Murray v. Bass, 184 N.C. 318 (1922)

Nov. 8, 1922 · Supreme Court of North Carolina
184 N.C. 318

W. H. MURRAY v. JOE B. BASS et al.

(Filed 8 November, 1922.)

1. Appeal and Error — Dismissal — Courts — Jurisdiction — Supersedeas Bond — Principal and Surety — Statutes.

Where the trial judge, upon sufficient findings, has properly adjudged that the defendant has abandoned his appeal to the Supreme Court, it is not required that the appeal should have been docketed and dismissed in the Supreme Court in order to bind the surety on his bond given to stay execution in accordance with the terms of C. S., 650.

2. Principal and Surety — Supersedeas Bond — Execution—Bankruptcy— Discharge of Principal — Statutes.

Where an undertaking to stay execution on appeal to the Supreme Court has been given by the defendant against whom judgment has been rendered, C. S., 650, and pending appeal he has been adjudicated a bankrupt in the Federal Court, an order properly entered dismissing the appeal with judgment against the surety on the undertaking rendered in the State court before the bankrupt’s discharge, without suggestion of the pendency of the bankrupt proceedings, the judgment against the surety becomes fixed and absolute, according to the terms of the undertaking, which the bankrupt’s subsequent discharge does not affect. Laffoon v. Kerner, 138 N. C., 281, cited and distinguished. ■

3. Same — Federal Statutes.

Where defendant’s appeal to the State Supreme Court has been properly dismissed with judgment against the surety on defendant’s undertaking to stay execution, C. S., 650, before discharge in bankruptcy in proceedings then pending, the defendant and his surety on the undertaking are co-debtors within the meaning of the bankrupt act, and thereunder the surety is not discharged from his obligation on the bond.

4. Bankruptcy — Principal and Surety — Discharge — Defenses—Pleas— . Puis Darreign Continuance.

In proper instances, the surety on the defendant’s undertaking to stay execution on appeal may successfully plead in the State court the defendant’s discharge in bankruptcy puis dwrreign continuance.

Appeal by plaintiff from Oormor, J., at April Term, 1922, of ROBESON.

*319Civil action to restrain tbe collection of a judgment of tbe Superior Court of Eobeson County, rendered in a case wberein Joe B. Bass was plaintiff and E. Pittman Barnes was defendant, and W. H. Murray surety on supersedeas bond.

From an order denying tbe relief sought, tbe plaintiff appealed.

Johnson &■ Johnson for plaintiff.

McLean, Varser, McLean & Stacy, 8. Brown Shepherd, and Britt & Britt for defendants.

Stacy, J.

Tbe essential facts, as found by bis Honor and embodied in tbe judgment of tbe Superior Court, are as follows :

1. On 17 February, 1921, tbe present defendant, Joe B. Bass, instituted a civil action in tbe Superior Court of Eobeson County against one E. Pittman Barnes. At tbe October Term, 1921, of Eobeson Superior Court, judgment was rendered in said action in favor of tbe plaintiff Bass and against tbe defendant Barnes in tbe sum of $970, with interest from 14 February, 1921, and for costs. Tbe defendant Barnes gave notice of appeal from said jirdgment to tbe Supreme Court of Nortb Carolina, and was required, in order to stay execution on said money judgment, to execute bis supersedeas bond in tbe sum of $1,200, wbicb be did in tbe form prescribed by C. S., 650, with W. H. Murray, tbe plaintiff in tbe present action, as surety thereon; and tbe filing of tbe same did, pursuant to tbe statute and tbe order of tbe court, operate to stay any execution on tbe judgment rendered in said action pending tbe appeal.

2. Thereafter, at tbe second February civil term of Eobeson Superior Court, 1922, in tbe said action wberein Joe B. Bass was plaintiff and E. Pittman Barnes was defendant, judgment was rendered by Hon. George W. Connor, judge presiding, finding tbat tbe appeal of tbe defendant from tbe judgment rendered at tbe October Term, 1921, bad been abandoned and tbe liability of tbe surety on tbe supersedeas bond was thereupon adjudged to be absolute and subject to execution. There was no appeal from this judgment, and no objection or exception noted at tbe time of its rendition.

