Case ID: ad_117/html/0269-01.html
Source: Caselaw Access Project
Author: {"author": "Laughlin, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The New York Institution for the Instruction of the Deaf and Dumb, Respondent, v. William F. Crockett, Appellant, Impleaded with May Lenox Mott and Others, Defendants.
    First Department,
    January 25, 1907.
    Bankruptcy — partnership — when judgment on partnership debt discharged on bankruptcy of partner — cancellation of judgment.
    A judgment on a partnership debt is properly scheduled on the voluntary bankruptcy of a member of the firm.
    When on the voluntary bankruptcy of a partner he schedules a judgment against him obtained upon a partnership debt, the judgment creditor, having no other claim against the bankrupt, is presumed to have notice of the proceeding and that the insolvent would seek a discharge from the partnership debt, although it is not expressly scheduled as such.
    When a firm is solvent and an individual member is insolvent and seeks a discharge in bankruptcy, he is entitled to a discharge and to have the business of the firm wound up and his surplus interest applied to liquidate his individual debts. ' ' •
    The equity of an individual partner in the partnership assets passes to his trustee in bankruptcy, and although the firm debts are provable against him in bankruptcy, the firm creditors can only share in the individual estate after the individual creditors have been paid in full.
    Where a bankruptcy court has acquired jurisdiction and granted a complete discharge of a bankrupt partner without making any reservation as to partnership debts, the decision is res adjudicata. It seems, however, that if the discharge be expressly limited to individual debts, the bankrupt is not relieved from liability on firm obligations.
    It is nota condition precedent to the discharge of the bankrupt that .his estate shall have been completely administered and the accounts of the trustee finally settled. ,
    In any event, on the discharge of an individual partner without reservation he is entitled to have a judgment on the partnership debt canceled of record when it does not appear that the firm is still doing business or has any remaining assets,
    
      It seems, that in such circumstances if it appear that the bankruptcy court has been deceived and that the bankrupt has concealed his property or that a partnership with assets undistributed exists, the application for cancellation of judgment should be denied, for the purpose of enabling the judgment creditor to apply to the bankruptcy court to vacate the discharge.
    Appeal by the defendant, William F. Crockett, from an order of the Supreme Court, made at the Dew York Special Term and entered in the office of the clerk of the county of Dew York.on the 14th day of August,, 1906, denying the said defendant’s- motion to have canceled and discharged of record a certain judgment entered in said clerk’s office 'On the 7th day of March, 1901, as to him, pursuant to the provisions of section 1268' of the Code of Civil Procedure, upon the ground that he has been discharged therefrom by á discharge in bankruptcy.
    
      David H: Taylor, for the appellant.
    
      Joseph M. Williams, for the respondent.
   Laughlin, J.:

The judgment sought to be discharged is a deficiency judgment obtained in an action to foreclose a mortgage given by the defend-, ant Crockett, the petitioner, and one John S. Roddy. The inov-’ ing papers show that on the 5th day of August, 1902, more than, one year prior to-the application for cancellation of the judgment, the petitioner, in voluntary bankruptcy proceedings duly instituted by him in the month of-June, 1902, in the United States District Court for the Southern District of Hew York, where he had resided for more than six months, was duly discharged from all debts and claims which existed against him on the 9th day of June, 1902, and were provable in bankruptcy. The motion was resisted by the plaintiff, and evidently denied, upon .the theory, that the judgment was on a copartnership obligation of the petitioner and Roddy,- who were partners in business; that the business of the copartnership had never been finally-settled; that there remained copartnership, assets; that there, was no application for or adjudica* tion in bankruptcy against the copartnership firm and that a copartnership firm obligation cannot be discharged in bankruptcy instituted voluntarily or involuntarily by or against a single member of the firm.

The correctness of the legal propositions upon which the objections to the cancellation of the judgment are evidently based aré neither conceded nor established by any controlling precedent; and the propositions of fact asserted are not sustained by the evidence.

First. The decisions, in the Federal courts on some of. these questions are conflicting and the decisions in the State courts,, while, tending toward-the doctrine that .a discharge in bankruptcy of an individual who was a member of a firm discharges him from both individual and copartnership debts, are not decisive on facts such as are here presented.

