Case ID: abbn-cas_10/html/0311-01.html
Source: Caselaw Access Project
Author: {"author": "Beach, J. Van Brunt, Ch. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

FREUND v. PATEN.
    N. Y. Common Pleas;
    
    
      General Term,
    
    January, 1882.
    Discharge in Bankruptcy.—Debts Fraudulently Contracted.— Pleading.—Weight of Evidence. —Charge.—Exception.
    In an action on contract, where the defendant sets up a discharge in bankruptcy, the plaintiff may reply, alleging that the debt was fraudulently contracted.
    
    
      It seems, that the fraud may be proven in avoidance of the discharge without a reply.
    An issue in a civil action, even where fraud is alleged, is made out where there is a preponderance of evidence in favor of the party supporting it: It need not, where it is not necessary to prove a felony, be established beyond a doubt.
    
    An exception to an erroneous charge of a legal proposition is suffi- . cient, without the suggestion of an amendment or change.
    Bernard Freund brought this action in the marine court of the city of New York against John H. Paten, upon two promissory notes, made by the defendant, payable to the plaintiff or order. The answer alleged the filing by defendant of his petition in bankruptcy after the making and delivery of the notes, and a discharge therein from all claims provable against his estate. The plaintiff replied, alleging fraudulent representations of solvency by the defendant when the goods were purchased and the notes given for their price. The jury rendered a verdict for the defendant. Plaintiff moved for a new trial upon the minutes, which was denied. The judgment and order were affirmed by the general term of the marine court, Hawes, J., dissenting, and from the judgment of affirmance plaintiff brought this appeal.
    Further facts sufficiently appear from the opinions.
    
      Abram Kling, for appellant.
    I. The court erred when it charged the jury, 1. “That if the jury should be in doubt whether defendant made the representations charged against him, they must give the benefit of such doubt to defendant, and find a verdict for defendant.” 2. “That if the jury should be in doubt whether defendant intended to cheat and defraud plaintiff, they must give the benefit of such doubt to defendant, and find a verdict for defendant.” 1. The rule of law as charged by the learned judge has only application to criminal cases, and not to those of a civil character, in which latter it becomes the duty of the jury to find for the party in whose favor the evidence preponderates, independent of any doubt, and the following decisions hold that the instructions given by the court were error (Johnson v. Agricultural Ins. Co., 13 Weekly Dig. 144; People v. Schryver, 42 N. Y. 1; Gordon v. Parmelee, 15 Gray, 413; Kane v. Hibernia Ins. Co., 39 N. J. L. 697; Ford v. Chambers, 19 Cal. 143; Bradish v. Bliss, 35 Vt. 326; Walker v. Wallace, 19 Mich. 57; Bessel v. Wert, 35 Ind. 57; Scott v. Home Ins. Co., 1 Dillon, 105; People v. Wreden, 12 Reporter, 682; People v. McCann, 16 N. Y. 58).
    
