In re Bernard

280 F. 715 | 2d Cir. | 1922

PER CURIAM.

[1,2] To expunge a debt or the statement of a debt from a bankrupt’s schedules, and to enjoin him from applying for a discharge in respect of such debt, is a novel procedure, for which no authority has been produced. It ís opposed to the theory of the Bankruptcy Act. The lower court evidently thought the debt not dis-chargeable, and for this reason entered the order above recited. But it is the duty of a bankrupt (section 7 [8], being Comp. St. § 9591) to file schedules containing “a list of his creditors,” and one to whom he owes an undischargeable debt is as much a creditor as is one whose claim may be discharged under the act.

A bankrupt is lawfully entitled to ajoply for a discharge under-section 14 (Comp. St. § 9598), and by section 17 (Comp. St. § 9601) such discharge shall release him “from all of his provable debts” with the exceptions there enumerated; and the prescribed form of discharge (No. 59) merely orders that the bankrupt “be discharged from all debts and claims which are made provable by said acts against his estate,” etc. To strike out from a schedule what the bankrupt swears is a debt is a power nowhere given to the District Court, and by anticipatory order to prevent application for discharge in respect thereof is (1) an _ implied departure from the statutory procedure which contemplates a discharge in the form laid down by the Supreme Court; and (2) an assumption of power to declare what shall be the effect of a discharge which as pointed out in Re Havens (C. C. A.) 272 Red. 975, is a function of the court in which any given claim or debt or demand is advanced, and not of the bankruptcy court. The latter tribunal issues the discharge; the effect thereof is to be passed upon in the court in which it may be pleaded.

[3] Thus the major and more important portions of the order complained of are erroneous and must be reversed. As to the stay or the lifting thereof, that under section 11 (and see Collier on section 11a) is largely discretionary. Proceedings on a plainly nondischargeable debt cannot be stayed; yet, where the question is debatable, a stay may be granted until the bankrupt shall have had a reasonable time within which to procure that discharge, which he must have in order to present to the proper tribunal the status of the debt in suit.

It is therefore directed that the order appealed from be reversed, with costs, without prejudice to any further proceedings in the court below in respect of a stay under section 11.