Court Opinion

ID: 9725305
Source: CourtListenerOpinion
Date Created: 2023-08-26 11:40:04.053414+00
Date Added: 2024-06-11T18:25:13.657456
License: Public Domain

*485Fairchild, J.
(dissenting in part). In my view, the record establishes two propositions: (1) Some portion of the judgment, though granting a recovery for breach of contract, represented debts created by Shelton’s defalcation; (2) the total defalcation was at least as large as $1,821.55, the sum of the liens which the court found were unpaid though sufficient funds had been on hand.
I can agree that to the extent of $1,821.55 the judgment has not been discharged. The supreme court of Michigan has held that where the record shows that the judgment includes both dischargeable and nondischargeable debts in certain amounts, and the debtor has received a discharge in bankruptcy, the judgment is to be enforced to the extent of the nondischargeable debts and treated as discharged as to the balance.1
It seems to me, however, that the majority of the court are deciding that where the record shows that some portion of the judgment represents nondischargeable debts, but does not show the amount thereof, nor that the entire judgment was nondischargeable, the entire judgment will be treated as nondischargeable.
This result, in my opinion, is contrary to the rule that the burden of establishing nondischargeability is on the judgment creditor.2
An intermediate appellate court in California has held that where it can be determined from the record that some part of a judgment represents a nondischargeable debt, but *486it is impossible to determine how much is of such character, the judgment creditor has not sustained its burden, and the bankrupt is entitled to cancellation of the entire judgment.3
The majority approve the drawing of an inference that the defalcation was equal to the difference between the total cost of the building and the contract price. In order to draw such an inference, one must assume that those who completed the work were willing to do it for the difference between the contract price and the amount paid over to Shelton and properly applied by him. Such an assumption seems unwarranted.
Courts have reached different conclusions as to the scope of the investigation into the character of a claim, already reduced to judgment, in a later proceeding where the judgment debtor asserts the judgment has been discharged in bankruptcy and the judgment creditor asserts it represents a nondischargeable debt. The majority appear to hold that the latter inquiry is limited to the record in the action in which the judgment was entered, but some courts have considered new evidence not in such record.4
The difficulty arises from the fact that in the first action the parties may have seen no need to litigate some of the issues which later become material in the proceeding to determine whether the claim was dischargeable in bankruptcy. It would seem to me to be a sound and workable practice generally to limit the inquiry to the record in the original action, but to permit the parties to bring in additional evidence where the court is convinced that such supplementation is necessary in order to avoid injustice.
In the proceeding now before us, the testimony in the action was not brought before the court even though that *487would have been permissible under the general rule. We have no way of knowing whether it would clarify the matter further, nor whether the circuit court would conclude that the situation calls for supplementary evidence.
If the matter were to be determined on the portion of the record now before us, the judgment should, in my opinipn, be deemed discharged and satisfied except for $1,821.55. I would think it fair, however, for the parties to have an opportunity to bring in the evidence in the action, if available, or to urge that supplementary evidence be received. This view would result in reversal and remand for further proceedings.
I am authorized to state that Mr. Justice Currie concurs in this opinion.

 Tudryck v. Mutch (1948), 320 Mich. 86, 30 N. W. (2d) 512.

 See 8 B C. J. S., Bankruptcy, p. 149, sec. 586.

 United States Credit Bureau v. Digoras (1959), 169 Cal. App. (2d) 673, 337 Pac. (2d) 866.

 Anno. 170 A. L. R. 368, 374-378; Fidelity & Casualty Co. v. Golombosky (1946), 133 Conn. 317, 50 Atl. (2d) 817, 170 A. L. R. 361.