Jackson v. Shaw

California Court of Appeal May 10, 1937 No. Civ. 1836Published

Before: Barnard

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Holding. A bankrupt who fails to seek a stay of proceedings in a state court action does not forfeit the right to use a subsequent bankruptcy discharge to stay the execution of a judgment, though the judgment itself remains valid and cannot be set aside.

Issues

Whether a judgment rendered against a bankrupt after the filing of a bankruptcy petition but before discharge is enforceable by execution.
Whether a court has jurisdiction to set aside a valid judgment on the basis of a subsequent bankruptcy discharge.

Disposition. Affirmed in part and reversed in part.

Quotations verified verbatim against the opinion

“A discharge in bankruptcy, unlike the bar of the statute of limitations, is a positive extinguishment of the debt, liability, or demand to which it applies.”

“The respondent has not forfeited his right to set up his discharge in bankruptcy as against an execution issued upon this judgment, and that the motion to recall the execution was properly granted.”

“That portion of the order which purports to set aside the judgment is reversed and that portion of the order which recalls the execution is affirmed.”

BARNARD, P. J.

This is an appeal from an order setting aside a judgment and recalling an execution which had been issued.

The plaintiff began an action on certain promissory notes in the Superior Court of Fresno County on September 25, 1934. Summons was served on the defendant in Contra Costa County on October 2, 1934. The defendant filed a petition in bankruptcy in a federal court, listing as a liability the claim involved here, and was adjudicated a bankrupt

[741]

on November 1, 1934. No appearance was made in this action and no stay of proceedings in the state court was sought or obtained. A notice of the first meeting of the creditors of said bankrupt was mailed to the plaintiff and to his attorney. After receiving said notice and on November 16, 1934, the default of the defendant was entered and judgment was rendered in favor of the plaintiff. On August 3, 1936; the defendant was discharged in the bankruptcy proceedings. The defendant had no knowledge of this judgment until December 3, 1936, when an execution issued by the clerk was levied on wages due him from his employer. Thereupon he filed a motion to set aside the judgment and to recall the execution, which motion was granted, and the plaintiff has appealed from that order.

The first question presented is whether a judgment rendered under these circumstances is enforceable by means of an execution. The debt on which the judgment was rendered remains the same debt on which the action was brought and which was provable in bankruptcy.

(Boynton

Ball,

121 U. S. 457 [7 Sup. Ct. 981, 30 L. Ed. 985].) The debt was therefore discharged unless this right was lost by the failure of the bankrupt to apply for a stay of the action, as permitted by that part of the bankruptcy act reading as follows:

“A

suit which is founded upon a claim from which a discharge would be a release, and which is pending against a person at the time of the filing of a petition against him, shall be stayed until after an adjudication or the dismissal of the petition; if such person is adjudged a bankrupt, such action may be further stayed until twelve months after the date of such adjudication, or, if within that time such person applies for a discharge, then until the question of such discharge is determined.” (U. S. C. A., title 11, sec. 29.)

Jackson v. Shaw

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BARNARD, P. J.

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