Neither in the petition in bankruptcy nor in the schedules of assets and liabilities is there any reference to a copartnership. That petition showed that the petitioner- owed debts which he was unable to pay in full, and that he was willing to surrender all of his property for the benefit of his creditors, except such as was exempt by law, and that he desired to obtain the benefits of the acts of Congress relating to bankruptcy; that Schedule “A,” thereto annexed, showed, among other things, a full and true statement of all his debts, the names and places of residence of his creditors, and that Schedule “ B ” contained an accurate inventory of all his property, both real and personal. Schedule “ A ” showed three debts, the first to the plaintiff, whose residence is given, and that it is a deficiency judgment for $1,414.58, after foreclosure of a mortgage; the second is a similar judgment to another creditor for $1,420.70, and the third is to another creditor for moneys advanced. Schedule “ B ” showed no property except property of the value of $30, which was therein claimed to be exempt from the operation of the bankruptcy statute. The order of the District Court, granted on the 5th day of August, 1902, discharging the petitioner, recites that whereas he “ has been duly adjudged a bankrupt under the Acts of Congress relating to bankruptcy, and appears to have conformed to all the requirements of law in that behalf, it is, therefore, ordered by this Court that said William F. Crockett be discharged from all debts and claims* which are made provable by said acts against his estate, and which existed on the 9th day of June, A. D. 1902, on which day the petition for adjudication was filed by him, excepting such debts as are by law excepted from the operation of a discharge in bankruptcy.” The proceedings in bankruptcy, intermediate the filing of the petition and schedules and the order discharging the petitioner, were not presented either in support of or in opposition to the motion. The petitioner, however, showed by affidavit that the plaintiff had notice of the bankruptcy proceedings in accordance with the provisions of section 58 of the Bankruptcy Act of 1898, which required, among other things, notice of all examinations of the bankrupt and of Iris application for discharge; and that he did not own' any real or personal estate or property 'at the time of the recovery of the judgment, nor has he since. _ The plaintiff showed in opposition to the motion, by the affidavit of the widow of Roddy, the other joint debtor in the deficiency judgment, that the defendants were, as she believed and understood, engaged in building operations “ for two or or three years as copartners under the name of Roddy and Crockett.’ She specifies one building operation and says that they conducted some others, but she gives no dates as to when their business commenced or ended. ■ She also says that “she does not know of any property belonging at this time to the debtor, William F. Crockett, or of any money owing to him. That she is not at' all acquainted with his- affairs.” The plaintiff further presented an examination of. the petitioner on proceedings supplementary to execution on this judgment op the. 26th day of November, 1901. His examination showed that his only business then was working for a corporation on a salary; that he had previously been in business with Roddy, commencing in 1895 or 1896,. as speculative builders, but that the firm had ceased operations and wound up its business on or about the 6th day of October,. 190.1, and was “no longer in existence; ” that the firm books were destroyed, by fire on said 6th day of October, 1901; that all the debts of the firm, save this judg naent and- the other similar judgment scheduled by the petitioner, have been paid; that the firm, in the course of its building operations, purchased the premises upon which from the complaint it appears that the mortgage which wTas foreclosed was' given. The complaint and judgment in foreclosure and deficiency judgment-form part of the moving papers. They contain no reference to the ■firm and show that a bond and the mortgage were executed by the defendants Crockett and Roddy jointly, for the purpose of securing the' payment to the plaintiff of the sum of $28,-000, and that Roddy’s wife' joined in the mortgage. It does not appear therefrom that the mortgage and bond were given to secure an indebtedness of the firm or. that the judgment was on a firm liability.' It does not appear that the petitioner was indebted to the plaintiff otherwise than on this judgment, and in view of his petition and' schedules in bankruptcy and affidavit here presented,'it must be assumed that he was not. The judgment was properly scheduled as a debt against the petitioner, even though recovered on a partnership obligation, because the members of the firm were jointly and severally liable for its debts. I think in the circumstances, since the creditor could not have been misled, that it was not essential that it should have been scheduled' as an obligation of the old firm. (Loomis v. Wallblom, 13 Am. Bank. Rep. 687. See, also, West Philadelphia Bank v. Gerry, 106 N. Y. 467; Bernheimer v. Rindskopf, 116 id. 428-440.)

The record does not show whether or not the plaintiff appeared in the bankruptcy proceedings or proved its judgment therein.- I regard that, however, as quite immaterial, because by virtue of the provisions of section 39 of the Bankruptcy Act, it was the duty of the referee in bankruptcy tó give the notices required by section 58 of the Bankruptcy Act to be given to creditors, which included all examinations of the bankrupt, all meetings of creditors and the application for discharge.

