Case ID: us_119/html/0096-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. Chief Justioe Waite", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

PALMER v. HUSSEY.
    .ERROR TO THE SUPREME COURT OE THE STATE OF NEW YORK.
    Submitted November 1, 1886.
    Decided November 15, 1886.
    The decision of the highest court of a State upon a motion, accompanied .by affidavits as proof, to, perpetually enjoin the collection of a judgment obtained in a court of the State on the ground of the discharge of the defendant in bankruptcy, raises a Federal question which may be reviewed ' by this court.
    
      Ilennequin v. Clews, 111 TJ. S. 676, affirmed, and followed, in holding, on similar facts in this 'case, that there was no such fraud in the creation of the debt,' and no such trust in respect to the possession of the bonds, as to bar the operation of the discharge in- bankruptcy.
    This was a motion to dismiss, united with a motion to affirm. The facts which make the case are stated in the opinion of the court.
    
      Mr. S. W. Bower for the motions.
    
      Mr. A. M. SIceir opposing.
   Mr. Chief Justioe Waite

delivered the opinion of the court.

This record shows that on the 18th of April, 1874, Acalus> L. Palmer recovered a judgment in the Supreme Court of New York against Erwin A. Hussey for $32,i28.57 on account of certain bonds of the United States which had been placed in his hands by Palmer, and for which he bound himself by a writing, the material part of which is as follows:

“ These bonds we hold subject to the order of A. L. Palmer, at ten days’ notice, agreeing to collect the coupons for his account free of charge, and to allow him two per cent, per annum interest on the par value of said bonds, said interest to commence and count June 1st, 1866; interest on the 7-30 bpnds payable June and December 15th; on 5-20, May and November 1st. “E. A. Hussey & Co.”

In tbe complaint it was alleged that tbe bonds “were received by tbe defendant from' tbe plaintiff as bis agent and broker, in a fiduciary capacity, upon tbe arrangement and agreement as contained” in'tbe foregoing paper; “that tbe said defendant without 'tbe authority or permission of tbe plaintiff, has fraudulently and wilfully sold, disposed of, and misapplied tbe said bonds, and has refused to deliver up tbe same to the said plaintiff, who has frequently demanded tbe same from him, and given the notice so to do as required by the agreement.” This was denied in tbe answer. Tbe suit was begun September 1, 1868.

On- tbe 20th of January, 1868, Hussey filed bis petition in bankruptcy, and was duly adjudicated a bankrupt January 21th. On tbe llth of May, 1880, be received bis final dis-chargé. Tbe record does not show when bis application for a discharge was made to tbe bankrupt court. On tbe 12th of June, 188Q, be moved tbe Supreme Court to perpetually enjoin the collection of the judgment in favor of Palmer because of bis discharge. In bis affidavit in support of this motion, and which presents tbe grounds of tbe rehef ■ asked, i't is stated:

“ That, among other grounds of objection to my discharge in bankruptcy made by tbe plaintiff, it was charged that I have been guilty of improper and undue delay in said proceedings. That that question was presented to tbe court and fully explained, and tbe court decided that I was not guilty of laches, and was entitled to my discharge.”

In opposition to tbe motion the counsel of Palmer filed a counter-affidavit setting forth tbe grounds of defence, and, among others, that tbe judgment was an adjudication that • “ tbe bonds were received in a fiduciary capacity,” and were “fraudulently and wilfully sold, disposed of, and misappbed by Hussey.”

Tbe Supreme Court, both at special and general term, denied' tbe motion on tbe ground that -the judgment on its face .showed that tbe debt was created by fraud, and while Hussey was acting in such a fiduciary capacity as to prevent tbe discharge in bankruptcy from operating as a release. This order was reversed-by the Court of Appeals and the execution of the judgment perpetually enjoined, because the fraud and trust established by the findings were not of a character' to bar the effect of- the discharge. To reverse that judgment this writ of error was brought, which Hussey now moves to dismiss because no Federal question was raised or decided, and with' this motion he has united a motion to affirm under rule 6, §, 5.

The motion to dismiss is denied. Palmer, in his affidavit, which in this case takes the place of technical pleading, specially set up and claimed an immunity under § 5117 of the Revised Statutes from the operation of the discharge in bankruptcy, because of the fraudulent and fiduciary character of his debt, and the decision was against him. This gives us jurisdiction, since the exemption depénds on the construction and effect of § 5117, which provides that “ nb debt created by the fr'aud ... of the bankrupt, or . . . while -acting in any fiduciary character,', shall be discharged by proceedings in ■bankruptcy.” As the affidavit of Hussey set forth the date of the adjudication in bankruptcy and the elate of discharge, the question of delay in making an application, and the construction and effect of § 5108, may also, perhaps, have been raised on the record. The opinion of the Court of Appeals shows' that both of these questions were actually presented to and., decided by that court. 87 N. ■ X. 303.

Upon the facts set forth in the affidavit of Hussey, which are not denied in the counter-affidavit ’ of the attorney of Palmer, and upon the facts as they appear, in the record of the judgment to be enjoined, it is clear.that, under the ruling of this court in Hennequin v. Clews, 111 U. S. 676, there was ho such fraud in the creation, of the debt, and no such trust, in respect, to the possession of the bonds by Hussey, as to bar the operation of the discharge.

■By § 5119 of the Revised Statutes, the certificate of discharge’ is-made conclusive evidence,, in favor of .the bankrupt, “ of the fact and- regularity of such discharge.” ¥e must presume, therefore, that the application was made within the time required . by § 5108, or, if not, that any delay there may have been was satisfactorily explained before the discharge was granted. The certificate is conclusive on this question.

As these are the only Federal questions presented, and one has. been already settléd by our decision in Hennequin v. Clews, and the other needs no further argument, the motion to affirm is granted.

Affirmed.