Burleson v. Langdon, 26566.
| Decision Date | 13 April 1928 |
| Docket Number | No. 26566.,26566. |
| Citation | 174 Minn. 264,219 N.W. 155 |
| Parties | BURLESON v. LANGDON. |
| Court | Minnesota Supreme Court |
Appeal from District Court, Hennepin County; Mathias Baldwin, Judge.
Action by H. L. Burleson against William C. Langdon. From a judgment for defendant plaintiff appeals. Affirmed.
Johnson & Simons, of Sioux Falls, S. D., and Richard Converse, and Todd, Fosnes & Sterling, all of St. Paul, for appellant.
Wendell Hertig, Henry C. Carlson, and Fowler, Carlson, Furber & Johnson, all of Minneapolis, for respondent.
In this action on a series of promissory notes, aggregating in principal $5,082.45, defendant had judgment and plaintiff appeals.
The case is here on a bill of exceptions, duly certified to present "all the proceedings had at the trial." The judgment was in fact ordered upon the pleadings supplemented by certain concessions and admissions by counsel. To the granting of the motion for judgment, plaintiff excepted. The record was made with the intention of presenting the questions about to be discussed. Nothing more need be said with respect to certain technical objections raised in argument.
The execution and delivery of the five notes for a valuable consideration in July, 1914, is admitted. They matured, one on January 1st each year from 1920 to 1924, inclusive. The answer pleads defendant's discharge in bankruptcy. Admitting that discharge, the reply seeks to show that the debt was not dischargeable under 11 USCA § 35, the material provisions of which are:
"A discharge in bankruptcy shall release a bankrupt from all of his provable debts, except such as * * * (second) are liabilities for obtaining property by false pretenses or false representations, or for willful and malicious injuries to the person or property of another, * * * or (fourth) were created by his fraud, embezzlement, misappropriation, or defalcation while acting as an officer or in any fiduciary capacity."
The substance of the reply is that plaintiff had placed with a corporation, engaged in a brokerage and investment business, considerable sums of money for investment, of which $5,185.85 was wrongfully converted by the corporation; and that defendant, as a large stockholder and managing officer of the corporation, actively participated in the conversion. It is not charged that he was personally enriched, but instead that the money was used "in payment of corporate obligations." It is alleged further that, the corporation becoming insolvent and defendant, recognizing his personal obligation to plaintiff, "voluntarily made, executed and delivered" to plaintiff the notes sued upon "for the purpose of stating and evidencing" his civil liability on account of the conversion. The notes are in fact the joint and several notes of defendant and two comakers, not parties to this action.
The argument for plaintiff is that defendant's liability on the notes is one for a willful and malicious injury to property, and so not dischargeable in bankruptcy under the statute. We assume, without deciding, that the original conversion of plaintiff's funds might have made a case of that kind within the rule of MacIntyre v. Kavanaugh, 242 U. S. 138, 37 S. Ct. 38, 61 L. Ed. 205. We need not determine whether the original debt, in addition to the character just assumed for it, was also one created by the fraud of defendant while acting as an officer or in a fiduciary capacity. Defendant as an individual was not a trustee for plaintiff. The corporation was, but inasmuch as defendant's original and personal liability in tort was not that of a delinquent officer to his corporation, the cases cited for plaintiff at this point, typified by Bloemecke v. Applegate (C. C. A.) 271 F. 595, are of doubtful application.
1. The complaint declares upon the notes without mention of antecedent tort or other history. For convenience of discussion, they may be treated as one cause of action. The complaint shows it purely and exclusively contractual, in point both of origin and present substance. The reply does not attempt to substitute the original tort (long since outlawed) as the cause of action. That would be a departure and not permissible. Strauch v. Flynn, 108 Minn. 313, 122 N. W. 320. The effort is rather so to connect the notes with the original tort as to make them, in effect, not the source and expression of a new but merely a means of continuing an original liability. The argument is that "taking the notes after discovery of the wrong did not waive the wrong or change the character" of the original indebtedness — that the initial cause of action for conversion has somehow or other survived, and now exists in the notes.
That argument is untenable. A new promise as an agency for the continuance or revival of a cause of action operates only in the field of contractual obligation to save a remedy as against the bar of a statute of limitation. It has never been applied to a cause of action for tort. Olson v. Dahl, 99 Minn. 433, 109 N. W. 1001, 8 L. R. A. (N. S.) 444, 116 Am. St. Rep. 435, 9 Ann. Cas. 252; Nelson v. Petterson, 229 Ill. 240, 82 N. E. 229, 13 L. R. A. (N. S.) 912, 11 Ann. Cas. 178; 17 R. C. L. 894. That being the law, we need not stop to determine how accurate or how well supported is the statement that "an implied promise arising out of a tort * * * may be renewed by an acknowledgment or a new promise." 37 C. J. 1098.
2. An unliquidated tort liability may be consideration for a contract to pay. Defendant's notes are such a contract, and our problem is to find how, if at all, their origin prevents the discharge in bankruptcy of the debt they evidence. The argument is that plaintiff, when his money was converted, had an election of remedies; that he could have maintained trover, or, waiving the tort had a cause of action on an "implied promise" to return the money; and that this latter obligation is the one now evidenced by the notes.
An action not upon any promise at all but upon the quasi contractual obligation to repay his money would have been open to plaintiff, but only against the corporation which had been enriched by the conversion. That this defendant participated actively in the tort doubtless made him liable in trover. Melady v. South St. Paul Live Stock Exchange, 142 Minn. 194, 198, 171 N. W. 806. Notwithstanding, and so long as he was not himself enriched by the conversion, he was not originally liable otherwise. He could not have been held on a quasi contractual obligation in the nature of an indebitatus assumpsit.
Professor Street (3 Foundations Legal Liability, 196) concludes correctly Another learned and original text-writer was of the same opinion. It is true, he said, Keener, Quasi Contracts, 163. The cases abundantly support the position taken by these authors.
Whether, in case of tort, there has been also an elective remedy on quasi contract, in the nature of an action for money had and received, has frequently arisen in bankruptcy law. In Crawford v. Burke, 195 U. S. 176, 25 S. Ct. 9, 49 L. Ed. 147, there was conversion with enrichment of the converters, and in consequence a right to elect the remedy in quasi contract, upon which was put the decision that the claim was...
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