Case ID: ad_172/html/0566-01.html
Source: Caselaw Access Project
Author: {"author": "Page, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Paul W. Horbach, Appellant, v. William J. Arkell, Respondent.
    First Department,
    May 5, 1916..
    Bankruptcy — statute construed — requirement that bankrupt state residence of creditors — failure to comply with statute — when judgment not discharged—subsequent action on judgment—mailing of notice addressed to creditor at club.
    The provisions of the Federal Bankruptcy Act requiring a bankrupt on filing his schedule to state the residence of his creditors if known must be strictly complied with, and, hence, where the bankrupt stated that the residence of a judgment creditor was the Lotus Club, city of New York, and the creditor had no such residence, but was domiciled in a foreign State, and as a matter of fact he received no notice of the bankruptcy proceedings until long after the adjudication therein, the debt was not discharged, and the creditor may maintain an action on his judgment in the courts of this State.
    Mere proof that a notice of the proceedings was mailed to the creditor at the address given, and that he had left instructions at the club to have his mail for’warded, was not sufficient to charge him with actual notice.
    Appeal by the plaintiff, Paul W. Horbach, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of New York on the 31st day of December, 1915, upon the verdict of a jury dismissing the complaint, and also from an order entered in said clerk’s office on the 30th day of December, 1915, denying plaintiff’s motion for a new trial made upon the minutes.
    
      Samuel M. Fleischman, for the appellant.
    
      William A. Sweetser, for the respondent.
   Page, J.:

This action was brought between the original parties upon a judgment of the Supreme Court, Hew York county.

The defendant has pleaded his discharge in bankruptcy on the 15th day of July, 1908, in the United States District Court for the District of Hevada. In the schedules in bankruptcy filed by the defendant, the plaintiff’s claim was scheduled as follows: [Creditor] Paul W. Horbach, Residence * * * Lotus Club, New York. When & Where Contracted, New York, Hay 20, 1905. Nature and Consideration of the Debt; * * * Judgment in Sup. Court Brokerage Acct., Amount $12,182.10.”

The plaintiff proved upon the trial that the Lotus Club never had been his residence; that at the time the bankruptcy proceedings were instituted and pending his residence was in Omaha, Nebraska.

It is the duty of the bankrupt to file a schedule containing a list of his creditors, showing their residences if known, if unknown that fact to be stated. (Bankr. Act [30 U. S. Stat. at Large, 548], § 7.) This schedule furnishes the basis for the notices which the referee or the court is to give thereafter to the creditors. (See Bankr. Act [30 U. S. Stat. at Large, 561], § 58.) The importance, therefore, of a strict compliance with this provision is obvious and is emphasized, by the provision of the act that where the debt has not been duly scheduled it is excepted from, and the debt is not affected by the discharge, unless the creditor had notice or actual knowledge of the proceedings in bankruptcy. (Bankr. Act [30 U. S. Stat. at Large, 550], § 17, as amd. by 32 id. 798, § 5.) The Court of Appeals has said: “* * It was intended that the decree discharging the voluntary bankrupt should be confined in its operations to the creditors who had been duly listed and who were enabled to receive the notices which the act provides for ” (Columbia Bank v. Birkett, 174 N. Y. 112, 117), and in affirming the judgment the United States Supreme Court said: The provisions of the law relied upon by plaintiff in error are for the benefit of creditors, not of the debtor. That the law should give a creditor remedies against the estate of a bankrupt, notwithstanding the neglect or default of the bankrupt, is natural. The law would be, indeed, defective without them. It would also be defective if it permitted the bankrupt to experiment with it — to so manage and use its provisions as to conceal his estate, deceive or keep his creditors in ignorance of his proceeding without penalty to him.” (Sub nom. Birkett v. Columbia Bank, 195 U. S. 345, 350.) The necessity of giving the correct address of the creditor in these schedules has frequently been before our courts (Matter of Quackenbush, 122 App. Div. 456; Murphy v. Blumenreich, 123 id. 645; McKee v. Preble, 154 id. 156), and it has always been held that when there is a failure to state the correct residence of the creditor the debt is not duly scheduled, and hence not discharged by the decree in bankruptcy, unless it shall appear that the creditor had actual knowledge of the proceeding. In the case last cited this court held that the giving of the office or business address of the creditor was not a compliance with the requirement of the act. How much less would it be a compliance with the act to give the address of a club of which the creditor was a member.

The plaintiff in this case testified positively that he did not at any time receive notice of the proceedings and did not until a long time after the adjudication have knowledge thereof. The sole evidence introduced by the defendant upon this question was proof of mailing of notices to the address given in -the schedules and the fact that the plaintiff had left instructions to have his mail forwarded. This was insufficient to raise an issue on the question of actual knowledge and the case should not have been submitted to the jury. The defendant could by inquiry at the club have ascertained the plaintiff’s actual residence; he, therefore, did not make a reasonable effort to ascertain plaintiff’s residence and in the absence of proof of the plaintiff’s actual knowledge of the proceedings during their pendency, the court should have granted plaintiff’s motion and directed a verdict.

The judgment will, therefore, be reversed, with costs, and judgment directed for the plaintiff for $12,182.10, with interest thereon from Hay 20, 1905, with costs.

Clarke, P. J., McLaughlin, Laughlin and Scott, JJ., concurred.

Judgment reversed, with costs, and judgment ordered for plaintiff as stated in opinion, with costs.