The United States District Court is a court of record, and on proof of the order discharging tiie bankrupt the presumption would arise that the court obtained jurisdiction and that its proceedings were had in conformity to law; hut we are not required to rest on this presumption, for a certified copy of the order granting the discharge was presented on the motion, and by virtue of the provisions of subdivision f of section 21 of the Bankruptcy Act,f that is declared to be evidence of the jurisdiction of the court, the regularity of the proceedings, and of the.fact that the order was made.” It must, therefore, be presumed that the plaintiff had notice of the bankruptcy proceedings and that its judgment, since the petitioner was not otherwise indebted to it, was scheduled as one of the debts from which he would seek a discharge. This is not controverted; but the plaintiff says that the judgment, being a partnership obligation, it was entitled to- notice as a copartnership creditor that he was seeking a discharge from his copartnership obligations. Support for this contention is found in some of the authorities which, while conceding that a member of a copartnership firm may, on liis individual petition in bankruptcy, obtain a discharge from the copartnership, as well as from his individual debts, yet maintain that it is essential to accomplish this. result that the firm debts should be scheduled as copartnership obligations, and that the notice to the firm creditors should be notice to them as such, and that the pet-h tion in bankruptcy and the application for the discharge should show that the petitioner sought a discharge from firm as well as individual obligations. In most of the cases in which this view is expressed the question as to the effect of a discharge was not before the court for adjudication, and the question before the court arose on an application in the bankruptcy proceedings for a discharge of ■ the bankrupt, to amend by giving notice to his partners,, or by pro-, ceedings for an adjudication against the firm as an entity. (See Matter of Little, 15 Fed. Cas. 598, No. 8390; Matter of Noonan, 18 id. 298, No. 10292; Matter of Laughlin, 3 Am. Bank. Rep. 1; Matter of McFaun, Id. 66; Matter of Winkens, 30 Fed. Cas. 302, No. 17875 ; Matter of Morrison, 11 Am. Bank. Rep. 498 ; Matter of Freund, 1 id. 25 ; Matter of Meyers, 8 id. 260 ; Matter of Levy, 2 id. 21.) In Matter of Levy (supra) doubt is expressed as to whether a discharge of an individual would discharge him from firm debts even, though there were no firm assets.

In Matter of Freund (supra) the opinion of the referee, which was adopted by the United States District Court, Horthern District • of Iowa, in January, 1899, shows that the question presented for decision was whether the bankrupt had complied with the law and was entitled to a discharge. That was a voluntary proceeding by an individual partner and the only debts scheduled- were firm obliga- . tions, although they were not scheduled as such. There had been no request to have the firm adjudged bankrupt, and the other members of the firm did not have notice of the proceeding. The application for a discharge was denied upon the ground that the Bankruptcy Act of 1898, as interpreted by the United States Supreme Court in prescribing rule 8 of the General Orders in Bankruptcy, fairly contemplates and requires that if an individual who has ■ been a member of a firm, the affairs of which have not been finally settled, petitions in bankruptcy, he must set forth in. his petition the existence of the partnership, and ask to have the other members brought"in and apply for a discharge from both classes of debts, by which, I presume, is meant that he must specify in his application the two elapses of debts from which he seeks a discharge. The decision, which was merely a denial of the application for the discharge until the other partners were brought in, was manifestly sound, because if there were firm 'assets the interest of the individual member therein, after the payment of firm obligations, would be applicable to the payment of his individual debts, and the liquidation of the partnership business was the only certain way of. ascertaining whether there would be a surplus available for the individual creditors. In so far, however, as the opinion in the Freund case holds that the present Bankruptcy Act, as interpreted by.said rule adopted by the Supreme Court of the United States, prescribes the contents of the petition in bankruptcy or of the application fora discharge, I fail to find any authority therefor. Of course, if the statute prescribed, as thus intimated, that where it was sought to obtain a discharge from partnership obligations the petition must set forth the material facts with respect to the existence of and his interest in the firm, compliance With this requirement would doubtless be jurisdictional, and it might well he that either the discharge would be void if compliance therewith had not been made or it would be ineffective as to firm obligations. The statute contemplates that the proceeding shall originate by petition (§ 3, subd. b; § 4; § 18, snbds. a and g), but it appears'to be silent concerning the contents of a voluntary petition at least. Doubtless the jurisdictional facts should be stated. They relate to the existence' of probable'debts, the residence'or domicile of the individual or his principal place of business or the location of property within the jurisdiction of the court (§ 2 (1) ), and in the case of a copartnership to the fact that the business has not been finally settled (§ 4a).

