Court Opinion

ID: 8635588
Source: CourtListenerOpinion
Date Created: 2022-11-24 19:44:41.1873+00
Date Added: 2024-06-11T16:55:54.901745
License: Public Domain

BLATCHFORD, District Judge.
It is claimed, on the part of the bankrupt, that the judgment in question is a debt which will be discharged by a discharge under the act; that the original cause of action was merged in the judgment; that the judgment is now the only debt; that it cannot be said, under section 33 of the act, that the debt was created by fraud, because the original claim, though created by fraud, was extinguished by the judgment, and the fraud disappeared when the judgment was obtained; that the judgment alone, and not the claim created by fraud, is provable under the act; that, as the judgment is provable, a discharge will discharge it; that, therefore, the bankrupt is, by the last clause of section 26, exempt from arrest on the judgment during the pendency of the proceedings in bankruptcy; and that, under section 21, the court can enjoin an execution on the judgment.
I cannot assent to these views. The question as to whether the debt which is represented by the judgment was created by the fraud of the bankrupt, I regard as concluded by the judgment. It was recovered in a court of competent jurisdiction, on the per-sqnal service of a complaint setting forth all the facts making up the fraud. The question is, therefore, res adjudicata, as between the parties to the judgment, who are the same parties now before this court.
The only other question is, whether the debt is one excepted by section 33 of the act, from the operation of a discharge. That section provides, that “no debt created by the fraud or embezzlement of the bankrupt, or by his defalcation as a public officer, or while acting in any fiduciary character, shall be discharged under this act.” It is claimed by the bankrupt that, the ddbt in this ease being in the shape of a judgment, this court cannot, in applying the thirty-third section, go behind the judgment, to see whether the claim on which the judgment was recovered was created by fraud; that the judgment, which is now the only debt, was created by the claim, and not by the fraud, and that, although the judgment was created by the claim and the claim by the fraud, yet the judgment was not created by the fraud. This view is unsound. Wherever the debt, no matter whether it be in the shape of a judgment or in any other form, was created by fraud, had its root and origin in fraud, there it is not to be discharged. To hold that the recovery of a judgment in an action where the gravamen of the complaint is fraud, condones that very fraud, by so merging the original claim, that the judgment cannot be said to be a debt created by the fraud set out in the complaint as the ground for recovering the judgment, would fritter away entirely the good sense and plain intention of the thirty-third section. The case of Bangs v. Watson, 9 Gray, 211, cited to sustain this view, does not, in my judgment, support it, and I have been referred to no case which leads to any such conclusion.
The debt, in this case, not being one to be affected by a discharge, the bankrupt is not exempt from arrest upon it-, and the application is denied.