Court Opinion

ID: 8781771
Source: CourtListenerOpinion
Date Created: 2022-11-26 13:21:28.096676+00
Date Added: 2024-06-11T17:02:52.195222
License: Public Domain

PARDEE, Circuit Judge
(dissenting). In the opinion of the court the case is fairly stated and disc'ussed, but I do not agree with the disposition made of it. There is nothing in the bankruptcy act of 1898 and amendments thereto which in my judgment expressly or impliedly lixnits and restricts any “person who owes debts” to one petition to be adjudged a voluntary bankrupt. On the contrary, the fourteenth section seems to actually 'contemplate the filing of a second petition. In Bluthenthal v. Jones, 208 U. S. 64, 28 Sup. Ct. 192, 52 L. Ed. 390, the Supreme Coxxrt holds that in a case where a discharge upon objection of a creditor was refused on the first petition, and a *39second petition was filed and thereon a discharge granted releasing the bankrupt from debts that were provable under the statute at the time of the first proceeding, the discharge was valid, because not opposed. And in the present case, the second petition, although practically denied, is not dismissed.*
So I take it a bankrupt may make more than one application to be released from his debts, and, if he may, then on a second petition he is entitled to the discharge from all provable debts, as declared in the bankruptcy law.
In JBluthenthal v. Jones, supra, the court says:
“Section I of Hie bankruptcy act defines a discharge as ‘the release of a bankrupt from all of his debts which are1 provable in bankruptcy, except such as are excepted by this act.’ Section 14 of the amended art, which was applicable to the second proceedings, provides that after due hearing the court shall discharge the bankrupt, unless he has committed one of the six acts specified in that section. Section 17 of the amended acts provides that a discharge in bankruptcy shall release a bankrupt from all of his provable debts, with four specified exceptions, which do not cover tills case. The discharge appears to have been regularly granted, and as the debt due to Hluthoni hal & Bickart is not one of the debts which, by the terms of the statute, are excepted from its operation, on the face of the statute the bankrupt was discharged from the debt due to them.”
What debtor shall be discharged in bankruptcy is a question of public policy exclusively vested in the Congress when it sees proper to act as it has done in the act of 1898, and it is not within the province of the courts to enlarge the disabilities or restrict the relief provided in the statute.
As noted in Bluthenthal v. Jones, supra, section 14 of the bankruptcy act as amended by Act Feb. 5, 1903, c. 487, § 4, 32 Slat. 797 (U. S. Comp. St. Supp. 1909, p. 1310) provides:
“(b) The judge shall hear the application for a discharge and such proofs and pleas as may be made in opposition thereto by the trustee or other parties in interest, at such time as will give the trustee or parties in interest a reasonable opportunity to be fully heard,’and investigate the merits of the application and discharge the applicant unless he has (4) committed an offense punishable by imprisonment as herein provided; or (2) with intent to conceal his financial condition, destroyed, concealed, or failed to keep books of account or records from which such condition might be ascertained; or (3) obtained money or property on credit upon a materially false statement in writing, made by him to any person or representative for the purpose of obtaining credit from such person; or (4) at any time subsequent to the first day of the four months immediately preceding the filing of the petition, transferred, removed, destroyed, or concealed, or permitted to be removed, destroyed, or concealed any of his property with intent to hinder, delay, or defraud his creditors; or (5) in voluntary proceedings been granted a. discharge in bankruptcy within six years; or (6) in the course of the proceedings in bankruptcy refused to obey any lawful order of or to answer any material question approved by the court.”
To this law my brethren practically add a clause like this: (7) Some time previous been adjudicated a bankrupt, and failed in that proceeding to apply for a discharge. To thus hold, my brethren rely upon decisions of courts in other circuits, and the cases cited are of two classes: (1) Where in a previous bankruptcy proceeding application for a discharge had been applied for and refused; (2) where in the previous bankruptcy proceeding no application for discharge *40was made. In these cases, the reasons for not applying do not appear, except in one — In re Stone (D. C.) 172 Fed. 947 — where it was said that it was through the neglect of the bankrupt’s attorney. In the first class — In re Fiegenbaum, 121 Fed. 69, 57 C. C. A. 409, and others following — I concur. In those cases the issue of discharge or not was made. The court tried the same and decided as to the right. This view is supported by the argument in Bluthenthal v. Jones, supra. In the second class, I am not in accord with the reasoning and do not think those cases should be followed.
It is not clear how where no issue is made and no question presented, nor any decision rendered, there can be “a thing judicially decided” or “a matter adjudged.” An estoppel under the statute might be claimed if there were anything in the statute to base it on; but, as said above, I do not find it there. As the statute leaves it optional with the bankrupt to apply for a discharge, in cases where he does not apply there is no estoppel by record nor by judgment. In this case it does not appear that the proceedings on appellant’s first petition have ever been closed by judgment of any kind.
In fixing the time in which a discharge could be applied for, it was not intended by the lawmaker to provide a hard and fast rule which would prevent relief to unfortunate debtors who, because of negligence attributable to inexperienced and careless attorneys, or to sickness and poverty and other calamities that litigants frequently suffer from, fail to apply promptly for a discharge; but the lawmaker was so far looking to the interest of creditors with provable debts as to obviate the necessity, if they wished to oppose the discharge, of watching the case indefinitely. A subsequent petition would require notice to the creditors. Therefore it is easily seen why the time limit should be enforced and the bankrupt remitted to another proceeding, as was actually the method followed in the early cases. In re Wolff (D. C.) 100 Fed. 430; In re Claff (D. C.) 111 Fed. 506; In re Fahy (D. C.) 116 Fed. 239.
It seems to be objected to the appellant, and therefore as prejudicing his right to a discharge under a petition filed more than six years after his first, that his new schedules show old and new debts, but no assets. It is generally understood that under the bankruptcy law debts are essential, assets non-essential.
The majority opinion concludes as follows:
“If the court below bad no authority to incorporate in the order granting the discharge the exception complained of, no injury can result therefrom to the bankrupt, for, in that ease, the exception would be a nullity, leaving the discharge unconditional, and it could he pleaded with unimpaired effect in an action to enforce the appellee’s claim.”
The effect of this is to turn over the matter of appellant’s discharge to be litigated in any court where his creditors see fit to sue him. I think the bankruptcy law was intended to release the provable debts of every unfortunate debtor entitled to the benefit of its provisions.
In my opinion, the appellant is entitled to a discharge in the form (section 59) prescribed by the Supreme Court, and with no other exceptions attached.