C H F Finance Co. v. Jochum

• Decision Date: 15 February 1961
• Docket Number: No. 45331,45331
• Parties: C H F FINANCE COMPANY, Inc. v. Ruby LEA, Wife of/and Henry JOCHUM.
• Court: Louisiana Supreme Court

Page 534

127 So.2d 534

241 La. 155

C H F FINANCE COMPANY, Inc. v. Ruby LEA, Wife of/and Henry JOCHUM.

No. 45331.

Supreme Court of Louisiana.

Feb. 15, 1961.

Rehearing Denied March 20, 1961.

John M. Holahan, New Orleans, for defendants.

Philip H. Giuffre, George W. Weber, New Orleans, for respondent.

HAMLIN, Justice.

The question posed for our determination is whether a certain promissory note made by relator, Henry Jochum, constituted a debt not affected by a discharge in bankruptcy.

Under a series of loan transactions commencing in 1943 or 1944, defendants were occasional debtors of plaintiff. On November 29, 1955, they executed a $300 note (type 3 1/2--2 1/2%) with plaintiff, a balance of $199.17 being in arrears on November 5, 1956. On the latter date, defendants executed a new note for $300; their note of November 29, 1955 was cancelled and returned to them, and they received net cash of $100.83. The company card evidencing defendants' payments on their 1955 note bore the following notation: 'New Loan, #7465; Renewed, 11--5--56; Amount, $300.00; Prev. Bal., $199.17; Net, $100.83.' In executing the 1956 note, defendants signed a financial statement, wherein they recited that they owed George Glover $150 and were indebted to C H F Finance Company, Inc.; they further stated, 'We have no other debts.'

On June 23, 1958, plaintiff filed suit on the note of November 5, 1956, alleging 'that the said note stipulates that on failure to pay any installment, the whole of said note shall at once become due and exigible, together with 25% Attorney's fee on principal and interest; that the defendants have paid $65.77 on account of said note, and interest through September 5, 1957, leaving a principal balance past due and unpaid of $234.23 together with interest and attorney's fee as aforesaid.' They further alleged that amicable demand was made on defendants without avail. Plaintiff prayed for judgment against the defendants in the sum of $234.23, together with interest and attorney's fee.

Defendants in answer specially pleaded their discharge in bankruptcy as to the debt sought to be recovered by plaintiff, averring that plaintiff was listed as a creditor, had received notices of meetings of creditors, and had had opportunity to oppose defendants' discharge, but had neglected to do so. Alternatively, defendants averred that if the debt were not one dischargeable in bankruptcy recovery should be limited to the actual cash received, as the transaction constituted a refinanced obligation. Defendants further prayed that no recovery should be had for interest and attorney's fees, averring that they were contractual obligations barred by the discharge in bankruptcy.

The trial court rendered judgment in favor of plaintiff and against defendants, for the full sum of $234.23, with 3 1/2% Per month interest on any unpaid principal balance not in excess of $150, and 2 1/2% Per month interest on that part of the unpaid principal balance in excess of $150 from September 5, 1957 to July 7, 1959, and 8% Per annum interest thereafter until paid, plus 25% Attorney's fees on principal and interest, and all costs.

The Court of Appeal for the Parish of Orleans ¹ (121 So.2d 373) found that at the time Henry Jochum made the financial statement, supra, he was indebted to about eight other creditors for substantial amounts; in the opinion of the Court, the statement was false and knowingly made. However, it found that Mrs. Jochum did not know of the false statement made by her husband, that she did not accompany him to the finance company, and that she only signed the note at her home upon her husband's presenting it to her for signature. The Court further found that the record was devoid of any evidence showing that plaintiff possessed a license permitting it to charge the rates of interest claimed.

The Court of Appeal dismissed plaintiff's suit against Mrs. Jochum; it amended the judgment against Henry Jochum, so as to provide that it should bear interest at the rate of eight percent per annum from September 5, 1957, until paid.

We granted certiorari (Art. VII, Sec. 11, La. Constitution of 1921) upon the application of Henry Jochum. He alleged that on the merits of the matter as a whole, it would appear that the plaintiff has not borne the burden of proving the intention of defendant to defraud it, nor has it shown that his statements were relied upon to make the note in question.