3. At this term of court no suggestion of pending bankruptcy of E. Pittman Barnes was made to tbe court when motion for judgment was made; but there were several cases on tbe calendar in wbicb E. Pittman Barnes was being sued, and, during tbe call of tbe docket, counsel for Barnes announced tbat, as a petition in bankruptcy bad been filed against tbe defendant, be would make no further contest in tbe eases pending against him.

*3204. It is agreed that tbe facts, with reference to the bankruptcy proceedings, are as follows: On 19 December,, 1921, a petition in bankruptcy was filed against Richard Pittman Barnes in the United States District Court for the Eastern District of North Carolina, and on 7- January, 1922, he was duly adjudged a bankrupt by said Court. That at the time of the institution of the present suit, 1 April, 1922, no application for discharge had been made by the bankrupt, and said proceedings are now regularly pending in the United States District Court for the Eastern District of North Carolina.

5. Joe B. Bass, in his suit against R. Pittman Barnes, has issued execution on the judgment rendered in his favor, and the sheriff of Robeson County was proceeding to enforce same against the property of W. II. Murray when this action was instituted and application made for a restraining order.

6. There was no substitution of any other surety on the supersedeas bond, given in the case of Joe B. Bass v. R. Pittman Barnes, and the said W. H. Murray remained liable thereon, which said liability became fixed and absolute by the judgment rendered in said action at the second February civil term, 1922.

7. The question having been raised as to whether the plaintiff herein should have proceeded by motion in the original cause or by independent suit, in order that the case might be determined on its merits, it was agreed that this action might be treated as a motion in the original cause between Joe B. Bass and R. Pittman Barnes, and it was so regarded by the court below.

Upon the foregoing facts, his Honor declined to relieve W. H. Murray from his obligation on the supersedeas bond, and from the judgment rendered at the second February civil term, 1922; and to this ruling exception was duly noted, and plaintiff appealed.

The supersedeas bond is not set out in the record, but it is agreed that it conforms in all respects to the requirements of O. S., 650. This section provides: “If. the appeal is from a judgment directing the payment of money, it does not stay the execution of the judgment, unless a written undertaking is executed on the part of the appellant, by one or more sureties, to the effect that if the judgment appealed from, or any part thereof, is affirmed, or the appeal is dismissed, the appellant will pay the amount directed to be paid by the judgment, or the part of such amount as to which the judgment shall be affirmed, if affirmed only in part, and all damages which shall be awarded against the appellant upon the appeal.” Here, it will be observed, the affirmation of the judgment, or any part thereof, or the dismissal of the appeal, is the condition upon which the surety agrees to become bound, either in whole or in part, as the case may be.

*321It was suggested, tbougb not urged, that as tbe appeal was never docketed in tbis Court, tbe judgment was not technically “affirmed” or “appeal dismissed,” as contemplated by tbe statute, and, therefore, tbe event upon wbicb tbe surety was to become bound bas not yet occurred or happened. 'This position, of course, is untenable. A judgment of tbe Superior Court, upon proper finding that tbe appeal bad been abandoned, would have tbe same effect, so far as tbe liability of tbe surety on tbe supersedeas bond is concerned, as an order of dismissal or judgment of affirmance here. Dunn v. Marks, 141 N. C., 233; Blair v. Coakley, 136 N. C., 409; Causey v. Snow, 116 N. C., 498; Avery v. Pritchard, 93 N. C., 266. Indeed, tbe statute does not require that such affirmance be made by tbe appellate court.

