Court Opinion

ID: 5407656
Source: CourtListenerOpinion
Date Created: 2022-01-08 16:04:04.259465+00
Date Added: 2024-06-11T08:30:39.077323
License: Public Domain

McAdam, J.
(concurring). Although a literal reading of subdivision 4 of section 17 of the Bankruptcy Law causes a doubt to arise, as to whether debts created by the fraud of a bankrupt, who is not an officer or one acting in a fiduciary capacity, are *218unaffected by his discharge (Matter of Lewensohn, 3 Am. Bank. Reg. 596), a careful reading of that subdivision in the light of former bankruptcy acts indicates that such debts are not affected by a discharge in bankruptcy.
A reference to the former statutes is instructive as showing the development of the scheme of exemption from the operation of the law.
There was no express provision for exemption in the act of 1800.
By the act of 1841 (§ 1) the debts not released by a discharge were “ debts created in consequence of a defalcation as a public officer; or as executor, administrator, guardian or trustee, or while acting in any fiduciary capacity.”
The act of 1867 (§ 33) provided: “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; but the debt may be proved, and the dividend thereon shall be a payment on account of said debt.
It will be noticed that the last mentioned statute adds fraud or embezzlement of the bankrupt, who may not be a public officer or occupy a fiduciary relation, to the cases provided for by the act of 1841.
That part of the present act devoted to exemptions (§ 17) not only provides for cases of fraud but for other torts (subds. 2, 4), and also makes the discharge inoperative as to taxes (subd. 1), and as to claims not scheduled in time, unless the creditor had actual knowledge or notice of the proceedings in bankruptcy.
Under the act of 1867 doubts arose whether a judgment for fraud by merger of the original debt did not make the bankrupt’s discharge operative upon the debt. Matter of Lewensohn, supra. Apparently to dispel such doubts subdivision 2 of section 17 of the present statute was enacted, providing that the bankrupt’s discharge shall not release him from provable debts which are “ judgments in actions for frauds, or obtaining property by false pretenses or false representations, or for willful and malicious injuries to the person or property of another.”
And subdivision 4 of said section of the statute is, in substance, a re-enactment of the analogous provision of the former act. Collier Bank. (3d ed.) 198.
It appears to have been the legislative intent to prevent bank*219ruptcy from being interposed as a shield against fraud, irrespective of the fact whether the creditor has obtained a judgment for the fraud or not.
Judgment affirmed, with costs.