Case ID: ny-super-ct_34/html/0006-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court.—Monell, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

BENJAMIN SHUMAN, Plaintiff and Appellant, v. JOSEPH L. STRAUSS, Defendant and Respondent.
    Upon a motion for leave to issue an execution on a judgment, after a lapse of five years from its entry, the defendant claimed, that by his discharge in bankruptcy since the entry of judgment, the same had been extinguished thereby. Plaintiff claims that the debt ■which was the basis of the judgment, was created by the fraud of the bankrupt, and the discharge does not operate against it, as such a debt is excepted by sections 33 and 84. The summons was for a money demand on contract, without any complaint. There was no answer, and judgment entered by .default. The complaint filed in the judgment roll set up the fraud.
    
      Held, that the plaintiff, by Ms summons, having waived the fraud and elected to bring the action in assumpsit, he is concluded by Ms election, and cannot now, by his complaint or proof aliunde, show that there was fraud on the part of the defendant in the original contraction of the debt.
    Before Monell and Spencer, JJ.
    
      Decided December 31, 1871.
    Appeal from an order denying a motion for leave to issue an execution.
    The action in which the judgment was obtained, was to recover the amount of three promissory notes, made by the plaintiff, for the accommodation of the defendant, on which the plaintiff had been sued, and which he was obliged to pay, with costs of suit. The complaint alleged, that the notes were obtained by the defendant by means of false and fraudulent representations. The relief demanded was a judgment for. the amount of the three notes, interest, and costs of suit.
    
      The summons was for a money demand on contract
    
    The defendant did not answer, and judgment was entered by default, in September, 1864.
    The motion for leave to issue execution was made in August, 1871.
    In opposition to the motion, the defendant put in evidence a discharge in bankruptcy, granted to him in the district court of the United States, for the southern district of Hew York, in September, 1868.
    The motion for leave was denied, and the plaintiff appealed.
    
      Mr. J. P. Joachimsen, for appellant.
    
      Messrs. Brown, Estes and Barnard, for respondent.
   By the Court.—Monell, J.

The provision of the bankrupt act, which, it is claimed, affects the question in this case, is, that no debt created by the fraud of the bankrupt, shall be discharged under the act (Section 33, Bankrupt act).

The action which the plaintiff brought was upon a simple contract debt. But from certain allegations in the complaint, it might have been an action to recover damages for a false and fraudulent representation ; in other words, for a fraud in contracting the debt.

The plaintiff, however, for the purposes of a cause of action, at least, waived the tort and sued for the contract debt; and the judgment was for money paid to the use of the defendant, and not for damages for • the fraud.

The action, therefore, which the plaintiff brought, did not admit of the allegations of fraud, as the fraud did not form any part of the only cause of action which he sought to enforce, and could be used appropriately, only as a means of procuring the provisional remedy of arrest (Lee v. Elias, 3 Sandf. 736; Atocha v. Garcia, 15 Abb. Pr. 303).

The question must, therefore, be examined, as if no allegation of fraud was contained in the complaint, and as if the cause of action was a simple money demand on contract.

Looking at the complaint in that light, it is clear that the case is not within the exception contained, in section 33 of the bankrupt act, unless we can go behind the judgment.

The question, then, is, can the plaintiff go behind his judgment and show that the simple, contract debt for which he sued, was, in fact, contracted in fraud %

As a general rule, a judgment merges the cause of action, and resort cannot be had afterwards to it for any purpose., There is also another general rule, that when a creditor has two remedies, he may waive one and pursue the other. Thus, for a debt fraudulently contracted, he may sue for the fraud, or he may sue for the debt. He cannot do both ; although, in a suit for the fraud, the damages would be, in part, at least, the debt. Whichever of the remedies he elects to pursue, is final, and he cannot afterwards pursue the other. So that if he waives the tort, as he may do, and sues for the debt, he is forever estopped from afterwards suing for the tort (Morris v. Reckford, 18 N. Y. 552).

The judgment, in this case, was recovered prior to the discharge in bankruptcy. It was, therefore, the only debt existing against the bankrupt at the time he petitioned, and the plaintiff was concluded by it. He had elected to waive the tort, and his election was final. It has been decided in two cases (Goodrich v. Dunbar, 17 Barb. 644, and McButt v. Hirsch, 4 Abb. Pr. 441), that the recovery of a judgment upon a debt fraudulently contracted, merges the original cause of action; and in an action upon such judgment the defendant, is not liable to arrest on the ground of fraud in the original debt.

These cases establish, that the judgment is the only debt, and that the original cause of action cannot be afterwards resorted to for any purpose.

There are, however, cases where it has been held, that a judgment, although a technical, one was not so complete a merger, that the courts, cannot look behind it to see upon what it is founded.

In Clark. Rowling, 3 N. Y. 216, pending a suit upon promissory notes, the defendant petitioned for a discharge in bankruptcy. Judgment was obtained before the discharge was granted. In an action upon the judgment in the nature of a creditor’s bill, the defendant set up his discharge in bar. But the plaintiff alleged, that as the original debt was merged in the judgment, the judgment was the only debt upon which the discharge could operate; and as that was created after the petition in bankruptcy it was not discharged. The court, however, went behind the judgment," and held, that the original cause of action was the debt, and gave effect to the discharge. In that case, however, the defendant in the judgment was allowed to go behind it, and the doctrines of merger and estoppel did not apply. If he could not have shown that the debt existed when he petitioned in bankruptcy, his discharge as to it would have been a nullity, and the whole object of the law defeated.

nevertheless, the language of section 33 of the bankruptcy act, is calculated to raise a doubt whether a creditor may not go behind his judgment. ■ The act declares “that no debt created by fraud,” shall be discharged, which is, perhaps, broad enough to let in evidence of the fraud at any time. I confess I am far ■from clear that he may not, in an action upon the judgment, show, to avoid the discharge, that the original debt was contracted in fraud. I rest my decision, therefore, upon the doctrine of merger and estoppel. The whole cause of action was merged in the judgment, and the plaintiff having elected to bring assumpsit, waived the tort, and is concluded by his election. He cannot now go back and show the original contraction of the debt.

The order should be affirmed, with costs.