Fahlstrom v. Denk

IN BANC. Action by Wesley F. Fahlstrom, a minor, by K.E. Fahlstrom, his guardian ad litem, against William Denk. From a judgment for plaintiff, defendant appealed, and subsequently, on motion of plaintiff, Emil Schwab, defendant's trustee in bankruptcy, was substituted for defendant. On motion to dismiss the appeal.

MOTION DENIED. This cause is before us upon a motion to dismiss the appeal. October 5, 1932, the plaintiff, as guardian for a minor, obtained a judgment for $2,000 against William Denk in an action based upon charges that a negligent act of Denk had inflicted a personal injury upon the plaintiff's ward. December 2, 1932, Denk filed a notice of appeal and an undertaking. January 7, 1933, he filed in this court an abstract of the record of the cause in the circuit court, and on January 23, 1933, a brief. March 4, 1933, respondent (plaintiff below) filed in this court a motion wherein he moved "for an order substituting Emil Schwab, the duly appointed, qualified and acting trustee in bankruptcy of William Denk, for the defendant and appellant herein, the said Emil Schwab having been appointed as such trustee in bankruptcy of defendant-appellant on the 24th day of January, 1933, and the within appeal judgment being one of the liabilities listed by said defendant-appellant William Denk in his said bankruptcy schedules. * * *" The motion was allowed. April 8, 1933, respondent moved for an order to dismiss the appeal. Accompanying the motion was a copy of an order made by the referee in bankruptcy which, after reciting that Schwab had petitioned for his discharge as trustee, proceeded: "It appearing that there are no assets in said estate which might be applied to the payment of any claims against said estate, now, therefore, without notice, no adverse party being represented, it is hereby ordered that the said Emil Schwab, trustee of said estate, and his bondsmen, be and hereby are discharged * * * and that said estate be closed". The motion to dismiss the appeal was predicated upon the above proof of Schwab's discharge as trustee, and upon a contention based thereon that he "therefore has no further right, authority or interest to continue the prosecution of the within appeal, and hence that the within appeal merely involves academic questions and that the affirmance or reversal of the judgment involved in the within appeal cannot possibly affect said bankrupt".

Section 7-502, Oregon Code 1930, provides: "Any party to a judgment or decree other than a judgment or decree given by confession, or for want of an answer, may appeal therefrom". Section 1-311, Oregon Code 1930, provides: "No action shall abate by the death, marriage, or other disability of a party, or by the transfer of any interest therein, if the cause of action survive or continue. In the case of the death, marriage, or other disability of a party, the court may, at any time within one year thereafter, on motion, allow the action to be continued by or against his personal representatives or successors in interest".

Where statutes grant to a party to a judgment the privilege of an appeal the courts generally hold that a judgment debtor who has been adjudged a bankrupt, but who has not yet received a discharge, has a sufficient interest in the judgment that he may prosecute an appeal. O'Neil v. Dougherty, 46 Cal. 575; Woodsv. Berry, 111 Cal.App. 675 (296 P. 332); Sanford v. Sanford,58 N.Y. 67 (17 Am. Rep. 206); Schoonmaker v. PittsburgContracting Co., 161 N.Y. Sup. 186; Carroll v. Hammon, 288 Pa. 320 (136 A. 212); Bennett v. Bennett, 23 Ky. L. Rep. 1281 (65 S.W. 12). See also Francis v. Burnett, 84 Ky. 23. A sound reason which sustains these decisions is thus succinctly expressed by Mr. Justice Rapallo in Sanford v. Sanford, supra: "He may never obtain a discharge and then the erroneous judgment will be a charge upon him". However, it has been held that a bankrupt who has been discharged from liability upon the judgment by an order of the bankruptcy court cannot prosecute an appeal.Knox v. Exchange Bank, 12 Wall. 379 (20 L.Ed. 287); Kelly v.Israel, 11 Paige (N.Y.) 147; Jones v. Barnes, 107 Miss. 800 (66 So. 212); Wilson v. McMullen, 4 Ky. L. Rep. 895.

The trustee in bankruptcy also has a sufficient interest so that he may prosecute an appeal or take command over one already instituted by the bankrupt. We quote from 30 U.S. Stat. at Large, p. 549, § 11C: "A trustee may, with the approval of the court, be permitted to prosecute as trustee any suit commenced by the bankrupt prior to the adjudication with like force and effect as though it had been commenced by him". (See also Collier on Bankruptcy (13th Ed.) p. 394). For applications of this statute to situations similar to the one before us see Knox v. Exchange Bank, supra;Jenkins v. Greenbaum, 95 Ill. 11; Roberts v. Fogg,244 Mass. 310 (138 N.E. 333). We need not concern ourselves with any possible conflict between the right of the trustee and the bankrupt because the latter has manifested no interest in this appeal.

This is not a motion to substitute a party, but to dismiss the appeal. It will be observed that the argument presented by the respondent in behalf of the motion "that the affirmance or reversal of the judgment involved in the within appeal can not possibly affect said bankrupt" is a mistaken one. The motion to dismiss will be denied.

BELT and KELLY, JJ., concur.

BEAN, J., concurs in the result.

RAND, C.J., did not participate.