      Charles Blandy, for respondent.
    I. Although the term giving the benefit of the doubt is more aptly applied to criminal cases, it is not error to charge in that language in a civil action which is quasi criminal in its nature. This is an action of tort, and a verdict against the defendant would consign him to jail and to public disgrace ; why should not the plaintiff be called upon to bring home the fraud by undoubted proof? And what does that mean if it does not imply that if any doubt exists, it should be given to the defendant? Every presu.r.ption is in favor of honesty and freedom from crime, and the proof should be as clear as in a criminal prosecution for the same crime. In Paret v. Segall, 12 Weekly Dig. 535, on motion to vacate order of arrest; held, that all the eircumstances considered did not warrant a finding, beyond reasonable doubt, that defendant wras guilty of the fraud, &c. This is an authority directly in point that the proof in this class of cases must establish (be charge beyond reasonable doubt. Saying that the benefit of the doubt must be given to the defendant, is saying no more than was laid down in the last-named case. The following are instances in point in similar questions involved in actions of tort. In slander for charging plaintiff with perjury, defendant, to support a justification, is bound to give as conclusive proof as would be necessary to convict plaintiff on an indictment for such offense (Per Bronson, J., Clark v. Dibble, 16 Wend. 601, citing Woodbeck v. Keller, 6 Cow. 118, and M‘Kinly v. Rob, 20 Johns. 350, and see Hopkins v. Smith, 3 Barb. 599). No decision by the courts of this State can be found contrary to those above cited. The leading case in England is Thurtell v. Beaumont, 1 Bingh. R. 339 (decided 1823), and that case has been followed in England, and by the courts in New York State, and by the courts of most of the other States. The action was against a director of an insurance company, to recover value of goods insured and destroyed by fire. Defense, that plaintiff willfully set fire to the premises. The judge directed the jury that before they gave a verdict against plaintiff, it was their duty to be satisfied that the crime of willfully setting fire to the premises was as clearly brought home to him, as would warrant their finding him guilty of the capital offense, if he had been tried before them on a criminal charge. On appeal, this charge to the jury was held right, and a new trial was denied. Among other cases in England holding the same as Thurtell v. Beaumont, see Chalmers v. Shackell, 6 Car. & P. 475; Wilmot v. Harmer, 8 Id. 695; Neely v. Luck, 8 Id. 532; Magee v. Mark, 11 Ir. Law, N. S. 449; see Steph. Dig. Ev. 98. The same ruling lias also been made and the principle above claimed to be the law, has been held in the courts of the following States, viz.: In Pennsylvania, in Steinman v. McWilliams, 6 Barr, 170; Gorman v. Sutton, 32 Penn. St. 247. In Maine, in Thayer v. Boyle, 30 Me. 475; Butman v. Hobbs, 45 Id. 227. In Illinois, in McConnell v. Delaware, &c., 18 Ill. 228; Darling v. Banks, 14 Id. 46. In Tennessee, in Coulter v. Stuart, 2 Yerg. 225. In Indiana, in Lenter v. McCowen, 8 Blackf. 495; Byrket v. Monekon, 7 Id. 83. In Florida, in Shultz v. Pacific, &c., 14 Fla. 73; S. C., 1 Ins. Law Jour. 495. In Missouri, in Polston v. Lee, 54 Mo. 291. In Iowa, in Ellis v. Lindley, 38 Iowa, 461; Fountain v. West, 23 Id. 1. In New Jersey, in Kane v. Hibernia Fire Ins. Co., 38 N. J. L. 441; S. C., 20 Am. R. 409; Berckman v. Berckman, 17 N. J. Eq. 453; Taylor v. Morris, 22 Id. 606. In Ohio, in Strader v. Mullane, 17 Ohio St. 624; Lex. Ins. Co. v. Paver, 16 Ohio, 324. In Wisconsin, in Freeman v. Freeman, 31 Wisc. 235. See Chaffee & Co. v. United States, 18 Wall. 545; The Mohler, 21 Id. 230. In 1 Greenleaf on Evidence (12 ed.) 76, § 65, it is said : “In criminal prosecutions it has been thought that greater strictness of proof was required than in civil cases, . . . but whatever indulgences the humanity of judges may have allowed in practice in favor of life or liberty, the better opinion seems to be that the rules of evidence are in both cases the same.” Citing Roscoe Crim. Ev. 73; 1 Deacon’s Dig. Crim. Law, 459; 1 Phil. Ev. 506; 2 Russell on Crimes, 588; Rex v. Watson, 2 Stark. 116, 155 ; Lord Melville’s case, 29 How. St. Tr. 376; United States v. Britton, 2 Mas. 464. Where the defense in a civil action is, that the property was willfully burnt by plaintiff himself, the crime must be as fully and satisfactorily proved to the jury as would warrant them in finding him guilty on an indictment for the same offense (2 Greenl. on Ev. [13 ed.] 368, § 408).
    
      II. The question of fraud in the contraction of the debt ought not to have been tried in this action, because the plaintiff’s cause of action was not in fraud ; the service of a reply had not the effect of changing the cause of action from one on simple contract to one of fraud. If the plaintiff had desired to do that, he should have served a supplemental complaint. It would be competent for the plaintiff to avoid the discharge in bankruptcy by proving fraud in procuring such discharge, but the effect of the discharge upon the debt cannot be overcome while the plaintiff’s cause of action remains, as. it does, on simple contract. The service of the reply was a mere nullity ; it did not in any way change the cause of action alleged in the complaint, nor did it incorporate into such cause of action the element of fraud.
    
      
      See note at the end of this case.
    
    
      
      See N. Y. Guaranty, &c. Co. v. Gleason, 7 Abb. N. C. 357, note.
    
   Beach, J.

Under the bankruptcy act (U. S. R. S. § 507), it is provided that no debt created by the fraud of the bankrupt .... shall be discharged by proceedings in bankruptcy. This issue was clearly raised by the plaintiff’s reply, and even without that pleading he would have been entitled to prove it on the trial in answer to the discharge, without any allegation in his complaint, it being no part of this cause of action, but an affirmative defense to the promissory notes upon which he declared (Argall v. Jacobs, Court of Appeals, MSS. opinion).

Upon the trial, the learned judge charged the jury if they should be in doubt whether the defendant made the representations charged against him, they must give the benefit of such doubt to defendant and find a verdict in his favor; and further, if the jury should be in doubt whether defendant intended to cheat and defraud plaintiff, the benefit of such doubt must be given to defendant and a verdict found in his favor. To these instructions exceptions were taken, and in my opinion should be sustained.

In civil cases, the jury should decide issues of fact according to the weight of evidence, and it is sufficient if the evidence on the whole agrees with and supports the hypothesis which it is offered to prove.

