Butler-Kyser Mfg. Co. v. Mitchell & Co.,

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Notebook

| Ala. | Dec 16, 1915

Lead Opinion

SOMERVILLE, J.

(1) The single question on this appeal is whether, under section 17 of the Bankruptcy Act of 1898, the defendants’ discharge in bankruptcy is a bar to the plaintiff’s action, the gravamen of which is that the defendants fraudulently converted to their own use a certain lot of fertilizer, or its proceeds after sale, which was consigned to the defendants to be sold on commission and accounted for by them as agents of the plaintiff; the title to the fertilizer, except after sale in due course, and thereafter to the proceeds, being specifically reserved to the plaintiff. Section 17 of the act declares that the discharge in bankruptcy relieves the bankrupt from all of his provable debts except such as “ (2)' 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, * * * or (4) were created by his fraud, embezzlement, or misappropriation, or defalcation while acting as an officer or in any fiduciary capacity.”

It is insisted for appellant that the complaint here exhibited makes a case within the exception created by subdivision 4. It has, however, been expressly and specifically settled by the decisions of the Supreme Court of the United States that: “A commission merchant and factor who sells for others is not indebted in a fiduciary capacity within the bankruptcy acts by withholding the money received for property sold by him.”

And further that: “A debt originating or founded upon an open account or upon a contract express or implied is provable against the bankrupt’s estate, though the creditor may have elected to bring his action in trover as for a fraudulent conversion, instead of in assumpsit upon an open account.”

The leading case is Crawford v. Burke, 195 U. S. 177, 25 Sup. Ct. 9, 49 L. Ed. 147" court="SCOTUS" date_filed="1904-11-07" href="https://app.midpage.ai/document/crawford-v-burke-96136?utm_source=webapp" opinion_id="96136">49 L. Ed. 147, which has been followed and cited with approval in the later cases of Tindle v. Birkett, 205 U.S. 183" court="SCOTUS" date_filed="1907-03-25" href="https://app.midpage.ai/document/tindle-v-birkett-96633?utm_source=webapp" opinion_id="96633">205 U. S. 183, 27 Sup. Ct. 493, 51 L. Ed. 762" court="SCOTUS" date_filed="1907-03-25" href="https://app.midpage.ai/document/tindle-v-birkett-96633?utm_source=webapp" opinion_id="96633">51 L. Ed. 762; Grant Shoe Co. v. Laird, 212 U.S. 445" court="SCOTUS" date_filed="1909-02-23" href="https://app.midpage.ai/document/frederic-l-grant-shoe-co-v-w-m-laird-co-96969?utm_source=webapp" opinion_id="96969">212 U. S. 445, 29 Sup. Ct. 332, 53 L. Ed. 591" court="SCOTUS" date_filed="1909-02-23" href="https://app.midpage.ai/document/frederic-l-grant-shoe-co-v-w-m-laird-co-96969?utm_source=webapp" opinion_id="96969">53 L. Ed. 591; and Clarke v. Rogers, 228 U.S. 534" court="SCOTUS" date_filed="1913-05-05" href="https://app.midpage.ai/document/clarke-v-rogers-97871?utm_source=webapp" opinion_id="97871">228 U. S. 534, 33 Sup. Ct. 587, 57 L. Ed. 953" court="SCOTUS" date_filed="1913-05-05" href="https://app.midpage.ai/document/clarke-v-rogers-97871?utm_source=webapp" opinion_id="97871">57 L. Ed. 953.

(2) The effect of a discharge in bankruptcy is strictly a federal question, and we are perforce bound by the decisions of the *243federal Supreme Court in our adjudication of the present appeal. We must therefore affirm the action of the trial court in sustaining the validity of the pleas of discharge.

(3) It is true that it was intimated in the opinion adopted by this court in the case of Ex parte Butler-Keyser Mfg. Co., 174 Ala. 237, 56 South. 960, perhaps without a consideration of the federal decisions, that a discharge in bankruptcy prior to a judgment for plaintiff in this case would not, under subdivision 4 of section 17 of the Bankruptcy Act, bar his claim, and true also that this seems to have been one reason given for denying the writ of mandamus therein prayed for. But it is a misconception of the law of estoppel or res judicata to assume that a reason given in the opinion in that case for dismissing the petition favorably to the trial judge, who was the only adverse party, became “the law of the case” in the present suit so as to bind the defendants and nullify their rights under federal statutes and decisions. Indeed, any ruling to that effect by this court would be nugatory and vain, since it would be promptly set aside on appeal by the federal Supreme Court, as in the case of Crawford v. Burke, supra.

Let the judgment of the circuit court be affirmed.

Affirmed.

All the Justices concur.

Rehearing

ON REHEARING.

In its third replication to defendants’ special plea plaintiff alleges that defendants filed a petition in the bankruptcy court, pending the proceedings there, asking for an injunction to prevent the prosecution of the present suit in the state court, which petition was successfully resisted by plaintiff, and, further, that during the same time plaintiff petitioned said bankruptcy court to delay defendants’ discharge until plaintiff could obtain a judgment at law to subject defendants’ exempt property, which petition was denied. It is further alleged that both these petitions were denied by a decision of the bankruptcy court holding that defendants’ discharge would not be a bar to plaintiff’s suit at law, and that defendants had the benefit of these decisions, and are thereby estopped from pleading the matters shown in their said plea.

(4) The action of the trial court in striking this replication from the files is the subject of the eighth assignment of error.. *244This assignment of error was not referred to in the brief of counsel, either by name or by any allusion to its subject-matter or the questions of law that might be involved. It was therefore treated as abandoned, under the well-settled rules of our practice.

We have treated the questions discussed in the opinion exactly as they were stated and discussed by counsel in their brief, and there can be no just complaint of our failure to discuss other phases of the case which counsel did not themselves deem of sufficient importance to refer to.