if the supreme court had not settled it in the decision cited; for the act expressly provides for the proving of such debts in the sections quoted. The purpose of the act seems to be to meet cases like the one at bar. At the time the petition in bankruptcy was, filed, John Leach held a note signed by McBryde, not under seal. It was not then barred. October 1, 1899, one day before barred by the state statute, he obtained judgment. This established the debt, and stopped the running of the statute of limitations. The filing of the petition might have done this, but the creditor was vigilant, and not willing to trust to á theory when there was a way certain. He obtained a judgment, as he had a legal right to do. which, as to his debt, gave him all the rights under the state law, — established his debt, stopped the running of the statute, — except the right to interfere with the bankruptcy proceedings by a levy, or to establish a priority. The debt is provable as other unsecured debts are provable.

Second exception is overruled. The discharge of the bankrupt is provided for in section 14a, and none of the reasons for refusing such discharge are shown or alleged. Section 14b. It appearing, however, that the homestead allotment made several years ago under process of a state court was adopted by the trustee, and the same has been enhanced in value in excess of that allowed by the laws of North Carolina, the discharge will not be granted until there is a reallotment of the homestead exemptions, and the bankrupt has otherwise fully complied with the provisions of the statute. This ruling disposes of the third exception. Except as herein modified, the report and rulings of the referee are affirmed.