Document: 516 U.S. 59116 S.Ct. 437133 L.Ed.2d 351 William FIELD and Norinne Field, Petitioners,v.Philip W. MANS. No. 94-967. Supreme Court of the United States Argued Oct. 2, 1995. Decided Nov. 28, Syllabus * After respondent Mans filed for relief under Chapter 11 Bankruptcy Code, petitioners Field alleged, in effect, that letters had written to them constituted fraudulent representations on which they relied continuing extend credit a corporation controlled by Mans, that, accordingly, Mans's obligation as guarantor corporation's debt should be excepted from discharge U.S.C. § 523(a)(2)(A) resulting fraud. The found false representations, but followed Circuit precedent requiring Fields show their reasonable reliance letters. Finding unreasonable relying without further enquiry misrepresentations, court held dischargeable. District Appeals affirmed. Held: standard excepting representation within meaning is not less demanding one justifiable representation. Pp. 440-447. (a) Section an antecedent 1903 amendments Act 1898, has changed only slightly since 1903, ''false pretenses or representations'' pretenses, representation, actual fraud, other than statement respecting debtor's insider's financial condition.'' 523(a)(2)(B), applies statements writing, also grew out amendment it more significantly over years. One these changes occurred 1978, when Congress added new element reliance. 440-442. (b) text does mention level required, rejects unsound argument addition 523(a)(2)(B) alone supports inference 523(a)(2)(A), did intend require That relies apparent negative pregnant, rule construction express statutory requirement place, contrasted with silence another, shows intent confine specified instance. Assuming this sound, would prove at most reasonableness was intended, reveal correct standard. Here, however, there reason reject pregnant even far goes. If proves anything here, too much: reasoning strip any establish causation scienter, odd result defies common sense. Moreover, ignores fact refers common-law torts not. terms used (A) imply elements law defined include, whereas (B) are creations. 441-443. (c) This established practice finding Congress's generally shared where, specification. Since treated conduct amounting here into understanding ''actual fraud'' 523(a)(2)(A). Restatement (Second) Torts states justifiable, rather reasonable, applicable general, person favor individual turns particular circumstances, provides justified factual conducting investigation, so long falsity patent upon cursory examination. Scholarly treatises torts, well state cases, similarly applied foregoing analysis relegate rubbish heap, merely indicates its force weakest suggests foolish results odds textual pointers. Court's reading leave irrelevant, greater distance between claimed limits doubt about fact. 443-447. (d) It may asked whether makes sense protect creditors who were quite apply different fraud carried point statement. ostensible anomaly explained concerns creditors' misuse statements. 446-447. (e) test entailing duty investigate clearly exceeds demands P. 447. 36 F.3d 1089 (CA 1 1994), vacated remanded. SOUTER, J., delivered opinion Court, REHNQUIST, C.J., STEVENS, O'CONNOR, KENNEDY, THOMAS, GINSBURG, JJ., joined. concurring opinion. BREYER, dissenting opinion, SCALIA, Christopher J. Seufert, petitioners. Alan Jenkins, States, amicus curiae, special court. E. Whittington, IV, appointed court, respondent. Justice SOUTER Court. Code's provisions stop short certain debts fraud.'' In case we consider creditor's misrepresentation necessary place thus beyond release. While statement, hold accordingly vacate remand. 2 June 1987 sold real estate $462,500 Philip supplied $275,000 toward purchase price personally guaranteed promissory note $187,500 secured second mortgage property. deed clause calling Fields' consent conveyance encumbered during term indebtedness, failing entire unpaid balance become payable sale unauthorized. 3 On October 8, 1987, triggered application conveying property newly formed partnership knowledge consent. next day, mans wrote asking waiver rights due-on-sale clause, saying he sought avoid claim might arrangements add principal his land development organization. letter failed already caused conveyed. responded offer waive if paid $10,500. answered lower bid, pay $500, again disclose conveyance. There no communications. 