Dr. Harry Kaplan v. Samuel Hirsh

696 F.2d 1046, 33 Fed. R. Serv. 2d 1570, 1982 U.S. App. LEXIS 19836

• Court: Court of Appeals for the Fourth Circuit
• Decided: April 23, 1982
• Docket: 81-1789
• Status: Published

Opinions

K.K. HALL, Circuit Judge:

Kaplan obtained a judgment against Hirsh in the district court for the District of Columbia. Hirsh filed a timely notice of appeal but did not file a supersedeas bond to stay execution on the judgment. Thereafter, Kaplan attempted to register the judgment in the district court in Maryland, pursuant to 28 U.S.C. § 1963 which permits a judgment creditor to register his judgment in foreign districts once it has become “final by appeal or expiration of time for appeal.” The Maryland district court refused to register the judgment, construing the statutory language to mean that the mere pendency of an appeal precludes registration in a foreign district. We disagree. For the reasons outlined below, we conclude that a judgment on appeal is nonetheless “final” for purposes of the registration statute unless the judgment debtor has filed a supersedeas bond to stay execution.¹

When an appeal is taken, execution on a money judgment may be stayed by filing a supersedeas bond pursuant to Fed. R.Civ.P. 62(d) or Fed.R.App.P. 8. The appealing party is not required to obtain a stay, but if he does not do so, the creditor may proceed to execution on the judgment. Sterling v. Blackwelder, 405 F.2d 884 (4th Cir.1969); Moore’s Federal Practice 162.06, 1208.03.

Problems arise, however, when the creditor tries to execute his judgment in another state. The question then is, how does the registration statute fit with the Rules which require a supersedeas bond in order to stay a judgment pending appeal?

At least one court has recognized the anomaly created when the statute is not viewed in pari materia with the Rules:

The [Rules] would permit a judgment creditor to levy against assets of his judgment debtor, unless supersedeas bond were posted, while [28 U.S.C. § 1963] would prevent the same, bond or no bond.... There is no sense to be found in such an incongruity, and in light of the policy in the federal courts against unsecured stays of execution ... no justice either, (citations omitted)

I.T.T. Credit Co. v. Lawco, 86 F.R.D. 708, 712 (S.D.W.Va.1980).

If § 1963 is not interpreted to require a supersedeas bond to stay execution, then it creates an unconstitutional disparity in rights between judgment debtors, depending on the location of their assets. A debtor whose property is within the jurisdiction of the court must file a bond to avoid execution of a judgment against him while he awaits the outcome of his appeal. Yet, if read without a bond requirement, the registration statute would grant an automatic stay to a debtor whose property is outside of the district when he files his appeal. If this were the case, then the statute would deny equal protection of the laws to debtors whose assets are within the district. We cannot countenance such an interpretation.

Also, if a supersedeas bond is not required under § 1963, the statute could encourage a debtor to escape his creditor by merely filing an appeal, even on frivolous grounds, and then transferring his property to another state. We do not believe that Congress intended to open the way for debtors to abuse the appellate process in this way.²

Finally, we believe that our construction of the finality requirement best serves the overall design of § 1963, which was intended to be a summary enforcement mechanism, an aid to creditors. Admittedly, a judgment creditor may be able to file an independent action on his judgment to gain enforcement in foreign districts, depending on jurisdictional requirements.³ Such a suit upon a judgment would result in a judgment upon a judgment; the facts litigated in the first court are res judicata in the second. Bros, Inc. v. W.E. Grace Mfg. Co., 261 F.2d 428 (1958);⁴ I.T.T. Credit Co. v. Lawco, supra. However, even if it is available, this is an unnecessarily circuitous route. The registration statute relieves creditors and debtors of the burden of litigating successive suits to a virtually foregone conclusion. We should not interpret one ambiguous clause as a restriction on the use of this abbreviated procedure.

Accordingly, the decision of the district court is reversed, 91 F.R.D. 106.

REVERSED.

1 . We write on a relatively clean slate. We can find no circuit court opinion directly addressing this question. In Bros, Inc. v. W.E. Grace Mfg. Co., 261 F.2d 428 (5th Cir.1958), the court, in dictum, noted a position contra to the one we take today without any discussion. In Goldman v. Meredith, 596 F.2d 1353 (8th Cir.1979), the court merely noted that the clerk had refused to register a judgment which had been appealed but not stayed. The court did not address the propriety of the clerk’s actions. Thus, this is virtually a question of first impression at the circuit court level.

Several district courts have considered the question either summarily or in dictum. E.g., Goldsmith v. Midwest Energy, 90 F.R.D. 249 (N.D.Ohio 1980); Lipton v. Schmertz, 68 F.R.D. 249 (S.D.N.Y.1974); Slade v. Dickinson, 82 F.Supp. 416 (W.D.Mich.1949). However, only two district courts appear to have given this question more than cursory attention, Dorey v. Dorey, 77 F.R.D. 721 (N.D.Ala.1978) and Abegglen v. Burnham, 94 F.Supp. 484 (D.Utah 1950). We find Dorey to be the more carefully reasoned and persuasive of the two.

2 . The dissent argues that the registration statute was intended to be only “half a loaf.” Yet it is inconceivable that Congress would have intended to enact a collection procedure which is nonetheless absolutely ineffective in a case where the debtor avoids execution by systematically transferring his assets from state to state. If § 1963 were read to permit this type of maneuvering, then it made no improvement on the separate judgment procedure which preceded its enactment. Under this construction, the statute would not amount to half a loaf; it wouldn’t even be a crumb.

3 . An independent action is often not available as an alternative collection procedure. This case is a perfect example. Hirsh could not be found in Maryland where his property was located. As a result, Kaplan could not get service of process on Hirsh in Maryland, and therefore could not institute a suit to execute his District of Columbia judgment against Hirsh’s assets in Maryland.

4 . Bros, Inc. held that a judgment until reversed was enforceable and therefore res judicata. The Bros court, however, refused to take the next step, as we do today, to hold that if a judgment is automatically enforceable as res judicata in another court, then a suit on a judgment is a waste of time when summary enforcement is available through the 28 U.S.C. § 1963.