Dusenbury v. Hoyt

Headnote

Cause of Action.—Discharge in Bankruptcy.— Hew Promise.—Pleading.

In an action to recover a debt which has been discharged in bankruptcy, and subsequently made the subject of a new promise, the new promise must be specially pleaded as the cause of action.

A discharge in bankruptcy absolutely extinguishes the debts on which it operates; and a new promise is not, as in the case of the statute of limitations, a mere waiver, but is the only cause of action; and ' the original debt is merelv the consideration that gives validity to the new promise.

Appeal from a judgment and an order denying a new trial.

Benjamin Gr. Dusenbury, executor, &c., of Catherine Corwith, sued Mark Hoyt, in this court.

The complaint set up the making of a promissory note for five thousand dollars in Hovember, 1865, and stated that in May, 1867, five thousand four- hundred and ninety-five dollars and eighty-three cents, was due thereon, and the defendant then paid three thousand dollars upon it, and in April, 1871, the further sum of one hundred dollars, leaving then unpaid upon the note the sum of three thousand and eighty-two dollars seventy-six cents.

The answer admitted the making of the note, and the payment in May, 1867, but denied the alleged payment of one hundred dollars in 1871 upon the note, and . set up as a further defense, the fact that the defendant

was in September, 1868, duly discharged from all debts and claims against him by a decree of a United States court in a certain voluntary bankruptcy proceedings. There was no replication.

Upon the trial, the defendant proved his discharge in bankruptcy, and rested.

The plaintiff then offered evidence to prove that subsequent to the decree in bankruptcy the defendant had both orally and in writing, promised to pay the sum remaining unpaid upon the note; which was excluded by the court upon the ground that the action was founded upon the note itself, and not upon any new promise or undertaking subsequent to the discharge in bankruptcy.

There being no further evidence, the court directed a verdict for the defendant, and he had judgment.

The plaintiff moved at special term for a new trial, which was denied, the following opinion being rendered :

Feeedman, J. J.—It It seems to be well settled that different principles apply to cases of defenses of the statute of limitations and of a discharge under the bankrupt act. The former statute operates upon the remedy merely, and does not extinguish the debt; a discharge in bankruptcy absolutely releases and extinguishes the debt.

Under the statute of limitations, where no statutory provision, to the contrary intervenes, a new promise may be implied, but after a discharge, it must be so express, clear and unequivocal, as to show that the promisor intended absolutely to waive the protection of his discharge and to rebind himself, legally, to pay the old debt (Depuy v. Swart, 3 Wend., 139 ; Lynburg v. Wightman, 5 Esp., 198 ; Horner v. Speed, 2 P. & H. [Va.], 616 ; Evans v. Carey, 29 Ala., 99 ; Fleming v. Haynes, 1 Stark., 370 ; Musklan v. St. John, 4 Tenn.,

513 ; Beach v. Wood, 13 Price, 667 ; Cambridge v. Littlefield, 6 Cush., 213 , per Dewey, J).

Thus, while in section 110 of the New York Code it it is enacted, that the effect of any payment of principal or interest shall not be altered by the provision, that no acknowledgment or promise shall be sufficient evidence of a new or continuing contract, whereby to take the case out of the operation of the statute of limitation, unless the same be contained in some writing, signed by the party to be charged thereby ; it has been held in cases which arose under the bankrupt law, that partial payments are not a new promise, nor the equivalent of a new promise (Stark v. Stimson, 3 Fost., 259 ; Viele v. Ogilvie, 2 Greene, 326 ) ; and that payment of interest by the maker, on a note from which he had been discharged, did not revive the liability to pay the note (Cambridge, &c. v. Littlefield, 6 Cush:, 210).

Upon the question, however, whether a new promise, after the discharge, creates a new and substantial cause of action, or operates merely as a waiver by the promisor of a defense with which the law has furnished him against an action on the old promise or demand, there is a marked conflict of authority. But, upon the principles decided in Depuy v. Swart, 3 Wend., 125 , and Stafford v. Bacon, 1 Hill, 533 , under the old practice of this State, and in Stearns v. Tappin, 5 Duer, 294 , 299, under the Code, and the reasoning of Corson v. Osborn, 10 B. Mon., 115 ; Field’s Case, 2 Rawle, 351 , and Graham v. Hunt, 8 B. Mon., 7 , I feel constrained to hold, that in every case the action must be founded upon the precise and positive new promise made after the discharge, and that the original debt is to be considered merely as the consideration that gives validity to the new promise.

From this it follows that, inasmuch as under the Code the plaintiff is required to set out the facts con

stituting Ms cause of action, and notMng else, the said new promise must be specially pleaded as the basis of the action.

■ This not having been done in thé case now before me, the rulings made at the trial must be affirmed.

As to the admissibility and effect of defendant’s discharge, I need only point out that the court of appeals, in Ocean National Bank v. Olcott, 46 N. Y., 15 , expressly held that, pursuant to the provisions of the bankrupt act of 1867, the certificate is conclusive evidence, in favor of the bankrupt, of the fact and the regularity of the discharge, and that the same cannot be questioned on the ground that it was improperly granted, in any other mode, nor in any other court, than prescribed in the act.

Motion for a new trial denied, with costs.

Judgment having been entered, the plaintiff appealed, both from the judgment and the order denying a new trial.