Fifth Avenue Building & Loan Ass'n v. Goldberg , 1903 Pa. Super. LEXIS 187 ( 1903 )

Opinion by

Orlady, J.,

On October 30,1900, a judgment in favor of plaintiff against the defendants was regularly entered in the court below. On November 24, 1900, a rule was granted to show cause why the judgment entered against Joseph Goldberg should not be opened and he let into a defense, which rule, after hearing, was made absolute. On the trial the plaintiff offered in evidence, without objection, a judgment bond, with accompanying mortgage, from Augusta and Joseph Goldberg to the plaintiff association—the mortgage being duly recorded, and the judgment bond filed to No. 124, December term, 1900—and rested his case. Joseph Goldberg then offered in evidence the adjudication in bankruptcy in the district court of the United States, for the western district of Pennsylvania, and the record in bankruptcy in that case; objection was made thereto because. of a defect in the schedule in naming this plaintiff as creditor, etc., and is as follows : “ Name of creditor, Fifth Avenue Building and Loan Association; residence, Pittsburg. Description of security, mortgage and bond for $3,600 given by Mrs. Augusta Goldberg on property in fifteenth ward, Pittsburg, dated June 1, 1898; ” which objection was sustained by the court. The defendant then offered to prove that the only debt that the defendant ever contracted with the plaintiff association was represented by the judgment bond and mortgage already in evidence, for the purpose “ of strengthening the fact that the plaintiff had been sufficiently notified by the schedule in baukruptcy,” which was rejected under objection, and the court gave binding instructions to return a verdict in favor of the plaintiff for $819.69.

The assignments of error may be considered together, the whole question being the sufficiency of the schedule, required by section 7 of the National Bankruptcy Act of 1898, to make the discharge in bankruptcy an effective release from the debts of Joseph Goldberg.

Section 17 provides, “ (a) A discharge in bankruptcy shall release a bankrupt from all of his provable debts, except such as (3) have not been duly scheduled in time for proof and allowance with the name of the creditor, if .known to the bankrupt, unless such creditor had notice or actual knowledge of the proceedings in bankruptcy; ” section 7 of the act requires that “ (a) The bankrupt shall .... (8) prepare, make oath to, and file in court within ten days, .... a schedule of his property, showing the amount and kind of property, the location thereof, its money value in detail, and a list of his creditors, showing their residences, if known, if unknown, that fact to be stated, the amounts due each of them, the consideration thereof, the security held by them, if any, and a claim for such exemption as he may be entitled to, all in triplicate, one copy of each for the clerk, one for the referee, and one for the trustee.”

The appellant concedes that the description in the schedule is, perhaps, not precise, in that it describes the security as the bond and mortgage of Mrs. Augusta Goldberg, and does not specifically state that Joseph Goldberg was a joint obligor with his wife. It is apparent that the designation of Augusta Goldberg, who was not a party to the bankruptcy proceeding, was not a compliance with the bankruptcy act, which required a debtor to give a particular schedule.

The purpose of inserting the names of creditors is to give to them and to the trustee full, accurate and early information as to the condition of the estate ; the provisions of subdivision 3 are new and form one of the most important changes made by the bankruptcy law of 1898 from former acts of congress. The preponderance of authority under the act of 1867 was that jurisdiction in bankruptcy proceedings, and also in the special proceeding to grant a discharge, did not depend on the correctness of the schedules, nor even on the giving of notice to the creditors, but on the petition and adjudication. Under that act a discharge, duly granted by a court having jurisdiction of the bankrupt, was a release of all provable debts (other than the excepted ones), whether or not they appeared on the schedules, and whether or not the creditors received personal notice of the proceedings in bankruptcy or of the application for a discharge. The rule was that in a case where the court had jurisdiction to grant a discharge which would be a release of omitted claims held by creditors who do not have personal notice of the proceedings in bankruptcy, applies equally under the present law, for though these creditors have not been served with notice, yet if they have actual knowledge of the proceedings, their claims are released by the discharge; but unless they do have actual notice or personal knowledge, then their claims, if omitted from the schedule are, by the present law, unaffected. • In this latter respect the act is diametrically opposed to the act of 1867 : Collier on Bankruptcy (3d ed.), pp. 197,198 ; Loveland on Bankruptcy, pp. 216, 225, 226. There is nothing in the offer to prove that this plaintiff had actual notice or personal knowledge of the proceedings, and if the facts stated, in answer to the rule to show cause why the judgment should not be opened, were susceptible of proof, a good reason would be suggested for making the description of the creditor so uncertain as to thwart its contesting the discharge of the debtor. The bankrupt made the schedule in such a way as not to convey notice that he was the debtor, and he must have known that the description was misleading, if not deceptive. Although he is bound to the exercise of good faith in order to secure the benefits and exemptions of the bankruptcy act, the offer as made caused the schedule to fail to show that it was the debt of Joseph Goldberg. There being no offer to prove that the plaintiff had actual notice or personal knowledge of the proceeding in bankruptcy, the evidence was properly excluded, and as the plaintiff had made out a prima facie case, it was entitled to the verdict as directed by the court.

The assignments of error are not sustained and the judgment is affirmed.