Rule 8 of the General Orders in Bankruptcy, adopted by the Supreme Court of the United States at the October term, 1898, is as follows : Any member of a partnership who refuses to join in a petition to have the partnership declared bankrupt shall be entitled to resist the prayer of the petition in the same manner as if the petition had been filed by a creditor of the partnership, and notice of the filing of the petition shall be given to him in the same manner as provided by law and by these rules in the case of a debtor petitioned against; and he shall have the right to appear at the time fixed by the court for the hearing of the petition, and to make proof, if he .can, that.the partnership is not insolvent or has not committed an act of bankruptcy, and to make all defenses which any debtor proceeded against is entitled to take by the provisions of the act; and in case an adjudication of bankruptcy is made upon the petition, stich partner shall be required to file a schedule of his debts and an inventory of his property in the same manner as is required by the act in cases of debtors against whom adjudication of bankruptcy shall be made.”

It is manifest that this rule has no application to a petition by an individual who is a member of a firm to have himself and not the firm adjudicated a bankrupt. (See Collier’s note to Matter of Freund, 1 Am. Bank. Rep. 31-33.)

It is evident that an individual may be a member of a solvent firm and at the same time be insolvent himself.

This rule shows quite clearly that the firm cannot be declared insolvent .unless it is such in fact. In such circumstances, unless therefore, the individual may by his own petition obtain a discharge in bankruptcy; even though insolvent, he could obtain no relief under the Bankruptcy Act. Where a firm is solvent and an individual member thereof' is insolvent and desires to be discharged in bankruptcy, it is manifest that he is entitled to such discharge and that the business of the firm should, be wound up and his surplus interest applied in liquidation of his individual debts.. This is fairly contemplated and provided for by subdivision h of section 5 of the Bankruptcy Act, which reads as follows: “In the event of one or more but not all of the members of a partnership being adjudged bankrupt, the partnership property shall not be administered in bankruptcy, unless by consent of the partner or partners not adjudged bankrupt; but such partner or partners not adjudged bankrupt shall settle-the partnership business as expeditiously as its nature will permit, and account for the' interest of the partner or partners adjudged bankrupt.” (See Collier’s note to Matter of Freund, supra.)

