Case Name: LIBERAL FINANCE CORPORATION v. Anson J. HOLLEY
Court: Louisiana Court of Appeal
Jurisdiction: Louisiana
Decision Date: 1963-05-06
Citations: 157 So. 2d 376
Docket Number: No. 1038
Parties: LIBERAL FINANCE CORPORATION v. Anson J. HOLLEY.
Judges: Before McBRIDE, REGAN and YAR-RUT, JJ.
Reporter: Southern Reporter, Second Series
Volume: 157
Pages: 376–380

Head Matter:
LIBERAL FINANCE CORPORATION v. Anson J. HOLLEY.
No. 1038.
Court of Appeal of Louisiana. Fourth Circuit.
May 6, 1963.
On Rehearing Nov. 4, 1963.
Heller & Heller, Edward M. Heller, New Orleans, for plaintiff and appellant.
George H. Fust, New Orleans, for defendant and appellee.
Before McBRIDE, REGAN and YAR-RUT, JJ.

Opinion:
McBRIDE, Judge.
This is a suit for the balance allegedly due on two promissory notes executed by defendant, each payable to plaintiff or bearer in monthly installments, the principal sum of the one dated January 26, 1961, being $1,276.80, and the principal sum of the other, dated July 5, 1961, being $160. Plaintiff prays for judgment for the aggregate balance due, plus interest and attorney's fees.
The defense is that defendant was adjudicated a bankrupt and subsequently was discharged as such, and that whereas plaintiff's claims were duly listed on the bankruptcy schedules, defendant is fully released and relieved from any indebtedness therefor.
Plaintiff's contention is that in connection with the two transactions defendant signed and submitted what are referred to as "financial statements" in which he represented that he had no liabilities or outstanding obligations other than those set forth, and that plaintiff relied on the truthfulness and verity of said representations, which were to the knowledge of defendant false and untrue and were made by him for the specific purpose of deceiving and defrauding plaintiff, and that plaintiff was actually a victim of such fraud. Plaintiff points out that under the exception in Section 17 of the Bankruptcy Act (11 U.S.C.A. § 35), a discharge does not have the effect of releasing the bankrupt's liabilities for obtaining money or property by false pretenses or false representations.
After a trial below, judgment was rendered dismissing the suit and this appeal by plaintiff ensued.
Plaintiff, holding a license under the Small Loan Act, is a moneylender. Defendant had been its patron for several years, having received various amounts from plaintiff as loans. On January 26, 1961, a transaction took place between the parties, out of which plaintiff took from defendant the first of the above-described notes for $1,276.80, and in connection with such transaction and immediately before the consummation thereof, defendant filled out in his own handwriting and signed in the presence of plaintiff's manager a statement on which he listed as his sole creditors a finance company and a bank and stated that the total he owed them was $600.
On July 5, 1961, another transaction took place as a result of which defendant executed the second of the notes above-mentioned, that is the one for $160, and prior to and in connection with this transaction, defendant filled out in his own handwrit ing and signed a statement on which he listed his total obligations as $972, purportedly owed to two finance companies, a bank, and a furniture company.
Each of the financial statements above-mentioned contains the following wording in large printed letters:
"For the specific purpose of obtaining a loan or extension of credit in the amount of $160.00 either as maker or comaker from LIBERAL FINANCE CORP., and as an inducement to make said loan or extension of credit, I hereby make the following statements which I represent, warrant, and guarantee to be true."
Then follow certain blanks in which defendant wrote in the name of his employer, the nature of his work, his salary, his age, and the purpose of the loan.
Then in large letters appears the following:
"I further represent, warrant and guarantee that the foregoing is my total indebtedness of every kind whatsoever, both secured and unsecured . Notwithstanding any previous dealings I may have had with LIBERAL FINANCE CORP., I understand that in extending credit to me it is relying entirely on the foregoing financial statement made by me this date, which is filled out, dated and signed by myself. I have not been influenced in any way by any employee of named company in filing this statement."
Both of the financial statements were false in the matter of the amount of obligations owed and also in the number of defendant's creditors. At the time of the first transaction, in addition to the two debts set forth, defendant was indebted to another bank and four other merchants for an aggregate amount of $7,998.75. At the time of the second transaction defendant owed, in addition to the amount set forth in the statement, the aggregate sum of $7,554.65; he neglected to state that a certain other bank and three merchants-were also his creditors.
Before Section 17 of the Bankruptcy Act (11 U.S.C.A. § 35) would be applicable, it is incumbent on the plaintiff to show: (1) That defendant made false representations; (2) that such representations were made with the intention of defrauding plaintiff;. and (3) that the plaintiff relied upon and was misled by the false pretenses or representations. De Latour v. Lala, 15 La.App. 276, 131 So. 211.
We believe that plaintiff has carried such burden of proof and upon such showing by plaintiff, the onus then shifted to the defendant to disprove intent to deceive. Earl Staehle Finance, Inc. v. Brooks, La.App., 144 So.2d 155; Accounts Supervision Company v. Atley, La.App., 89 So.2d 508. Defendant has failed to refute plaintiff's pretensions and we entertain no doubt that defendant executed the statements in order to deceive and take advantage of plaintiff, and that plaintiff relied on the false representations, and that to some extent defendant has been guilty of obtaining money or property by false pretenses or representations, and to the extent of his fraud the discharge in bankruptcy will and cannot protect him.
A salient point in the case is just how extensive was plaintiff's loss. At the time of the first transaction of January 26, 1961, involving the note for $1,276.80, it cannot be said that plaintiff was defrauded of that whole sum. The testimony shows that all defendant realized out of this transaction was $200 in cash. While two other checks were issued to him, defendant actually endorsed said checks over to plaintiff for the purpose of retiring two prior notes, but nothing in the record indicates that the prior notes were delinquent or matured. In the absence of a showing by plaintiff that these were due and exigible, we cannot say that defendant defrauded plaintiff of property in the form of the prior notes. We think that the $200 in cash received by defendant when he executed the $1,276.80 note would be the proper standard for measuring the recovery plaintiff is entitled to on the first transaction, less, however, any subsequent repayments made by defendant.
There is no question that the second note for $160 was not given in renewal of any existing note, its consideration being represented solely by cash advanced to defendant and plaintiff would be entitled to recover the full amount due on the second note less any repayments made by defendant.
See C H F Finance Company, Inc. v. Jochum, 241 La. 155, 127 So.2d 534; Personal Finance Co. of Shreveport, Inc. v. Murphy, La.App., 53 So.2d 421.
Notwithstanding his discharge in bankruptcy defendant would still owe plaintiff a principal balance of $360 on the two notes which is the amount of the fraud. However, we notice from the allegations of plaintiff's petition that defendant has repaid the sum of $266 which would leave a net amount of $94 due.
There is no showing that the defendant in making repayments declared what debts he meant to discharge, nor is there anything to denote that the creditor issued receipts to defendant setting forth to what debts it had imputed the amounts repaid; so, therefore, we believe that the proper imputation (under LSA-C.C. art. 2166) would be to give defendant credit for his repayments on the debts which he had the most interest in discharging, namely, the indebtedness arising from the fraud perpetrated on plaintiff. None of the repayments should be imputed to the balances on the prior obligations which amounts were incorporated in the principal of the $1,276.-80 note.
For the reasons assigned, the judgment appealed from is reversed, and it is now ordered, adjudged and decreed that plaintiff have judgment against defendant for the full sum of $94, with interest at the rate of 3½ per cent per month from July 5, 1961, until paid, together with attorney's fees in the sum of $25; defendant is cast for the costs of both courts.
Reversed and rendered.