But appellant stakes bis case upon tbe ground that tbe bankruptcy proceedings against tbe principal, R. Pittman Barnes, relieves him as surety on tbe supersedeas bond. For tbis position be relies upon tbe decision in Laffoon v. Kerner, 138 N. C., 281, where it was held that tbe sureties on a stay bond were not liable when, pending tbe appeal from a justice’s judgment and before trial in tbe Superior Court, tbe defendant obtained a discharge in bankruptcy from all bis debts, including tbe plaintiff’s claim, and interposed same by way of plea in bar of plaintiff’s suit. There is tbis distinction, however, between tbe facts of that case and tbe one at bar. In Lwffoon’s case, supra, tbe liability of tbe surety on the supersedeas bond bad not become fixed and absolute when tbe principal named therein obtained bis discharge in bankruptcy, and exhibited same to tbe court after plea setting up tbe fact; not so here. Tbis, we apprehend, is a vital and important difference between tbe two cases. Tbe contingency upon which tbe sureties in Lwffoon’s cáse, supra, agreed to pay tbe judgment never happened — -tbe discharge in bankruptcy of tbe defendant having destroyed plaintiff’s debt before tbe liability of the sureties thereon became fixed necessarily worked a dismissal of tbe action and a release of tbe sureties. Payne v. Able, 7 Bush. (Ky.), 344; 3 Am. Rep., 316. But here tbe contingency, upon wbicb "W. H. Murray agreed to pay Bass’s judgment, bas happened, and bis liability therefor bas become fixed and absolute; and tbis before any discharge in bankruptcy relieving R. Pittman Barnes from its payment. W. H. Murray, therefore, at tbe present time, stands in tbe position of a codebtor. Section 16 of tbe Bankrupt Act of 1 July, 1898 (U. S. Oomp. St., sec. 9600), wbicb does not seem to have been amended or changed by subsequent legislation, reads as follows: “Tbe liability of a person who is a codebtor with, or guarantor, or in any manner a surety for, a bankrupt shall not be altered by tbe discharge of such bankrupt.” In order to have prevented tbis condition of affairs, tbe pending bankruptcy proceedings should have been called to tbe judge’s *322attention by proper plea prior to tbe rendition of tbe judgment at tbe second February civil term, 1922, of Robeson Superior Court. Gay v. Brookshire, 82 N. C., 409; Ollis v. Proffitt, 174 N. C., 675.

Tbe identical question bere presented was before tbe Court of Appeals of Kentucky, in tbe case of Slusher v. Hopkins, 97 S. W., 1128, where it was beld tbat tbe sureties in an appeal bond, conditioned on tbe payment of tbe judgment appealed from, in tbe event of its affirmance, were not discharged from liability by appellant, pending tbe appeal, filing a petition in bankruptcy and obtaining bis discharge subsequent to tbe affirmance of the judgment. To like effect is tbe decision of tbe Court of Appeals of New York in tbe case of Knapp v. Anderson, 71 N. Y., 466. And, in fact, as we understand it, Laffoon v. Kerner, supra, is in full support of, and in no way militates against, our present position.

It is undoubtedly the practice in this State tbat a defendant in an action brought to recover on a dischargeable debt may plead in the trial court bis discharge in bankruptcy, secured puis darreign continuance, and, unless some valid cause is shown to tbe contrary, tbe action will be dismissed. Laffoon v. Kerner, supra. But where, in a case of this kind, a stay of execution or supersedeas bond has been given, pending appeal, and tbe condition or contingency upon which tbe liability of tbe surety . was to become operative has happened, and this without any plea setting up tbe discharge, or even suggesting tbe bankruptcy proceedings, being interposed prior thereto, tbe surety will not be relieved of bis obligation after judgment has been rendered against him. Tbe bondsman having elected to deprive tbe judgment debtor of tbe opportunity of enforcing bis claim, by voluntarily executing tbe supersedeas bond, cannot now with propriety complain if be is required to live up to tbe terms of bis undertaking. In tbe present case be agreed to assume tbe risk, upon conditions stated, and those conditions have been met. His liability has now become fixed and absolute.