4 ensuing years brought precipitous drop prices, December 10, 1990, petitioned New Hampshir e Code. following February 6, learned conveyance, lawyer discovered registry deeds. subsequent complaint bankruptcy proceeding, argued some $150,000 due liable guarantor, fraud.1 5 detriment extending credit.2 precedent, see re Burgess, 955 F.2d 134 (C.A.1 1992), make showing reliance, ''what prudent man do those circumstances.'' App. 43-44. have checked after exchange letters, unreasonably ignored 1988, Mr. Field's boss told him third party claiming owner property.3 Having implicit title, 6 affirmed, likewise holding requires exempt discharge, judgment supported adequate indication record sufficient reason. First affirmed reasons. Judgt. order reported (1994). 7 We granted certiorari, 514 ----, 115 1821, 131 743 (1995), resolve conflict among Circuits creditor demonstrate.4 II 8 bankrupt's debts, §§ 727, 1141, 1228, 1328(b), subject exception 523(a), carries 16 subsections setting categories nondischargeable debts. Two traceable materially set 523(a)(2): 9 ''(a) A section 1228(a), 1228(b), 1328(b) title debtor — 10 . ''(2) money, property, services, extension, renewal, refinancing credit, extent obtained 12 ''(A) condition; [or] 13 ''(B) use writing 14 ''(i) false; 15 ''(ii) ''(iii) whom such reasonably relied; 17 ''(iv) made published deceive.'' 18 These innovations recent codification, Reform 1978 (Act), Pub.L. 95-598, 92 Stat. 2590, obvious antecedents 1898 (1898 Act), amended, 30 544. precursor created 17(a)(2) modified provided ''liabilities obtaining affected bankrupt, still required them. Feb. 5, ch. 487, 32 798. language inserted 1978,5 time recodified amended read quoted above. Thus, issue progressed 19 product active evolution. germ presently relevant amendment, barred bankrupt purpose credit. 797-798. provision explicitly deceive 1960 adding requirements rely limiting July 12, 1960, 86-621, 74 409.6 rewrote above 523(a)(2)(B). Though forms different, distinction version 20 sum all history two close companions barring discharge. expressly follows transfer value extension induced (not going condition), intentionally deceptive condition relied. III 21 question what, any, justification needs mere t just reviewed say many words. speaks ''obtained ... fraud,'' define much such, let required. No one, course, doubts degree satisfy inherent phrase by,'' Government, curiae (like portion brief), submits minimum will do. argues understood context, fact, circumstances. Both Government while They emphasize precursors lacked requirement, contend But unsound. 22 there, See Gozlon-Peretz v. 498 395, 404, 111 840, 846-847, 112 919 (1991) ('' '[W]here includes statute omits another same Act, presumed acts purposely disparate inclusion exclusion' '') (quoting Russello 464 16, 23, 104 296, 300, 78 (1983)). Thus failure demanded lacks requirement. Without more, helpful one. why elevated interpretive trump card. 23 First, assuming intended. our job end rejecting discover standard, where multiple contenders remaining (as here), finish job. 24 is, fundamental objection depending present circumstances soundness Quite simply, much. then causal connection eliminate scienter very notion itself; material; material meant deceive. neither nor materiality intentionality. contrast enough preclude need misrepresented intentionally, been material, balk.7 really wished bar unintentional lly immaterial misrepresentations having effect decision, could that. would, take clear convince anyone odd, nothing ever courts previously construed statute, routinely intent, before applying See, e.g., Phillips, 804 930 (C.A.6 1986); Martin, 963 809 (C.A.5 1992); Menna, 1994). 25 attempt draw moreover, significance historically persistent difference substantive (B): former refer latter predecessor writing,'' 797; current writing.'' Neither apparently context include separately. ''statement must (and course keep dischargeability swallowing rule). operative hand, carry acquired art. terms, and, shortly us include. Durland 161 306, 312, 508, 510, 40 L.Ed. 709 (1896); James-Dickinson Farm Mortgage Co. Harry, 273 119, 121, 47 308, 309, 71 569 (1927). enumerated elements, contrary drafting choice deprive richer bare terms. IV 26 ''It '[w]here uses accumulated settled law, infer, unless otherwise dictates, means incorporate terms.' '' Community Creative Non-Violence Reid, 490 730, 739, 109 2166, 2172, 811 (1989) NLRB Amax Coal Co., 453 322, 329, 101 2789, 2794, 69 672 (1981)); Nationwide Mut. Ins. Darden, 503 318, 1344, 1347, 117 581 (1992). case, structure 523(a)(2) explicit reveals, adopt used. 27 look concept 523(a)(2)(A).8 Then, now, widely accepted distillation torts9 (1976), passed Act. dealing both ''justifiable'' Id., 537. expounds explaining ''although ascertained investigation.'' 