John W. Odell, plaintiff in error, vs. Joseph Wootten, defendant in error

Supreme Court of Georgia1868-12

38 Ga. 224

Summary · law.co

Holding. The discharge of a bankrupt principal debtor also discharged the security on an appeal bond, because the security's liability was limited to guaranteeing judgment in the specific pending action, and federal bankruptcy law prevents any judgment from being entered against a discharged bankrupt. Judgment affirmed.

A defendant posted security on an appeal bond under state law, which required the security to guarantee payment of any judgment eventually entered in the pending appeal case. The principal debtor was later declared bankrupt and received a full discharge. The court considered whether the bankruptcy discharge of the principal also discharged the appeal bond security. The court held that it did, reasoning that the security's obligation was limited to guaranteeing judgment in that specific action, not the underlying debt itself. Since bankruptcy law provides that a discharged bankrupt shall not have judgment entered against them, and since no judgment could be entered in the original case, the security's contractual obligation was fulfilled and their liability ended.

The court distinguished the appeal bond security arrangement from the kind of surety relationship covered by the federal Bankrupt Act. The security here did not contract to pay the debt generally, but only the judgment that might result from the particular pending appeal. Under federal bankruptcy law, once the principal is discharged, creditors are barred from obtaining judgment against the debtor. Therefore, the security's limited liability—which attached only to a potential judgment in that case—automatically terminated when the bankruptcy discharge made such judgment impossible.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether bankruptcy discharge of principal debtor discharges appeal bond security
Scope of security's liability under appeal bond statute
Application of federal Bankrupt Act to state appeal bond requirements
Distinction between surety for debt versus surety for judgment in particular action

Procedural posture

The defendant in error (Wooten), who served as security on an appeal bond, was sued by the plaintiff in error (Odell) after Wooten's principal was discharged in bankruptcy, and the case was brought before this court by writ of error.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

Brown, C. J.

The defendant in this case became security on an appeal bond, executed for the purpose of taking an appeal from the judgment of the County-Court to the Superior Court, as provided by law, prior to the adoption of our new Constitution, by which such an appeal is no longer allowed. The effect of the appeal was to bring up the whole ease for a new trial before a special jury.

After this appeal was entered, the principal in the Court below, who had entered the appeal, was adjudged a bankrupt, and was fully discharged as such in the proper Court. And the question presented for our adjudication is, did this discharge of the principal, discharge the security on the appeal? We think it did.

1. The Revised Code, section 3559, provides, that the appellant, before entering such appeal, shall pay all costs which may have accrued, and give bond and security for the eventual condemnation money.

Section 3564 declares, that such security shall be bound for the judgment on the appeal, and that he may be compelled to pay off the debt or damages for which judgment may be entered. This is the extent of his liability. He does not contract to pay the debt or damages absolutely, but only the debt or damages for which “judgment may be entered” on the trialof the appeal. To illustrate: Suppose A sues B in an action of assumpsit on a promissory note under seal, and the petit jury renders a verdict in his favor, and B enters an appeal to a special jury, and C signs the appeal bond as security, as the statute terms it: After the appeal, A finds that he can not maintain his action of assumpsit on the sealed instrument, and he dismisses it, and afterwards begins an action of debt against B for the recovery of the same amount, due on the same promissory note under seal: will it be contended that C, the security on the appeal in the first action, which has been dismissed, is liable for the judgment that may be entered against B in the second action? Certainly not.

B did not become a surety for the payment of the debt, he only contracted to pay the judgment that might be entered in the action then pending; and when that case went out of Court, the liability went with it. In other words, as no judgment was rendered against his principal, no liability attached to him.

2. But it is insisted by counsel for plaintiff in error, that the act’of Congress known as the Bankrupt Act, section 33, is the paramount law on this subject, and that it enacts, that the discharge of the principal, as a bankrupt, shall not discharge the security. A careful perusal of the Act will show that this applies only to a surety who contracted to become liable for the payment of the debt, and not for the payment of the judgment to be entered in a particular action then pending. Its language is, “no discharge granted under this Act, shall release, discharge or affect, any person liable for the same debt, for or with the bankrupt, either as partner, joint contractor, indorser, security or otherwise.” This clearly contemplates a case where the security contracts to become liable with the principal for the payment of the debt.

This same Act, (section 21,) which, under the Constitution of the United States, is, we admit, the paramount law on this subject, declares that no creditor, whose debt is provable under this Act, shall be allowed to prosecute any suit at law or in equity, to final judgment, against the debtor, after he is adjudged a bankrupt, until the question of his discharge has been determined.

Again, it is declared, in section 54, that the discharge duly granted under this Act shall, with the exceptions aforesaid, (which do not apply in this case,) release the bankrupt from all debts, claims, liabilities and demands which were or might have been proved against his estate in bankruptcy.

Wooten’s contract, when he signed the appeal bond, was to pay the judgment that might be entered in that case. His principal was afterwards adjudged a bankrupt, and discharged as such. And the paramount law says, as the claim was provable in bankruptcy, that the principal shall be absolutely released from the debt, and that no judgment shall ever be entered in the case. Upon this state of facts, we hold that Wooten, the security on the appeal, has complied with his contract, and his liability ceases.

Judgment affirmed.