Farmington Production Credit Ass'n. v. Estes

504 S.W.2d 149, 1974 Mo. App. LEXIS 1282
CourtMissouri Court of Appeals
DecidedDecember 18, 1974
Docket9488
StatusPublished
Cited by10 cases

This text of 504 S.W.2d 149 (Farmington Production Credit Ass'n. v. Estes) is published on Counsel Stack Legal Research, covering Missouri Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Farmington Production Credit Ass'n. v. Estes, 504 S.W.2d 149, 1974 Mo. App. LEXIS 1282 (Mo. Ct. App. 1974).

Opinion

BILLINGS, Judge.

Plaintiff sued the defendants, husband and wife for the balances due on two promissory notes and obtained an attachment of real estate owned by the defendants as tenants by the entireties. On stipulated facts the trial court entered judgment dismissing plaintiff’s petition and dissolving the attachment on the ground that the defendants had been discharged in federal bankruptcy proceedings from their liability to plaintiff on the notes. We affirm.

The notes contained the usual joint and several promise to pay and it is the plaintiff’s contention that the separate discharges of the defendants by the bankruptcy court did not affect or discharge their *151 joint liability to the plaintiff. Thus, plaintiff says, even though it is not entitled to collect a judgment personally against either defendant individually because of the bankruptcy actions it should be permitted a joint judgment against the defendants and that such a judgment should be enforceable against the estate by the entireties.

The defendants are residents of Wayne County, Missouri, and their estate by the entireties is located in that county. When plaintiff instituted this suit it also filed an affidavit for attachment of the entireties property, alleging as grounds those found in Rule 85.01(5), (9), V.A.M.R. and § 521.-010(5), (9), RSMo 1969. The defendants were personally served and filed their answer to plaintiff’s petition. Thereafter both defendants instituted voluntary and separate bankruptcy proceedings in the United States District Court for the Eastern District of Missouri, Southeastern Division. The sums due plaintiff under the notes were scheduled as debts by each defendant in their separate proceedings. The defendants were adjudicated bankrupts and plaintiff filed claims based on the notes against each bankrupt and obtained allowances as a nonsecured creditor. The bankruptcy proceedings were not consolidated and the estate by the entireties was not included as an asset of either of the bankrupt’s estates.

Following the separate discharges of the defendants by the bankruptcy court they filed an amended answer herein pleading the further defense of their discharges in bankruptcy. Plaintiff’s reply alleged that to the extent of the attachment and as to the property attached the indebtedness represented by the notes was not extinguished by the bankruptcy proceedings.

In this appeal the plaintiff emphasizes the joint promise of the defendants in the notes and the fact that the estate by the entireties was not included as an asset in either bankrupt’s estates. From this plaintiff advances the proposition that the joint liability of defendants was not discharged in bankruptcy and that it is entitled to look to the real estate for satisfaction of the sums remaining due under the notes. For the reasons hereinafter appearing we disagree.

The estate by the entireties was properly excluded as an asset of either defendant in the separate bankruptcy proceedings. Shipman v. Fitzpatrick, 350 Mo. 118, 164 S.W.2d 912 (1942); Dickey v. Thompson, 323 Mo. 107, 18 S.W.2d 388 (1929); 166 A.L.R. 986 (1947); In re Wetteroff, 453 F.2d 544 (8th Cir. 1972). This is because the defendants, being husband and wife and owning the realty, are seised of the property by the entirety and not by moieties. Wimbush v. Danford, 292 Mo. 588, 238 S.W. 460 (1921). Since the individual defendants were declared bankrupts in separate proceedings the estate by the entireties could not be an asset of either tenant. Shipman v. Fitzpatrick, supra, 350 Mo. at 120-121, 164 S.W.2d at 913.

The proposition advanced by the plaintiff in this case is neither new or novel, having been urged by creditors or husbands and wives who owned real estate as tenants by the entireties in previous cases where one or both of the tenants had received a discharge in bankruptcy. In Wharton v. Citizens’ Bank of Bosworth, 223 Mo.App. 236, 15 S.W.2d 860 (1929), 82 A.L.R. 1236 (1933), the husband and wife had given their “joint and several” note to a creditor and the husband had voluntarily initiated bankruptcy proceedings and had been discharged. The creditor obtained a • judgment against the wife and sought a lien against an estate by the entireties. The court rejected the creditor’s various arguments, similar to those made by instant plaintiff, and pointed out that in order for property owned by a husband and wife as tenants by the entireties to be reached by a judgment creditor there must be a joint judgment against both spouses and “[i]t is impossible to obtain a judgment against the entity, independent of a judgment against its natural members. *152 The judgment must be against the husband and wife.” Id. at 240, 15 S.W.2d at 862. In answer to the creditor’s contention that the adjudication of the husband did not affect the estate by the entireties since the realty never became an asset of the trustee in bankruptcy, the court held that the husband’s discharge in bankruptcy destroyed his debt and destroyed the creditor’s right to a joint judgment against the spouses. And, without a joint judgment against the husband and wife, the estate by the entire-ties could not be “looked to” by the creditor. 1

The Supreme Court reached the same conclusion in Dickey v. Thompson, supra, where both the husband and wife, in separate voluntary bankruptcy proceedings, had been adjudicated bankrupts. The plaintiff was the trustee of the husband individually and trustee of the wife individually, and brought suit to set aside certain conveyances made by the bankrupts as fraudulent. There was some evidence that one tract of land was owned by the husband and wife as tenants by the entireties. After noting that the husband and wife had the same debts and that the debts were their joint obligations, the court said that following their adjudication in bankruptcy their common creditors could not obtain judgments upon the notes listed in their separate schedules. The court observed that a creditor of tenants by the entireties who had been adjudged bankrupts was not wholly without remedy, if proper and timely procedure was followed in the bankruptcy proceedings, but that failure to enforce its right before discharge of the bankrupts would result in their discharge in bankruptcy discharging their liability for the debts. The court held that if the tract of real estate was owned by the husband and wife as tenants by the entireties the plaintiff was without authority to reclaim and interfere with it.

Here the debts represented by the two promissory notes were scheduled as liabilities of both the husband and wife in their separate bankruptcy proceedings. Plaintiff filed claims, based on the notes, against each bankrupt’s estate. Plaintiff’s claims were recognized and allowed as non-secured claims. The discharge of the defendants by the bankruptcy court destroyed the individual and personal liability of both the husband and wife and without a joint judgment against them their entire-ties property cannot be reached. The discharges to defendants of their indebtedness to plaintiff are res adjudicata [Wharton v.

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Bluebook (online)
504 S.W.2d 149, 1974 Mo. App. LEXIS 1282, Counsel Stack Legal Research, https://law.counselstack.com/opinion/farmington-production-credit-assn-v-estes-moctapp-1974.