There are Federal decisions under the present Bankruptcy Law holding, but without referring specifically to said subdivision h of section 5, as was held under the act of 1867, which did not contain a similar provision, that the copartnership assets cannot be reached on an individual proceeding in bankruptcy, and that it is essential that the firm should be proceeded against directly. (Matter of Shepard, 21 Fed. Cas. 1256, No. 12754.) If by this is meant that they cannot be directly reached, the doctrine is doubtless sound; but the statute clearly contemplates that they shall be reached indirectly by the other members of the firm accounting to the trustee in bankruptcy. It has been held by the Circuit Court of Appeals of the United States (Matter of Mercur, 10 Am. Bank. Rep. 505) in the third circuit, on an application to consolidate and amend individual petitions of all members of a firm by asking that the firm be adjudicated a bankrupt, that where each member of a firm' individually applies for an adjudication in bankruptcy,, the firm assets cannot be administered by the bankruptcy court, but that difficulty may be readily overcome by having the firm adjudged bankrupt. Section 70 of the Bankruptcy Act provides, among other things, that the title of the bankrupt to any property “ which prior to the filing of the petition he could by any means have transferred or which might have been levied upon and sold under judicial process against him,” vests in the trustee as of the date of the adjudication in bankruptcy. It is well settled that the interest of an individual member of a firm may be assigned by him, but the assignee only acquires the proportionate share of the member in the surplus remaining after the payment of the copartnership debts and the adjustment of the equities between the members of the firm, and does not acquire any title to the corpus of the firm assets, which remain a primary fund for the payment of the firm debts, with the right in the assignor, as well as in the creditors, to compel their appropriation thereto. (Saunders v. Reilly, 105 N. Y. 12, 17; Menagh v. Whitwell, 52 id. 146.) The right of firm creditors to have the firm assets applied in payment of their claims is derivative, and is founded upon the rights of the members of the firm as between themselves to have the firm assets first applied in liquidation of firm liabilities. (Saunders v. Reilly, supra.) If, therefore, this interest of a member of a firm is assignable by him, it follows, both on principle and by virtue of the express terms of the Bankruptcy Act, that it must pass to his trustee in bankruptcy.- I think it may now be regarded the well-settled rule, not only that the equity of an individual,in copartnership properly, which is his separate estate, passes to his trustee in bankruptcy, but .also that the firm debts are provable against him in bankruptcy, the firm creditors, of course, to share only in the individual estate after the individual creditors have been paid in full (Amsinck v. Bean, 89 U. S. [22 Wall.] 395; West Philadelphia Bank v. Gerry, 106 N. Y. 467; Berry Brothers v. Sheehan, 115 App. Div. 488; Loomis v. Wallblom, 94 Minn. 392; 13 Am. Bank. Rep. 687; Wilkins v. Davis, 15 Nat. Bank. Reg. 64; 29 Fed. Cas. 1248, No. 17664; Curtis v. Woodward, 58 Wis. 499; Matter of Laughlin, supra; Jarecki Mfg. Co. v. McElwaine, 5 Am. Bank. Rep. 751; Matter of Webb, 29 Fed. Cas. 495, No. 17317), and that the bankruptcy of" the individual dissolves the firm. ( Wilkins v. Davis, supra; Kirby v. Schoonmaker, 3 Barb. Ch. 49; Amsinck v. Bean, supra) In Curtis v. Woodward (supra) the court, in discussing the question as to the property passing to the assignee in bankruptcy under the act of 1867, as amended, say : “ The bankrupt thus became divested and stripped of all his estate, property and rights of property, and all actions and rights of actio:) relating to property Or rights of property, whether in law or in equity, which -by operation of law were thus vested in his assignee in bankruptcy. This com- . píete separation of the bankrupt from his former estate, property, rights of property and-of action, seems to render the question relating to ■ the distribution of such estate, and the marshalling of such assets, immaterial to the question of his discharge.” It would, therefore, seem clear that an individual member of a firm may, on1 his own independent application, made in his own right, obtain a discharge, not only from his individual debts, but from his firm • liabilities, and that the existence or non-existence of firm assets is immaterial to the decision of this question. This view was expressed by the Supreme Court of Wisconsin in Curtis v. Woodward (supra), but it is opposed by many cases in the Federal District Courts, and some in this district, which appear to be to the effect that the discharge may be complete or only partial, and that it. is complete against all creditors when the firm is adjudged bankrupt or there are no firm assets and the firm debts have been scheduled as such, but partial only and limited to the individual creditors when the individual alone is adjudged bankrupt and especially if there are firm assets. (Matter of Kaufman, 14 Am. Bank. Rep. 393; Matter of Abbe, 2 Nat. Bank. Reg. 75; Matter of Knight, 8 id. 436 ; Hudgins v. Lane, 12 Fed. Cas. 800, No. 6827 Matter of Feigenbaum, 7 Am. Bank. Rep. 339; Crompton v. Conkling, 6 Fed. Cas. 850, No. 3408; Id. 848, No. 3407; Trimble v. More, 47 N. Y. Super. Ct. 340; Matter of Hirsch, 3 Am. Bank. Rep. 344; Hodge v. Kaufman, 46 Misc. Rep. 248, following Matter of Meyers, 3 Am. Bank. Rep. 260.) It is'difficult to reconcile this view if it relates to a discharge granted in the general language of the statute, with the . plain mandatory language of section 17 of the. Bankruptcy Act, that “ a discharge in bankruptcy shall release a bankrupt from all of his provable debts,” with certain exceptions not here involved. Since partnership debts are provable against a bankrupt’s individual estate, it is difficult to see why they are not discharged by a discharge which follows the language of the statute. It appears to me to be a question of jurisdiction, and that where,"as in this case, the bankruptcy court acquired jurisdiction and granted a complete discharge under the statute, without attempting to make any reservation, it should be given effect as such. It may well be ' that if the adjudication and discharge in bankruptcy are expressly limited to the individual debts, the discharge would not relieve • the bankrupt from liability on firm obligations, and if that is what is meant by the decisions on that subject, to which reference has been made, they are doubtless sound. Here, however, the discharge is complete, without qualification or limitation, and in the absence of the decree it must be assumed that the discharge is in accordance with the decree. I find nothing in the Bankruptcy Act which requires as a condition precedent to the right of the bankrupt to be discharged, that his estate shall have been completely administered and the accounts of the trustee finally settled. The discharges are sometimes, if not usually, granted before the estate has been completely administered. A discharge in bankruptcy has not been construedas a cancellation of the debts which precludes the appropriation of the property in the hands of the trustee to the payment thereof. The discharge is designed to enable the debtor to start anew in the business world without being embarrassed by his former obligations which were provable and dischargeable in bankruptcy. It would seem that the same rule would apply to-the appropriation of the partnership assets to the payment "of the partnership debts, even after an' individual discharge in bankruptcy of a member of the firm, although the partnership assets in such case, are not administered ' directly by the bankruptcy court, The discharge of .the indebtedness and cancellation of the judgment could not, I think, deprive the creditor of the right to prove the judgment against the partnership and hav.e'the same paid from the partnership assets. Nor would it then, in view of the partnership relation and the rights of the other members of the firm.who were not parties to the individual bankruptcy proceeding, become' an individual debt, chargeable, in the adjustment of the equities between" the partners, to the members other than the one who was discharged in bankruptcy. If, however, this be regarded as doubtful, the difficulty may be obviated by deferring the discharge until after the partnership business has been liquidated by the members of the firm who are not in bankruptcy, and until they have accounted to, the trustee in bankruptcy' for the interest, if any, of the bankrupt member of the firm, so that all assets, individual and firm, shall have been administered- or shall be in - the . custody of the bankruptcy court. ' It was doubtless. competent for the Supreme Court of the United States, by virtue'of the authority conferred by section 16 of the Bank, ruptcy Act, to prescribe that a. petitioner should state in his petition whether or not he 'is a member of a copartnership, the business of which has not been finally settled, and, if so, his interest therein, and - whether there are firm creditors from whom lie seeks á discharge, and . firm assets unadministered, which could then, be reached under subdivision h of section 5; and doubtless the bankruptcy" court could adopt rules on the same subject not inconsistent with those adopted by the Supreme Court. The Supreme Court has prescribed forms for petitions by individuals and for petitions by copartnership firms; but I. find no provision in these forms requiring that, in an individual petition, it must be set forth whether. the applicant is a member of a copartnership firm, and I find nothing in the rules prescribed by the Supreme Court on the subject, or . dealing' with the subject, of whether in any circumstances the discharge may be partial and not complete. I am of opinion, therefore, that no question of jurisdiction is presented, and that, at most, a suspicion is cast on the regularity of the petitioner’s bankruptcy proceedings according to some of the Federal decisions; but even that depends upon there being a partnership business which has not been finally settled, and qn this judgment being a partnership' obligation. In these circumstances, I think the true rule is, and that the tendency of the decisions, in the State courts at least, is toward holding that where the court.acquires jurisdiction, and grants a full discharge in the language of the statute from all provable debts properly scheduled, not specially excepted, that joint as well as individual debts are discharged. (Curtis v. Woodward, supra ; West Philadelphia Bank v. Gerry, supra ; Loomis v. Wallblom, supra ; Jarecki Mfg. Co. v. McElwaine, supra; Wilkins v. Davis, supra; Berry Brothers v. Sheehan, supra.)