When this matter was decided by the Court of Appeal, it was provided in Section 17 of the Bankruptcy Act (11 U.S.C.A. § 35) that '(a). A discharge in bankruptcy shall release a bankrupt from all of his provable debts, whether allowable in full or in part, except such as * * * (2) are liabilities for obtaining money or property by false pretenses or false representations, * * *' ² In De Latour v. Lala, 15 La.App. 276, 131 So. 211, 212, the Court analyzed the foregoing language and stated that before Section 17 (11 U.S.C.A. § 35) would be applicable, 'the plaintiff must show: (1) That defendant made false representations; (2) that these representations were made with the intention of defrauding the plaintiff, and (3) that the plaintiff relied upon and was misled by the false pretenses or representations.'

The record herein contains a stipulation, made in the trial court by counsel for defendants, to the effect that defendants filed bankruptcy proceedings in the United States District Court for the Eastern District of Louisiana, on October 7, 1957, and that the debt herein involved was listed in the schedules. Counsel for plaintiff stipulated that the defendants were discharged prior to the filing of the instant suit.

Henry Jochum affirmatively testified that at the time he executed the note of November 5, 1956, he had creditors other than those listed in the financial statement he signed; he said that he could only think of two creditors at the time. A reading of the entire testimony of record convinces us that the following statement of the Court of Appeal is correct:

'We do not hesitate for a moment to comment that Jochum induced plaintiff by means of the false financial statement to part with the cash amount and the old note, * * *'

In the case of Guedry Finance Company v. McCubbin, 120 So.2d 298 (certiorari denied) ³ the facts of which are almost identical with those in the instant case, the Court of Appeal found that plaintiff did not show that it had sustained any loss financial or otherwise as a result of the false representations alleged. The Court stated that it was incumbent on plaintiff to make such a showing; otherwise the discharge in bankruptcy would stand as a bar to a recovery on the claim. In the instant matter, we find that plaintiff has adequately borne its burden of proof by showing that it suffered a financial loss and was misled by the representations of the defendant Henry Jochum. ⁴

Having decided that Henry Jochum made false representations to plaintiff with the intention of receiving cash and refinancing his note and that plaintiff was misled by such representations, we must determine whether plaintiff is entitled only to the cash received by the defendant Henry Jochum when the executed the note of November 5, 1956, or whether plaintiff should recover the face amount of the note less any payments made.

Plaintiff contends that the old promissory note, which was cancelled and returned to Jochum on execution of the new note, together with $100 cash, was property within the statutory contemplation of Section 17, sub. a(2), 11 U.S.C.A. § 35, of the Bankruptcy Act.

Relator, Henry Jochum, argues that the old promissory note, when received by him, was not property; as authority, he relies on statements made in 6 Am.Jur., Sec. 782, p. 1008, and 8 C.J.S. Bankruptcy § 573, p. 1513 et seq., which set forth that the extension or renewal of an existing note is not the equivalent of 'property' within the meaning of the exception from discharge of a liability for obtaining money or property by false pretenses or false representations.

We have read the authorities cited by relator and find that the statements therein made relate to specific situations; they do not set forth a hard and fast rule which applies to the facts of every claim against a bankrupt for obtaining money or property on credit through false representations or false pretenses as to his financial condition at the time the money or property is obtained.

It is a recognized rule of statutory construction that the act as a whole ought to be interpreted so that no clause, sentence, or word, shall be superfluous, or meaningless, if that result can be avoided. Hibernia National Bank in New Orleans v. Louisiana Tax Commission, 195 La. 43, 196 So. 15; Dore v. Tugwell, 228 La. 807, 84 So.2d 199; Bartley, Inc. v. Town of Westlake, 237 La. 413, 111 So.2d 328. In interpreting a part or section of an act in dispute, the part or section should be interpreted with the rest of the act. Pepsodent Co. v. Krauss Co., 200 La. 959, 9 So.2d 303. A familiar canon of construction requires that the meaning of a statute is to be looked for in all its sections taken together and in that posture related to the end in view. United States v. Vivian, 7 Cir., 224 F.2d 53; 350 U.S. 953, 76 S.Ct. 340, 100 L.Ed. 830; Smither & Co., Inc. v. Coles, 100 U.S.App.D.C. 68, 242 F.2d 220; 354 U.S. 914, 77 S.Ct. 1299, 1 L.Ed.2d 1429.

Section 14 of the Bankruptcy Act, 11 U.S.C.A. § 32, sub. c(3), recites:

'The court shall grant the discharge unless satisfied that the bankrupt has * * * obtained money or property on credit, or obtained an extension or renewal of credit, by making or publishing or causing to be made or published in any manner whatsoever, a materially false statement in writing respecting his financial condition.'

In Gilbert's Collier on Bankruptcy, Section 14, Discharges When Granted, VII. False Statement to Secure, Renew or Extend Credit, Paragraph 484, Distinguished from Section 17,...