Saunders v. Mitchell

Cooper, J.,

delivered the opinion of the court.

The sale of the land of the lunatic under an execution issued on a judgment against his guardian was a nullity and the purchaser acquired no title. After the appointment of a guardian by the probate court, the statute required that the lands of the lunatic should be sold for the payment of his debts, contracted when he was of sound mind, in the same manner as sales of land of a decedent were required to be made for the payment of his debts, and such sales could only be made by order of the probate court. Code of 1857, pages 465, 445, 446. Notwithstanding the áppointment of a guardian by the probate court, it was within the power of the bankrupt court to make an adjudication of bankruptcy on the petition of the lunatic, for though he had been adjudged a lunatic, *326 it may be that he afterward recovered or had lucid intervals. By the decree on the inquisition of lunacy against Duncan, it was conclusively settled that he was a lunatic at the time of the decree, but not that he always would be. Breed v. Pratt, 18 Pick. 115 ; Stone v. Damon, 12 Mass. 488 . The bankrupt court was a court of record, and decrees of such courts cannot be collaterally attacked by showing that a party plain tiff or defendant was a lunatic at the time of its rendition. Mansfield’s Case, 7 Coke (Part 12); Shelford on Lunacy 243 ; Wood v. Bayard, 63 Penn. St. 320. If the bankrupt was a lunatic at the date of the adjudication of bankruptcy, the bankrupt court proceeded in error of fact, and the mistake should have been pointed out by a writ of error coram nobis. The principal question presented is whether by reason of the discharge of the bankrupt and the assignee, and the lapse of time since intervening, there had been a reinvestment of the title of the bankrupt to the land sued for, in his heirs-at-law, so as to enable them to recover in ejectment against one having no title. The land sued for was not included in the schedule of assets filed for the bankrupt, but that was not necessary to transfer the title to the assignee, the title passed to the assignee by reason of the adjudication of bankruptcy, the appointment of the assignee and the conveyance made by the register. Bankrupt Act of 1867, § 14. Whatever title the bankrupt had passed to his assignee, the question is has it ever passed back to him or his heirs? In Steepens v. Earles, 25 Mich. 40 , it was held that the bankrupt was entitled to the surplus of his estate remaining after the payment of all debts proved against it, and after the lapse of thirty years it was presumed that all debts had been discharged, and the heirs of the bankrupt were permitted to recover in ejectment lands which had not been returned by the bankrupt on his schedule. On the other hand, it was held in Bobinson v. Denny, 92 Ala. 457 , that the heirs-at-law of a bankrupt could not maintain an action to recover lands which belonged to him at the time of his bankruptcy, although it was shown that the bankrupt and his assignee had been discharged, and that all debts due by the bankrupt had been paid or legally satisfied, the court saying: “It is doubtless true, that if *327 after the payment of the debts, -which may be proved against the estate of a bankrupt, a surplus remains in the hands of the assignee, he holds it in trust for the bankrupt, and that on a proper application to the court of bankruptcy, payment or a transfer of it will be decreed. Until the decree is obtained the title remains in the assignee, and if the surplus consists of rights in action, he alone can maintain suit founded upon them. No other court can properly inquire whether the debts of the bankrupt are satisfied, and what are his rights and equities, or the rights and equities of the assignee or of creditors.”

The bankrupt act made no provision for the reconveyance by the assignee to the bankrupt of any surplus of the estate which might remain after the payment of the debts proved against the estate, but such surplus of necessity belongs to the bankrupt. It cannot be held by the assignee for he is a mere officer of the court and holds the title officially not personally. It cannot be appropriated by the creditors, for they never have any right to the property itself, but only to have its proceeds applied to the payment of their demands, and when these are satisfied they are strangers both to the bankrupt and to the estate. Since the law makes no provision for a reconveyance of the estate, and the bankrupt is the only party entitled thereto on the execution of the purposes for which it is taken, it seems to us that there is reverter of the original title to the bankrupt by operation of law. But such reversion ought not to be presumed or found, in the absence of clear and full proof of the complete execution of the purposes for Avhich the property is held by the assignee.

Where, as in the Michigan case, there had been a lapse of sufficient time, twenty years, to raise the common-law presumption of payment of all claims, we are not prepared to say that this would not be sufficient to authorize a recovery of the land in an action of ejectment brought by the bankrupt or his heirs. If also it should be made to appear, as in the Alabama case, that the debts had been actually satisfied, or if there was clear proof of an abandonment of the property by the assignee and creditors, we are unable to see wíiy such action might not be maintained.

*328 But it cannot be said that the assignee or creditors of a bankrupt have abandoned property the existence of which was unknown to them, for an abandonment implies an election not to take the property, and an election implies knowledge of the thing abandoned.

In this case it is shown that the property sued for was not put on the schedule by the bankrupt. The estate actually surrendered was insufficient to pay the costs of the bankrupt proceedings, and there is nothing shown from which it may be inferred that either the assignee or the creditors had any notice of the bankrupt’s right to the land. The bankrupt was by law charged with the duty of making a full disclosure and surrender of all the property owned by him. This he failed to do. * Proof of debts by the creditors would have availed them nothing, if the whole estate had consisted of the property returned by the bankrupt,' and their failure to prove their claims under such circumstances cannot be said to be a surrender of their debts. They were warranted in assuming that there was no other estate than that described in the schedules, and neither the bankrupt nor his heirs ought under these circumstances to be permitted to say that the creditors or the assignee abandoned the property to him or to them.

The defendants may not be entitled to retain the property, but neither are the plaintiffs entitled to recover it. JBuelcingham v. Buckingham, 36 Ohio St. 68 .

The judgment is affirmed,.

Chalmers, J., dubitaiur.

I doubt, without dissenting from the conclusion reached.

It is manifest from the record that the bankrupt omitted the land in controversy from his schedule because ignorant of his own superior title to it and with no fraudulent design. Many years have now elapsed since his own discharge in bankruptcy and that of his assignee. There is no intimation of any intention to proceed further in bankruptcy by any creditor, nor indeed any proof that ■there are any existing creditors. I doubt under these circumstances whether the present holders of the property can raise the question of his former bankruptcy and his loss of title thereby.

*329 If they were marked trespassers, I would say with confidence that they could not, but they hold, and have held for many years under color of title, and as plaintiffs (the heirs of the bankrupt) can only oust them on the strength of their father’s title, which is constructively in custodia legis for the benefit of any possible creditors through some assignee to be hereafter appointed, it may be that my associates have reached the correct conclusion.