Shivell v. Hurd

PATROSSO, J. pro tem. Plaintiffs in 1940 obtained a judgment against defendants in the sum of $1,250. In March, 1950, plaintiffs moved the court for a writ of execution upon this judgment pursuant to the provisions of section 685, Code of Civil Procedure, which motion was granted and an order was entered directing that such writ issue. From this order, an appeal is taken by the defendants resulting in an affirmance thereof by this court (Shivell v. Hurd, 104 Cal.App.2d 291 [231 P.2d 595]). Following the filing of the remittitur in the superior court a writ of execution was issued [406]and levied upon a parcel of real property of the defendants which was subject to a declaration of homestead. Thereafter, plaintiffs filed their petition for the appointment of appraisers, which was resisted by the defendants upon the ground that the plaintiff Arthur Shivell, pending the appeal from the order directing the issuance of the writ of execution, had been adjudicated a bankrupt, and hence had no longer any right, title or interest in or to the cause of action, as the sole right to proceed further thereunder was vested in the trustee in bankruptcy. In sustaining defendants’ contention in this regard and in refusing to appoint appraisers the trial court fell into error.

While it is true that all rights of action in favor of the bankrupt on contract vest in the trustee by virtue of the bankruptcy act, it is well settled that a trustee is not obligated to intervene in pending actions by or against the bankrupt. He may allow them to proceed without intervention and accept the fruits if successful (Johnson v. Collier, 222 U.S. 538 [32 S.Ct. 104, 56 L.Ed. 306]; Tucker v. Western Union Tel. Co., 94 Miss. 364 [157 N.Y.S. 873, 876]; Griffin v. Mutual Life Ins. Co., 119 Ga. 664 [46 S.E. 870, 871]; Kessler v. Herhlotz, 132 App.Div. 278 [117 N.Y.S. 45, 47] ; 8 C.J.S., p. 695).

In Johnson v. Collier, supra, 56 L.Ed. 306, 307, following the institution of the action, plaintiff was adjudicated a bankrupt, and defendant thereupon moved that the suit be dismissed upon the ground that his adjudication precluded him from further maintaining the same- The trial court denied the motion and subsequently upon the trial rendered judgment in favor of the plaintiff which was affirmed upon appeal by the Supreme Court of Alabama. In affirming the decision of the latter court, the Supreme Court of the United States said: “If because of the disproportionate expense or uncertainty as to the result, the trustee neither sues nor intervenes, there is no reason why the bankrupt himself should not continue the litigation. ... If the trustee will not sue and the bankrupt cannot sue, it might result in the bankrupt debtor being discharged of an actual liability. The statute indicates no such purpose, and if money or property is finally recovered it will be for the benefit of the estate. Nor is there any merit in the suggestion that this might involve a liability to pay both the bankrupt and the trustee. The defendant in any such suit can, by order of the bankrupt court, be amply protected against any danger of being made to pay twice.”