Second. I am also of opinion that even though the foregoing rule be unsound, the petitioner was entitled to have the judgment canceled, for it does not satisfactorily appear that this was a firm obligation or that the firm has any remaining assets. It has been seen-that the obligation on which the deficiency judgment was recovered was a joint obligation of the petitioner and Roddy, but that alone does not make it a firm debt although the firm property might have been sold thereon, at least if the partners did not object and there was no fraud as against firm creditors. (Saunders v. Reilly, supra ; Davis v. President, etc., D. & H. Canal Co., 109 N. Y. 47.) Under the Federal bankruptcy decisions, which, on this point, appear to be uniform, it would not have been competent even if the firm had gone into bankruptcy, to have shown that the obligation upon which this judgment was recovered was in fact an obligation on which credit was given to the firm, or that the firm had- the use or benefit of money borrowed thereon, to thereby make it a firm charge (Matter of Jones, 8 Am. Bank. Rep. 626; Strauss v. Hooper, 5 id. 225; Collier Bankr. [3d ed.] 72, 73), nor has it been shown to he a firm obligation within the liberal rule prescribed in Berhshire Woolen Co. v. Juillard (75 N. Y. 535) where the Court ■of Appeals held in a proceeding in equity that a joint and several obligation, of all the members of the firm, sliow.n to have been given in the firm business and for the benefit of the firm, could be proved as a charge against the firm assets in the hands of a receiver of the insolvent firm, the credit having in fact been given to the firm,, although the firm was not mentioned in the contract. Even under that rule, it' would be essential to show dehors the récord both that the credit was given to the firm and that the firm had the use of the money, the proceeds of the obligation. (See Turner v. Jaycox, 40 N. Y. 470.) The claim that this was a firm obligation is based upon the fact that the firm at one time owned the mortgaged property and that the petitioner answered in the affirmative two leading questions with respect to whether there were any other judgments against the firm, ■or whether it owed any other debts, but it is manifest that that is wholly insufficient. Moreover, if it were a firm obligation, it does not satisfactorily appear that the firm owns any undistributed assets. This copartnership business was of such a nature that it could have been readily settled and doubtless was practically settled-" as they parted with, each piece of property in -which they invested. It might fairly be inferred from the evidence that the firm is not only not.in existence, not that its assets have been distributed and a final settlement made between the partners, and if these facts are fairly established, the court would have had no authority to entertain bankruptcy proceedings against the firm. (§ 5a.) Mo property was discovered on the plaintiff’s examination of the petitioner in supplementary proceedings before his bankruptcy. . The plaintiff on subsequently receiving notice of the bankruptcy proceedings, had notice that he still claimed to have no property except two items of the value of thirty dollars, which he claimed to be exempt. The plaintiff had an opportunity in the bankruptcy proceedings to further examine him and-to ascertain whether lie had any other property than that embraced in his schedules in bankruptcy. (Bankr, Act, § 55, subd. b.) This was a proper subject of inquiry by the bankruptcy court. " There perhaps the burden was on the petitioner; but after the discharge, I think it would be on the creditor. (Loomis v. Wallblom, supra; Crompton v. Conkling, 6 Fed. Cas. 850, No. 3408.) It should be presumed on this record in'favor of the discharge that if the attention of the bankruptcy court was drawn to this question the court must have decided that there was no firm property to- be administered, or the discharge would not have been granted (See Matter of Meyers, 2 Am. Bank. Rep. 707); and I do not see how we could examine the proceedings in bankruptcy even if they were before us, to discover whether or not the attention, of the bankruptcy court was drawn to the partnership, witli a view to impeaching or modifying the apparent effect of the discharge. If it appeared probable that the bankruptcy court had been deceived by the petitioner and that he had concealed his property or concealed the fact of an existing partnership, with assets undistributed, the application for the cancellation of the judgment might well have been denied or held to enable the judgment creditor to apply to the bankruptcy court to open the proceedings or vacate the discharge. The failure of the petitioner to refer to the old partnership which he claimed had been finally settled surely was not jurisdictional even if he had been in error. In any view of this case, therefore, as presented by this record, the petitioner was entitled to have the judgment canceled.

