Strang v. Bradner

• Citation: 5 S.Ct. 1038,114 U.S. 555,29 L.Ed. 248
• Parties: STRANG and others v. BRADNER and another
• Decision Date: 04 May 1885
• Court: United States Supreme Court

114 U.S. 555

5 S.Ct. 1038

29 L.Ed. 248

STRANG and others v. BRADNER and another.

May 4, 1885.

G. H. Forster, for plaintiffs in error.

Wm. F. Cogswell, for defendants in error.

HARLAN, J.

On the first day of June, 1877, each of the appellants, who were defendants below, received from the district court of the United States for the Southern district of New York his discharge from all debts and demands, which, by the Revised Statutes of the United States, title 'Bankruptcy,' were made provable against his estate, and which existed on the third day of July, 1875,—other than such debts as were by law excepted from the operation of a discharge in bankruptcy. The statute excepts from the operation of a discharge any 'debt created by the fraud or embezzlement of the bankrupt, or by defalcation as a public officer, or while acting in a fiduciary capacity; but the debt may be proved, and the dividend thereon shall be a payment on account of such debt.' Rev. St. § 5117. To this action, brought by appellees against appellants upon a cause of action accruing prior to July 3, 1875, the latter made defense, in part, upon the ground that their respective discharges in bankruptcy relieved them from all liability to plaintiffs. In the supreme court of New York there was a verdict and judgment in favor of the plaintiffs for the sum of $17,517.86. That judgment having been affirmed in the court of appeals, the question to be determined upon this writ of error is whether the claim or demand of the plaintiffs is one from which they were relieved by their discharges in bankruptcy. If the debt was of that character, the judgment below must be reversed; otherwise, affirmed.

The evidence before the jury tended to establish the following facts: That for some years prior to June, 1875, the plaintiffs were doing business in he city of Rochester, New York, as partners, under the style of Lowery & Bradner, while, during the same period, the defendants were engaged in business in the city of New York, under the style of Strang & Holland Bros.; that the special business of plaintiffs was the purchase of wool, which they forwarded to the defendants, as commission merchants, to sell on account; that plaintiffs, for the accommodation of defendants, often furnished them with promissory notes, for the purpose of enabling them to carry on business; that the defendants took care of these notes, paying the same at maturity out of the proceeds of the property consigned, and with money remitted by the plaintiffs; that in the transactions between the parties the plaintiffs were credited with those notes, with the proceeds of property sold on their account, and with money remitted by them, and were charged with the amounts paid to take up the notes; that on or about March 1, 1875, the defendants requested the plaintiffs to furnish them with four promissory notes, of about $4,000 each, to enable them to raise money thereon, and to be credited to plaintiffs on their account, in accordance with the course of business existing between the parties,—such notes to be of odd amounts, and made as of different dates, before the time they were transmitted to the defendants, so that they might appear to be given for real indebtedness; that, pursuant to that request, the plaintiffs made and transmitted to defendants their four promissory notes, for $4,325.50, $4,326.25, $4,327.13, and $4,327.15 each, at four months, dated, respectively, on the first, ninth, fifteenth, and twentieth days of February, 1875, and each payable to the plaintiffs at the office of the defendants, in the city of New York, and indorsed by the plaintiffs; and that, on or about April 4, 1875, Strang represented to plaintiffs that his firm had not used, nor been able to use, those notes, because they were made payable at their office, and requested plaintiffs to lend them four other notes of the same amount, payable at the Metropolitan National Bank, in New York city, to be used in the place of those dated in February.

There was also evidence tending to prove that the plaintiffs, relying upon the representation that the February notes had not been used, and that the defendants desired other notes to be used in their place, executed and delivered to the latter four other promissory notes, each at four months, for $4,850, $4,951.25, $4,860.30, and $4,970, respectively, dated thirteenth, fourteenth, sixteenth, and twentieth of March, 1875, payable four months after date to their own order at the Metropolitan National Bank, New York, and by them indorsed; that, at the time defendants requested to be furnished with the notes last described, they had, in fact, discounted and put in circulation the February notes, whereby the plaintiffs, as makers and indorsers, were compelled to pay the same to the holders; that when Strang applied for the March notes, the defendants knew that they were insolvent, but that fact was not known to plaintiffs; that he made such representations and procured said notes with the intent to defraud the plaintiffs; and that the latter was compelled to pay such part of the March notes as amounted, principal and interest, to the sum for which they obtained judgment below. In the misrepresentations made by Strang to Lowery & Bradner there was no active participation by his partners, the Messrs. Holland. But it was proven that the proceeds of the notes last obtained from plaintiffs, as well as the proceeds of the February...