Source: https://supreme.justia.com/cases/federal/us/290/66/
Timestamp: 2019-04-24 00:10:37+00:00

Document:
highway contract. Upon default by the contractor, the surety became obligated upon a judgment obtained against them jointly by one who had furnished labor and materials entering into the work. The surety paid and took an assignment of the judgment. The contractor subsequently was adjudged bankrupt, and upon his application for discharge from his debts, including that due the surety, the latter filed objections.
(1) The obligation of the surety according to the terms of the bond to pay the contractor's debt was "property" within the meaning of § 14 of the Bankruptcy Act, as amended (11 U.S.C. § 32(b)(3)) barring discharge where the bankrupt "obtained money or property on credit . . . by making . . . a materially false Statement in writing respecting his financial condition." P. 69.
(2) The bankrupt obtained, and the surety gave, the bond and obligation "on credit " within the meaning of the section. P. 290 U. S. 69.
(3) The application for discharge should have been denied. P. 290 U. S. 70.
2. The word "property," when used without qualification, may reasonably be construed to include obligations, rights, and other intangibles, as well as physical things. P. 290 U. S. 68.
Certiorari, 288 U.S. 597, to review a judgment affirming an order of the District Court granting a discharge in bankruptcy.
principal and surety jointly. Petitioner paid and took an assignment of the judgment. In 1931, respondent, having been adjudged bankrupt, applied for discharge from his debts, including that due petitioner on account of such payment. Petitioner filed objections showing that respondent induced it to become surety by means of materially false written statements in respect of his financial condition. Respondent demurred, the District Court sustained the demurrer and entered a decree of discharge. The Circuit Court of Appeals affirmed, 61 F.2d 607, following decisions of District Courts in that circuit. In re Tanner, 192 F. 572, and In re Ford, 14 F.2d 848.
Cincinnati v. Hafer, 49 Ohio St. 60, 65, 30 N.E.197; Dillingham v. Insurance Co., 120 Tenn. 302, 315, 108 S.W. 1148. For the meaning rightly here to be given the word, regard is to be had to the statute and connection in which it is found. Nashville, C. & St.L. Ry. Co. v. Tennessee, 262 U. S. 318, 262 U. S. 323; Wells, Fargo & Co. v. Jersey City, 207 F. 871, 876. The Act, while making discharge of bankrupts the general rule, conditions the grant upon adherence by every applicant to the standards of honesty and fair dealing in business transactions that are required or reflected in § 32(b)(1), (2), (3), (4), (6), (7). The fraud perpetrated by respondent is of the kind condemned. Giving effect to the rule that legislative intent controls, it is plain that "property" includes petitioner's obligation according to the terms of the bond to pay respondent's debts. Matter of Dunfee, supra; Gaddy v. Witt, 142 S.W. 926; Royal Indemnity Co. v. Cooper, supra. In Gleason v. Thaw, 236 U. S. 558, this Court held that the professional services of an attorney were not within § 17(2), which excepts from the general discharge liabilities for property obtained by false pretenses. That was a close case. See Gleason v. Thaw, 185 F. 345, 196 F. 359. The principle of construction there applied may not reasonably be extended to this one.
obtained, and petitioner gave, the bond and obligation on credit. See Swarts v. Siegel, 117 F. 13, 17; Kobusch v. Hand, 156 F. 660, 662. While clause (3) seems aimed particularly at false pretenses made by borrowers and purchasers to obtain money or goods on credit (Firestone v. Harvey, 174 F. 574, 577), it is not limited to such transactions. Respondent's application for discharge should have been denied.

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