In criminal cases it must produce a moral certainty of guilt and exclude any other reasonable hypothesis (Starkie on Ev. 813, 816; Johnson v. Agricultural Ins. Co., 13 Weekly Dig. 144; People v. Schryver, 42 N. Y. 1). It is said, in StarJcie on Evidence, supra, that in some contests as to civil rights a mere preponderance of evidence may be insufficient, where it falls short of fully disproving a legal right once admitted or established, or of rebutting a presumption of law. Other exceptional cases are actions of libel or slander wherein the charge is the commission of a criminal offense in which a plea of justification requires the same degree of evidence as would be necessary to convict the plaintiff in a criminal prosecution for the same offense (Townshend on Libel, 674; Woodbeck v. Keller, 6 Cow. 118).

The instructions given the jury were plainly not in accord with the legal rule, and more strongly marked by the omission of the term “reasonable,” in qualification of the word “ doubt.” The plaintiff’s counsel, by excepting to the court’s charge of legal propositions, did all that was needful to present the question. Under such circumstances, counsel are not called upon to suggest amendments or changes to the court; but may rely upon the exception (Goldman v. Abraham, 10 Weekly Dig. 108; Allis v. Leonard, 58 N. Y. 291).

The judgment should be reversed, and a new trial ordered, with costs to abide the event.

Van Brunt, Ch. J.

I concur in the result of the foregoing opinion, but I do not concur in the same so far as it seems to assume, that if the judge in the court below had used, the words “reasonable doubt,” his charge would have been correct. No party to a civil action is bound to make out his case beyond a reasonable doubt, unless in order to make out Ms case it is necessary to prove felony. An issue in a civil action is made out when there is a preponderance of evidence in favor of the party supporting the issue. If there are fewer doubts in the minds of the jury upon that side of the case than upon the other, then such party is entitled to a verdict, because a preponderance of evidence exists.

Note on Pleading Discharges.

The discharge is not available as a defense unless pleaded.

This is a general rule applicable alike to discharges in insolvency and in bankruptcy. Rudge v. Rundle, 1 Sup’m. Ct. (T. & C.), 649; Horner v. Spelman, 78 Ill. 206; Ludeling v. Felton, 29 La. Ann. 719; Park v. Casey, 35 Tex. 536; Jenks v. Opp, 43 Ind. 108; Jones v. Coker, 53 Miss. 195; Way v. Lewis, 115 Mass. 26.

Where the discharge is relied on by plaintiff as a bar to a counterclaim set up by defendant, it should be pleaded by reply; although, under the familiar rule that objections not taken on the trial cannot avail on appeal, the failure to plead it may be waived by failing to object to its admission in evidence. Raymond v. Baker, 60 Barb. 605.

The old authorities requiring particularity in detail in the pleading of a discharge, are superseded as to discharges in bankruptcy under the act of Congress of 1867, and the United States Revised Statutes, § 5119, by the provision of that statute allowing a short allegation. And see Hennequin v. Clews, 46 Super. Ct. (J. & S.) 330; 77 N. Y. 427; reversing 45 Super. Ct. (J. & S.) 108.

It is now settled that a plea of a discharge cannot be avoided by allegation or proof of fraud or irregularity in obtaining it, for which the creditor, had he known the facts, could have successfully opposed the granting of it. Ocean Nat. Bank of N. Y. v. Olcott, 46 N. Y. 12; Beebce v. Pyle, 1 Abb. N. C. 412; Poillon v. Lawrence, 77 N. Y. 207; reversing 43 Super. Ct. (J. & S.) 385; but want of jurisdiction, or the fact that the debt sued on was not discharged because not provable, may be shown.

For this purpose it is not necessary, nor usual (Brown v. Broach, 52 Miss. 536, and see Fairchild v. Lynch, 46 Super. Ct. [J. & S.] 1), for plaintiff to anticipate the discharge in his complaint, and allege the matter he will rely on in avoidance, but, as suggested in the case in the text, he may regard the plea of discharge as put in issue by the statute. Code Civ. Pro. § 522, last clause ; and see Dambman v. Schulting, 4 Hun, 50; Linn v. Hamilton, 34 N. J. L. 305.

The court have power in their discretion, on defendant’s application before trial, to direct plaintiff to reply or allow the plea of discharge to stand as admitted. Code Civ. Pro. § 516. And a reply that the debt was created by fraud, &c., stating particulars, is good. Broadnax v. Bradford, 50 Ala. 270; Wyman v. Mitchell, 1 Cow. 316.

If no such reply is required, plaintiff may on the trial meet the discharge by proving that the debt sued on was not provable. Argall v. Jacobs, 21 Hun, 114; Talcott v. Harris, 18 Id. 567; and see Hun v. Cary, 82 N. Y. 65.