Court Opinion

ID: 8192505
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:15:36.86721+00
Date Added: 2024-06-11T16:40:39.319739
License: Public Domain

Eschweilbe, J.
(dissenting). I cannot concur on certain of the points decided in the majority opinion.
It is there held that the lien obtained tinder sec. 3116», Stats., is rendered null and void under sec. 61 f of the national bankruptcy act so far only as it affected the salary due at the time of filing the petition in bankruptcy.
Whatever right the plaintiff creditor obtained under sec. 3716a was obtained by legal proceedings within four months priol to bankruptcy and was not the subject of waiver or contract. Such right or interest, therefore, and the whole thereof, became null and void, and the property or interest, or whatever it. might be that was affected thereby, was “wholly discharged and released” by virtue of said sec. 67 /. There is no provision in this section for any partial release, any more than there can he a separation of exempt and nonexempt property. Chicago, B. & Q. R. Co. v. Hall, 229 U. S. 511, 33 Sup. Ct. 885; Globe B. & T. Co. v. Martin, 236 U. S. 288, 35 Sup. Ct. 377; People’s Nat. Bank v. Maxson, 168 Iowa, 318, 150 N. W. 601. It became so wholly discharged and released by virtue of a federal statute, and thereupon both the state officials and state courts must give up any control over the same. It cannot, therefore, be shifting from *444federal to state courts, dead in one and practically alive in the other.
Again, it is held by the majority opinion that the defendants’ tort liability, having developed into a judgment, thereupon becomes a provable debt in the bankruptcy proceedings under sec. 63 of the bankruptcy act. But a change in form by the rendition of the judgment does not alter the nature of the obligation. Boynton v. Ball, 121 U. S. 457, 466, 7 Sup. Ct. 981. The court may, and should, look behind the judgment to determine the nature of the obligation which has been reduced to judgment. Wetmore v. Markoe, 196 U. S. 68, 72, 25 Sup. Ct. 172; Bever v. Swecker, 138 Iowa, 721, 116 N. W. 704; 1 Loveland, Bankr. (ed. 1912) § 296, p. 613. A tort claim such as this was before judgment is not a provable debt. Eberlein v. Fidelity & D. Co. 164 Wis. 242, 245, 159 N. W. 553. I fail to find anything that indicates that its nature is changed by merely making it a judgment.
The word “debt” is the dominant feature of this sec. 63. 1 Loveland, Bankr. (ed. 1912) § 296, p. 614; Id. § 325, p. 669. Judgments only, therefore, which can be construed as debts, that is, founded upon a transaction involving a contract, express or implied, should be held within the contemplation of this sec. 63. Much seeming confusion appears in many of the authorities in determining whether or not the word “judgment” may mean the same as “debt,” yet much of this apparent conflict arises from the difference in the situations and varied viewpoints as to the word “debt.” Although it is sometimes said that a judgment establishes a legal obligation to pay the amount recovered, yet this is a mere fiction, which does not convert a transaction wanting the assent of parties, express or implied, into one which necessarily implies consent. Louisiana v. Mayor, etc. 109 U. S. 285, 288, 3 Sup. Ct. 211.
Such a judgment does not become a debt or contract for which directors of a corporation became liable under a stat*445ute charging them with its debts and contracts. Savage v. Shaw, 195 Mass. 571, 81 N. E. 303. Neither would it seem that a tort judgment can become such a debt that there then comes into existence, by reason of its being a judgment, a new contract, express or implied, for its payment by the debtor; for, were it a contract, then there could not be imprisonment upon execution therefor, as it has been so repeatedly held that there may be by this court in spite of sec. 16, art. I, Const., providing that “No person shall be imprisoned for debt arising out of or founded on a contract, expressed or implied.”
In cases where, from the nature of the transaction, either an action on contract or an action for fraud may be brought, a judgment in form as though upon fraud may nevertheless be treated as from its contract side and therefore as a provable debt. Kreitlein v. Ferger, 238 U. S. 21, 35 Sup. Ct. 685; Crawford v. Burke, 195 U. S. 176, 25 Sup. Ct. 9; Frederic L. Grant S. Co. v. W. M. Laird Co. 212 U. S. 445, 29 Sup. Ct. 382. Just as such a judgment may be a debt against an estate. Lothrop v. Parke, 202 Mass. 104, 88 N. E. 666.
There is no apparent reason why the. term “unliquidated claim,” found in a further subdivision of sec. 63, might not as well be 'construed a claim for tort as the term “judgment” in the preceding subdivision, but a tort is never provable under the provision as to unliquidated claim's. Brown & Adams v. United B. Co. 149 Fed. 48; In re New York T. Co. 166 Fed. 284.
Neither can I agree with the proposition that such judgment is dischargeable under sec. 17 of the bankruptcy act. To be discharged it must be both provable, that is, susceptible of being proved, and it must not be within the exceptions of that section. Crawford v. Burke, 195 U. S. 176, 186, 25 Sup. Ct. 9. So if it be not provable under sec. 63 the inquiry need go no further. Trouble arises from the fact that *446in the specification of exceptions in sec. 17 there is mentioned, first, that the discharge is a release from all “provable debts” except, etc.; and secondly, that in the list of exceptions so mentioned are liabilities which are in the nature of torts without any element of contract, such as wilful and malicious injury to person or property, etc.
Attention to this diificulty of construing secs. 63 and 17 is called by the compilers of the U. S. Comp. Stats. 1916, vol. 9, p. 11611; and in Collier on Bankruptcy (11th ed. 1917), p. 427, where it is suggested that this negative provision in sec. 17 as to certain torts does not of itself make other torts provable debts within the scope of sec. 63. To the same effect is 1 Loveland on Bankruptcy (ed. 1912) § 296, p. 614.
In Brown & Adams v. United B. Co. 149 Fed. 48, this diificulty is fully dwelt upon and it was there held that in sec. 63 is found the controlling provision as to what are provable debts. This construction also apparently receives at least a negative indorsement from the definition given of provable debts in Williams v. U. S. F. & G. Co. 236 U. S. 549, 556, 35 Sup. Ct. 289, where it is said that such provable debts include all liabilities founded upon contract, express or implied.