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Credit Alliance Corp. v. Williams

United States Court of Appeals for the Fourth Circuit
851 F.2d 119 (4th Cir. 1988)


In February 1980, Penn Hook Coal Co. (Penn Hook) bought a John Deere wheel loader from Croushorn Equipment Co. (Croushorn) pursuant to a three-year note. The note was assigned by Croushorn to Credit Alliance Corp. (plaintiff), which received guarantees of payment by Gary Williams (defendant) and Malcolm Williams. Penn Hook defaulted on the note. In January 1981, Credit Alliance sued Penn Hook, Gary Williams, and Malcolm Williams in a New York court. None of the defendants responded to the summons and complaint. In March 1981, Penn Hook filed a Chapter 11 bankruptcy petition in a Virginia court. In April 1981, the New York court entered a default judgment in the amount of $62,866.70 against Penn Hook and the guarantors. In October 1984, Credit Alliance commenced garnishment proceedings in Virginia against Penn Hook and Gary and Malcolm Williams. The bankruptcy court held that the automatic stay voided Credit Alliance’s default judgment as to Penn Hook and both guarantors. The district court reversed as to the guarantors, concluding that the judgment was neither voided nor stayed as to those individuals. Gary Williams appealed.

Rule of Law


Holding and Reasoning (Wilkinson, J.)

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