Frey v. Torrey

The action is brought to recover the amount deposited by the plaintiff with the defendant, who was a private banker, which deposit was, according to the plaintiff, received by the said banker, although the latter knew he was insolvent at the time of receiving such deposit. The answer is a general denial and a discharge in bankruptcy. The justice gave judgment for the plaintiff for $162.05 damages" and costs. The defendant appeals.

The defendant was a private banker, with whom plaintiff had been making deposits for more than a year. His last deposit was on October 11, 1898. On October 4, 1898, the plaintiff’s total balance with defendant was $1.19, but on October 5th, 6th, 7th, 10th, and nth he deposited sums aggregating $150. However, during the aforesaid days of October, 1898, he withdrew sums aggregating $28, so that at the close of business on October nth he had a balance of $123.19, of which $122 had been deposited by the plaintiff and received by the defendant as such private banker subsequent to October 4, 1898. Other checks were drawn by the plaintiff on the defendant on October 10th, and payment refused, although the amounts were within the limit of the plaintiff’s balance with the defendant. No part of the balance of $123.19 has been paid by the defendant, although duly demanded. On October 13, 1898, the defendant made a general assignment for the benefit of creditors. The assignee only succeeded in collecting about $600 of assets. The plaintiff introduced considerable evidence, both documentary and oral, tending to show that defendant was insolvent at the time that said deposits were made, and that he accepted them with full knowledge of his own in

The judgment, upon the whole case, should be affirmed, with costs.

FREEDMAN, P. J., concurs.

(concurring). Although a literal reading of subdivision^ 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 unaffected by his discharge (In re Lewensohn [D. C.] 3 Am. Bankr. R. 596, 99 Fed. 73 ), 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 ( 2 Stat. 19 ). By the act of 1841, § 1 ( 5 Stat. 440 ), 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 (14 Stat. p. 533, § 33). provided:

“No debt created by the fraud or embezzlement of the bankrupt or by his defalcation as á 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 (section 17) not only provides for cases of fraud, but for other torts (subdivisions 2, 4), and also makes the discharge inoperative as to taxes (subdivision 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. In re 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 re

Judgment affirmed, with costs.