It follows that the order should be reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs.

Ingraham, J., concurred; Clarke and Scott, JJ., concurred in result.

Order reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs. Order filed. 
      
      30 U.. S. Stat. at Large, 561.— [Rep.
     
      
       30 U. S. Stat. at Large, 555.— [Rep. † 30 U. S. Stat. at Large, 552.— [Rep.
     
      
       See 30 U. S. Stat. at Large 546, § 3, subd. b; Id. 547, § 4; Id. 551, § 18, subds. a, g.— [Rep.
     
      
       See 30 U. S. Stat. at Large, 545, § 3, subd. 1.— [Rep.
     
      
       See 30 U. S. Stat. at Large, 547, § 4, subd. a; Id. § 5, subd. a.— [Rep.
     
      
       See Collier Bankr. [5th ed.] 598.— [Rep.
     
      
      30 U. S. Stat. at Large, 548.— [Rep.
     
      
      See 14 U. S. Stat. at Large, 517, chap. 176, as amd.; Collier Bankr. (5th ed.) 911 et seq.— [Rep.
     
      
       30 U. S. Stat. at Large, 550.— [Rep.
     
      
      30 U. S. Stat. at Large, 550,— [Rep.
     
      
       See Bankr. Act (30 U. S. Stat. at Large, 547), § 5, subd. a.— [Rep.
     
      
       30 U. S. Stat. at Large, 559.— [Rep.