159 F. 688 | 2d Cir. | 1908
The question in this case is whether unliquidated claims, like the petitioners’ demands, founded upon torts are provable against a bankrupt estate.
Section 11a of the bankrupt law (Act July 1, 1898, c. 541, 30 Stat. 549 [U. S. Comp. St. 1901, p. 3426]), provides:
“A suit which is founded, upon a claim from which a discharge would ho a release', and which is pending against a person at the time of the filing of a petition against him, shall he stayed until after an adjudication or the dismissal of the petition; if such person is adjudged a bankrupt, such, action may be further stayed until twelve months after the date of such adjudication, or, if within that time such person applies for a discharge, then until the question of such discharge is determined.”
Thus the act only authorizes the restraining of .suits founded upon claims “from which a discharge would he a release.” But unless a claim is provable against a bankrupt estate, it is not discharged, and, consequently, is not subject to the control of the bankruptcy court.
Paragraph “a” of section 63 enumerates the debts of the bankrupt which may be proved against his estate. Tt includes debts founded upon (1) judgments and written instruments; (2 and 3) taxation of costs; (4) open accounts or express or implied contracts; (5) certain judg
Paragraph “b” provides:
“Unliquidated claims against the bankrupt may, pursuant to application to the court, be liquidated in such manner as it shall direct, and may thereafter be proved and allowed against his estate.”
This paragraph evidently relates to procedure. It provides for the liquidation of such of the claims enumerated in the preceding paragraph, e. g., for breach of contract, as might require such process. The one paragraph particularly enumerating the debts which are provaable, we see no ground for holding that the other opens the door to unliquidated demands of every nature. Moreover, any question about it seems to be settled by the decision in Dunbar v. Dunbar, 190 U. S. 350, 23 Sup. Ct. 757, 47 L. Ed. 1084:
“In section 63b provision is made for unliquidated claims against the bankrupt, which may be liquidated upon application to the court in such manner as it shall direct, and may thereafter be proved and allowed against his estate. This paragraph ‘b,’ however, adds nothing to the class of debts which might be proved under paragraph ‘a’ of the same section. Its purpose is to permit an unliquidated claim, coming within the provisions of section 63a, to be liquidated as the court should direct.”
While the Supreme Court in the later case of Crawford v. Burke, 195 U. S. 187, 25 Sup. Ct. 9, 49 L. Ed. 147, stated that another construction of the paragraph was possible, we do not understand that they adopted it. It is urged, however, that a different construction should be adopteddn view of an amendment to section 17 — relating to discharges — adopted in 1903. Act Feb. 5, 1903, c. 487, § 5, 32 Stat. 798 [U. S. Comp. St. Supp. 1907, p. 1026]. This section as originally . adopted provided as follows:
“A discharge in bankruptcy shall release 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 wilful and malicious injuries to the property or person of another. * * * ”
Judgments rendered before bankruptcy whether based upon liability for tort or contract are expressly provable under section 63a. The exception in section 17 was to prevent judgments for certain torts being discharged.
In 1903 section 17 was amended in various ways. One change was the substitution of the word “liabilities” in place of the word “judgments.” And the provision as it now stands affords some basis for the claim that the exception from the operation of the discharge of particular liabilities for tort implies that such liabilities in general are not discharged. But this implication does not carry far. The amendment was to an exception in the discharge statute which states what debts shall not be discharged rather than what shall be. A negative provision that liabilities for certain torts shall not be discharged does not, of itself, make all other tort liabilities provable debts. It is apparent that Congress by the amendment intended to preclude the possibility of claims for certain torts being discharged, whether reduced to judgment or not. Having that object in view, it used language not wholly in
The petitioners also ask the court to declare that the District Court had no jurisdiction of the whole bankruptcy proceedings because the corporation was not of the classes subject to be adjudicated bankrupts. But the petitioners have only petitioned this court to review the two restraining and reference orders. All they urged in the District Court upon the jurisdictional question was by way of objection to the granting of these orders. They sought to escape from the bankruptcy proceedings. Upon the record as it stands, we can do no more than let them go.
The orders of the District Court ate reversed, with costs.