540. Significantly purposes, illustration given seller says free encumbrances; according Restatement, buyer's ''walk[ed] across street office register deeds courthouse'' easily unsatisfied mortgage. 540, Illustration 1. later noting contributory negligence recovery because intentional tort. Here clear: ''Although plaintiff's mean conform man. Justification matter qualities characteristics plaintiff, community cases.'' 545A, Comment b. Justifiability limits, however. As comment 541 explains, 28 ''required senses, cannot recover blindly utilized opportunity examination investigation. induces buy horse representing purchaser though eye, shown buys slightest inspection disclosed defect. stated recipient capable appreciating senses. defect experienced horseman once recognize first glance experience horses.'' 541, a. 29 missing eye ''sound'' thing; teeth ''young'' perhaps, another. Similarly, edition Prosser's Law available successor) victim's cases alleged ''[i]t facts intelligence glance, something serve warning being deceived, investigation own.'' Prosser, p. 718 (4th ed.1971); accord, Keeton, D. Dobbs, R. & Owen, Prosser Keeton 108, 752 (5th ed. 1984) (Prosser Keeton). represents authority stating ''the seems turn own capacity has, fairly charged against observation light case.'' supra, 717; 751; F. Harper James, 7.12, pp. 581-583 (1956) (rejecting justifiability ''by distinct tendency modern plaintiff entitled character kind part falsity, defendant guilty conscious can defense verify same'') (footnote omitted); Harper, O. Gray, 455-458 (2d ed.1986). 31 authoritative syntheses surely spoke speak today) prevailing view American courts. Of 46 November (the day became law), articulated action, reliance,10 fact,11 intermediate frequently referred reliance.12 Following specification, Vann, 67 277 (C.A.11 1995); Kirsh, 973 1454 (C.A.9 1992). syllabus constitutes prepared Reporter Decisions convenience reader. Detroit Lumber 200 321, 337, 282, 287, 50 499. Although observe corporations, indicate parties thought treating comes us, presented originator misrepresentation. thereafter. never raised subsumed reach it. testified proceeding 1988 report indicated conveyed 14-15, confronted issue. 26-27. conversation. Compare Ophaug, 827 340 (C.A.8 1987); Mayer, 51 670 (C.A.7 Allison, 960 481 Mullet, 817 677 (C.A.10 1987). intervening change ''obtaining property'' money property.'' 22, 1938, 52 851. transferred individuals (where discharge) specific incurred statement). release ''are liabilities renewal [the bankrupt's] manner whatsoever 409. by'' problem, (B); supplies materiality, deceive, renders 523(a)(2)(B)'s redundant. More point, (§ Act) nonsensical, language. Second, impossible construe encompassing deceive; obtain intention doing (for example, unintentionally annual income $100,000, $10,000, loan). suggest requisite differ pretense settle here. general dominant consensus jurisdictions, State. 323, n. 3, 1348, (1992); 740, (1989). Polansky Orlove, 252 Md. 619, 624-625, 251 A.2d 201, 204 (1969) (stating reliance); Cudemo Al Lou Construction 54 A.D.2d 995, 996, 387 N.Y.S.2d 929, (1976) (referring imposing investigate); Works Wyche, 344 S.W.2d 193, 198 (Tex.Civ.App.1961) (requiring Jardine Brunswick Corp., Utah 2d 378, 382, 423 P.2d 659, 662 (1967) Horner Ahern, 207 Va. 860, 863-864, 153 S.E.2d 216, 219 information excite suspicions man, investigate). Beavers Lamplighters Realty, Inc., 556 1328, 1331 (Okla.App.1976) only); Campanelli Vescera, 75 R.I. 71, 74-75, 63 722, 724 (1949) sufficient, notwithstanding party's verify); Negyessy Strong, 136 Vt. 194-195, 388 383, 385 (1978) wrong neglect); Horton Tyree, W.Va. 238, 242, 139 S.E. 737, 738 (1927) (holding right inquiry); Johnson Soulis, 542 867, 872 (Wyo.1975) only).

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