135 Ky. 140 | Ky. Ct. App. | 1909
Opinion of the court by
Revers- • ing.
Tn November, 1902 the appellants W. S. and J. B. Dycus and S. H. Cassidy, now deceased composing the firm of S. IT. Cassidy & Co., entered into a contract
There does not seem to be any serious dispute concerning the fact that the sale of the tobacco resulted in a loss, or the amount of it; but appellants insist that the discharge in bankruptcy released them from all liability to Brown and Bloom growing out of the tobacco transactions and that the .judgment against Mrs. M. A. Cassidy was erroneous.
Taking up first the question as to the liability of Mrs. M. A. Cassidy, her connection with the transaction arose in this way: In December, 1907, her husband, S. H. Cassidy, conveyed to her all his real and personal estate, and in consideration thereof she agreed “to meet and comply with all his obligations so far as the property herein conveyed may enable her to do and comply with them.” And it was averred in the petition of Brown and Bloom that “the valué of the property so conveyed to and received by Mrs. Cassidy was more than sufficient to satisfy the claim of Brown and Bloom, and all other obligations of S. H. Cassidy, and that Mrs. Cassidy took said property in trust for the purpose of discharging the obliga
Cassidy & Co. — and for purposes of brevity we include Mrs. Cassidy- — set up in their answer that prior to their adjudication in bankruptcy they agreed with Brown and Bloom that the latter would take all of the tobacco that had been purchased by Cassidy & Co. for the firm “for better or worse,” and pay all debts and expenses growing out of the purchase and sale of the tobacco; and, in consideration of this undertaking on the part of Brown and Bloom, Cassidy ¿c Co. surrendered all interest they had in the tobacco and thereafter did not concern themselves about it, but treated the tobacco as the sole property of Brown and Bloom. They further averred that because of the agreement and transfer of the tobacco to Brown and Bloom it was not mentioned in the schedule filed by them in bankruptcy proceedings. All this was denied in a reply filed by Brown and Bloom. On the issue of fact thus presented the evidence is conflicting, but in the view we have of the case it does not seem important to further consider this phase of it.
As it is conceded that Brown and Bloom had actual notice of the adjudication in bankruptcy, and all the steps taken in the bankruptcy proceedings, they occupied towards the bankrupts the same attitude as if they had been mentioned in the petition in bankruptcy as creditors of Cassidy & Co. Jones v. Walter, 115 Ky. 556, 74 S. W. 249, 24 Ky. Law Rep. 2459.
Tn the assumption that Brown and Bloom did not have a provable debt against Cassidy & Co., in October, 1903, we cannot agree. Bloom was asked the following questions: “Q. Tell whether at the time of the filing of the petition in bankruptcy, or the composition that was made, it was known whether or not the partnership venture engaged in between you, Mr. Brown, and the defendants would result in a profit or a loss. A. I expected it to be a loss — in fact, I knew it. Q. Was it known at that time whether there would be a profit or a loss'? A. Not exactly; the account was not closed up yet. It was open, and some tobacco had to be sold yet.” From this it appears that Brown and Bloom knew at the time Cassidy & Co. filed their petition in bankruptcy that there would be a loss, and consequently an indebtedness due by Cassidy & Co. to them, although the amount of it was not then ascertained. The mere fact that the total amount of the loss was not then ascertained, or the fact that it could not be ascertained until all of the tobacco was sold, did not, in
That there is some confusion and apparent conflict in the cases as to what are and are not provable debts, and “as to the proper meaning of the words, “unliquidated claims,” must be conceded, but the weight of authority favors tlie view we have taken. Thus, in the case of In re Hilton (D. C.) 104 Fed. 981, the facts were that in November, 1895, Johnson made a
In considering the case the court said: “It only remained to liquidate the amount of the damages arising out of the breach of contract to make it provable like any other debt. Section 63b expressly provides for the proof of such claims to be liquidated ‘in such manner as the court shall direct. ’ Having made this provision, it is impossible to suppose that it was the intent of the act to allow a creditor voluntarily io withhold such claim from liquidation, and thereby preserve it as a claim against any subsequently acquired property, and thus practically defeat the object of the bankrupt act as respects the debtor; to free him from the load of former obligations. Section 17 provides that the discharge shall release the bankrupt from all his ‘provable debts.’ A provable debt as here used means in my judgment any claim thát the creditor may make provable through the means provided by section 63b. * * * I cannot doubt that the intent of these words ‘claim provable in bankruptcy’ was to include every claim that under the provisions
'In Dunbar v. Dunbar, 190 U. S. 340, 23 Sup. Ct. 757, 47 L. Ed. 1084, in considering the proper construction of the words “unliquidated claims” in the bankrupt act, the court, said: “In section 63b provision is made for unliquidated claims against the bankrupt, which may be liquidated upon application to the court in such maner as it shall direct, and may
Although the precise question presented in the case before us was not involved in the cases mentioned, the reasoning of the court supports the view we have taken.
Nor does the fact that the claim grew out of a partnership venture which must be settled add anything- to the strength of the argument presented by Brown and Bloom that it was not necessary to assert their claim in the bankrupt court. It may be conceded that. Brown and Bloom had the right to settle the partnership business, but it is also manifest that it was their duty to report the settlement made to the bankrupt court. If a profit had been realized on the
"Wherefore the judgment is reversed, with directions to dismiss the petition.