This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
If the bankrupt elects to avail himself of his discharge as a defense, he must plead his discharge in the action against him on the claim to which he seeks to interpose his discharge as a defense.1 If the bankrupt does not plead his discharge properly he waives the defense.2 If the debtor does not attempt to plead his discharge until after verdict, it is too late for him to interpose such defense without leave of the trial-court.3 Still more clearly is it too late if he waits till after final judgment and then attempts to avail himself of his discharge as a defense.4 If the bankrupt does not plead his discharge in a foreclosure suit, but permits judgment to be taken therein, he can not plead his discharge in a suit based upon the foreclosure decree to recover the balance due thereon.5 It has been said that a bankrupt who fails to plead and prove his discharge in bankruptcy can not have a judgment against him set aside so as to permit him to set up such defense.6 It has been held, however, that the defense of a discharge in bankruptcy is an honest and a meritorious defense;7 and that wherever a court may vacate a default judgment and permit an honest and meritorious defense to be set up, it may vacate a default defense for the purpose of a discharge in bankruptcy to be set up.8 If the discharge has been granted after the default judgment was taken, a court will allow such default to be set aside in order that such discharge may be set up as a defense.9 A judgment against a bankrupt after his discharge has been granted, can not be treated as a nullity.10 A and B were jointly liable, and A obtained a discharge in bankruptcy. Subsequently, the creditor obtained a judgment against A and B jointly, A not pleading his discharge in bankruptcy. Execution issued: A's property was levied on and sold and the judgment was satisfied on the record. Subsequently, in a proceeding to which B was not a party, such sale was set aside and the satisfaction was vacated. The creditor then attempted to enforce the judgment against B on the theory that the judgment against A was absolutely void and hence the satisfaction was a nullity, and the judgment against B was valid and in full force. This theory was held to be untenable, the judgment against A being valid, and the satisfaction preventing the enforcement of the judgment against B.11
Hart, 166 Mo. 503, 89 Am. St. Rep. 715, 66 S. W. 260; Alabama Great Southern Railway Co. v. Crawley, 118 Miss. 272, 70 So. 94.
5 Childs v. Childs, 10 O. S. 339, 75 Am. Dec. 512.
11n re Marshall Paper Co., 102 Fed. 872, 43 C. C. A. 38.
It does not relieve them in equity. First National Bank v. Mfg. Co., 127 Mass. 563.
2 Way v. Barney, 116 Minn. 285, 38 L. R. A. (N.S.) 648, 133 N. W. 801; Elsbree v. Burt, 24 R. I. 322, 53 Atl. 60.
1 Maryland. Griffith v. Adams, 95 Md. 170, 52 Atl. 66.
Massachusetts. Lane v. Holcomb, 182 Mass. 360, 65 N. E. 794; Rogers v. Abbot, 206 Mass. 270, 138 Am. St. Rep. 394, 92 N. E. 472.
Minnesota. Northwest Thresher Co. v. Herding, 126 Minn. 184, L. R. A. 1916F, 837, 148 N. W. 57.
Mississippi. Alabama Great Southern Ry. Co. v. Crawley, 118 Miss. 272, 79 So. 94.
North Carolina. Balk v. Harris, 130 N. Car. 381, 41 S. E. 940.
North Dakota. Citizens' Nat. Bank v. Branden, 19 N. D. 489, 27 L. R. A. (N.S.) 858, 126 N. W. 102.
Wisconsin. Bank of Commerce v. Elliott, 109 Wis. 648, 85 N. W. 417.
2 Griffith v. Adams, 95 Md. 170, 52 Atl. 66; Bank of Commerce v. Elliott, 109 Wis. 648, 85 N. W. 417.
3 Lane v. Holcomb, 182 Mass. 360, 65 N. E. 794.
4 Leisure v. Kneeland, 2 Wash. 537, 26 Am. St. Rep. 888, 27 Pac. 176.
5 Leisure v. Kneeland, 2 Wash. 537, 26 Am. St. Rep. 888, 27 Pac. 176.
If a discharge in bankruptcy is granted after an action has been begun against the bankrupt and before final judgment therein, the bankrupt may use such discharge as a defense against such judgment, or as a means for preventing the enforcement thereof.12
If the bankrupt pleads his adjudication in bankruptcy and asks for a continuance until his discharge is granted or refused, and the trial-court overrules his motion for continuance and renders judgment, equity will enjoin the enforcement of such judgment on the application of the bankrupt after he has received his discharge in bankruptcy.13
6 Mack Mfg. Co. v. Van Duerson, 138 Fed. 953.
7 Northwest Thresher Co. v. Herding, 126 Minn. 184, L. R. A. 1916F, 837, 148 N. W. 57; Citizens' National Bank v. Branden, 19 N. D. 489, 27 L. R. A. (N.S.) 858, 126 N. W. 102.
8 Northwest Thresher Co. v. Herding, 126 Minn. 184, L. R. A. 1916F, 837, 148 N. W. 57; Citizens' National Bank v. Branden, 19 N. D. 489, 27 L. R. A. (N.S.) 858, 126 N. W. 102.
9 New Hampshire Savings Bank v. Webster, 48 N. H. 21.
lODimock v. Revere Copper Co., 117 U. S. 559, 29 L. ed. 994; Lackey v. Steere, 121 111 598, 2 Am. St. Rep. 135, 13 N. E. 518.
11 Lackey v. Steere, 121 111. 598, 2 Am. St. Rep. 135, 13 N. E. 518.
12 Boynton v. Ball, 121 U. S. 457, 30 L. ed. 985; Morris v. Perkins, 148 Ga. 554, 97 S. E. 526; Rogers v. Western Marine & Fire Ins. Co., 1 La. Ann. 161; Cornell v. Dakin, 38 N. Y. 253.
It is said that the pleading need not show the jurisdiction of the court of bankruptcy as this may be presumed.14 Some courts hold that the answer pleading a discharge must show notice to the creditor in question as provided for by statute,l5 while other authorities hold that regularity in proceedings will be presumed, and it will accordingly be presumed that notice was given as required by law.16 Under the latter theory, the creditor must plead that the bankrupt did not schedule his debt if he wishes to take advantage of that fact.17 It is not necessary that the bankrupt should plead facts to show that the debt in question is not within one of the statutory exceptions to the operation of the discharge.18