Dixon v. Barnum

7 F. Cas. 748, 3 Hughes 207, 2 Va. Law J. 312, 1878 U.S. Dist. LEXIS 149

• Court: District Court, E.D. Virginia
• Decided: April 30, 1878
• Status: Published

Opinion

HUGHES, District Judge.

In the suit of E. Barnum’s Administrator et al. v. John W. Dixon, in the circuit court of Matthews county, Dixon’s deed to Green, conveying the land which the bill sought to subject to judgment liens, was not attacked as fraudulent, but was treated as valid, and therefore it must be so considered by this court. If it was valid, then Dixon, when he came into bankruptcy, had conveyed away all his title, and the land did not become part of the assets in bankruptcy, and the bankruptcy court could not have had any jurisdiction over the land. Not only, therefore, did the land remain charged with any liens that might have been superior to Dixon’s deed of conveyance to Green, but the enforcement of such liens remained within the exclusive jurisdiction of the proper state court. It is very true that it would have been competent for the assigns in bankruptcy or any alien creditor to come into this court and attack the deed as invalid by reason of fraud; in which event, this court would have had jurisdiction to try such an issue. If such a bill had been filed and this court had pronounced the deed fraudulent and void, then the land it related to would have become part of the assets in bankmptcy, and this court, on its bankruptcy side, would then have had exclusive jurisdiction to administer it as assets, and to ascertain and liquidate the liens resting upon it But the deed of Dixon to Green has been all along accepted and treated as valid; and it therefore operated to convey away all of Dixon’s title, and therefore the land it conveyed formed no part of the assets in bankruptcy, and was not and is not within the jurisdiction of this court If it was charged with liens when conveyed by Dixon to Green, it is exclusively for the state court so to decree. It is not competent for this court to consider of that matter.

But it is claim.ed that the discharge of Dixon in bankruptcy operated to extinguish as to him all debts which he owed before the date of his petition in bankruptcy, and that such discharge operated to release the land which he had conveyed away from the lien of the debt to E. Barnum’s administrator when the land came back to him by Green’s reconveyance. !Let us examine this pretension. The bankruptcy proceeding consists of two branches. The bankrupt surrendered his estate to the court, and becomes civiliter mortuus as to it from the filing of his petition. The estate comes to the court charged by the bankruptcy law with all liens which were resting upon it The bankruptcy proceeding then goes on, in one branch as to the bankrupt, and in the other branch as to his estate and the liens upon it. The law requires the bankruptcy court to respect and discharge the liens resting upon the estate, and contains nothing in the remotest degree implying that the estate which had been held by the bankrupt previously to the filing of his petition shall be exonerated from the liens legally resting upon it. The bankruptcy proceeding, in the branch relating to the bankrupt himself, is purely personal, and the discharge in bankruptcy is simply a personal exoneration of the bankrupt from the debts which he had owed. Even the assets which he brings into bankruptcy are charged with all liens existing against them, and if they are sold after his discharge (a thing not unusual), and he becomes the purchaser of such of them as are incumbered with liens, he takes them subject to the liens of the very debts from which he is personally discharged. If this be so by the express terms of the bankrupt law [of 1807 (14 Stat. 517)], as to property which he brings into the bankruptcy court, how much more certainly is it as to property which, by fraud- or contrivance, or even by honest transfer, he has managed not to surrender in bankruptcy. The discharge in bankruptcy is merely personal as to the bankrupt, and does not affect his estate. If the estate is subject to liens, the personal discharge of the bankrupt does not operate to release it from the liens. The bankrupt ■cannot, by conveying away any part of his •estate before filing his petition, discharge it •of liens which would be enforced against it If it came into bankruptcy. That which he thus conveys away may be subjected by state courts to liens incumbering it. That which he brings into bankruptcy will be subjected to liens incumbering it by the bankruptcy court. In either case the lien in rem will stand and be enforced, though the debt in personam be discharged in bankruptcy. The language of the order of discharge is that John W. Dixon, the bankrupt person, “‘be discharged from all debts which existed st the filing of his petition;” not that his estate be discharged from the liens of those •debts. Documents of this sort mean only what they express, and are not construed to •operate beyond the strict effect of their terms. When, therefore, a discharge in bankruptcy declares that the said bankrupt, John W. Dixon, is forever discharged from debts and claims due on the day of his petition, It refers to -him personally, and cannot be construed to mean that his estate is discharged from the liens which incumber it.

As to the more general aspects of this ease, I concur fully in the opinion of Judge Montague rendered in the cause in the state •court, and will dissolve the temporary restraining order heretofore entered by me, and •dismiss the bill in this court.

The case of G. W. Simmons is similar to this one in its general features, and I will dissolve the injunction and dismiss the bill ¡in that case also.