Crawford v. Burke

• Decision Date: 18 February 1903
• Citation: 66 N.E. 833,201 Ill. 581
• Parties: CRAWFORD et al. v. BURKE.
• Court: Illinois Supreme Court

201 Ill. 581

66 N.E. 833

CRAWFORD et al.

v.BURKE. ^*

Supreme Court of Illinois.

Feb. 18, 1903.

Appeal from Appellate Court, First District.

Action on the case by John E. Burke against Richard C. Crawford and another. From a judgment of the Appellate Court (102 Ill. App. 566) affirming a judgment for plaintiff, defendants appeal. Affirmed.Peckham, Brown & Packard, for appellants.

John E. Burke (Pence & Carpenter and T. A. Moran, of counsel), for appellee.

CARTER, J.

This was an action on the case, brought in the Cook circuit court by John E. Burke, the appellee, against Richard C. Crawford and Edward A. Valentine, the appellants,to recover damages for the wrongful and fraudulent conversion of certain shares of stock belonging to the plaintiff, and of the proceeds of the sale thereof, or of his reversionary interest therein, to their own use, as alleged in the first five counts of the declaration, and as alleged in the last five counts, for false and fraudulent representations made by the defendants to the plaintiff, to the effect that they had and held, on purchases made by them at his request, a certain large number of shares of said stock, in order to obtain, and whereby they did obtain, from him, large sums of money as margins or part payments on such stock, when, in truth and in fact, they did not have or hold such shares of stock, but had previously, without his knowledge or consent, sold the same on their own account, with intent, as alleged in all the counts, to cheat and defraud the plaintiff. The suit was brought in 1897, and the defendants pleaded ‘Not guilty.’ Afterward, in 1901, Congress having in the meantime enacted the bankrupt law of 1898 (30 Stat. 544 [U. S. Comp. St. 1901, p. 3418]), and the defendants having, in proceedings thereunder, been duly discharged in bankruptcy, they filed their separate pleas puis darrein continuance, setting up such discharge, and also, in the same pleas, traversing the positive fraud and fraudulent intent alleged in the declaration. Replications were filed by the plaintiff, not denying the bankruptcy proceedings, and the defendants' discharge therein, but taking issue, in the language of the pleas, on the matter averred in them traversing the alleged fraud. A jury was waived, trial had by the court, and judgment was rendered for the plaintiff for $9,690 and costs. The defendants appealed. One of the judges of the Appellate Court, having heard the cause on a former trial, took no part, and, the other two judges being unable to agree, the judgment was affirmed. The defendants then took this appeal to this court.

The evidence tends to prove that the defendants were associated together as partners doing business in Chicago as stockbrokers, and that in 1894 and 1895, acting as the brokers and agents of the plaintiff, they purchased, at his request, from time to time, through other brokers in Philadelphia, on the stock exchange in that city, upwards of 100 shares of Metropolitan Traction stock, and also, by agreement with the plaintiff, took over a large number of other shares of the same stock from other brokers, agents of the plaintiff, who had previously purchased and were carrying the same for him, until the defendants had and held for him 550 shares of such stock, upon which he had paid the required margins or payments on account of such stock to a large amount of money, and which said stock the defendants agreed to carry for the plaintiff; he having agreed to make such further payments on the purchase price as should be required, and which agreement he had faithfully performed on his part. At one time, about April 1, 1895, when the defendants, by the course of dealings between the parties, should have had for the plaintiff, as they then represented to him they did have and were carrying for him, 550 shares of said stock, the defendants demanded of him, because of a falling market, $3,800 as further margins or payments on that number of shares, and which amount he then paid, when the truth was that they had previously sold all but 50 of said shares, without his consent or knowledge and without having rendered to him any account for the same whatever. They were then insolvent, and, about May 20th following, failed in business, and a receiver was appointed. Shortly before such failure, plaintiff offered to pay the balance of the unpaid purchase price due on said 550 shares, and demanded delivery to him, but the defendants were wholly unable to comply with the demand.

The principal question in the court below was, and in this court also is, whether or not recovery by the plaintiff was barred by the discharge in bankruptcy set up in the pleas puis darrein continuance. This question is presentedby the holding of the court, as law in the decision of the case, certain propositions asked by the plaintiff, applicable, respectively, to different ones of the several alleged tortious acts of the defendants. It will be necessary to state here only one of such propositions, viz., the second: ‘(2) If the evidence shows that the defendants were acting as the brokers and agents of the plaintiff, and that on or about the 10th day of January, 1895, the defendants, as such brokers and agents, were carrying for him, and had in their possession or under their control for the plaintiff, and belonging to him, four hundred shares of Metropolitan Traction stock, in controversy in this cause, and that on or about the said 10th day of January, 1895, the defendants, without the knowledge or consent of the plaintiff, sold or caused to be sold one hundred shares of said stock, and converted or appropriated to their own use the said one hundred shares, or the proceeds of the sale thereof, or the plaintiff's reversionary interest in said one hundred shares, or his interest in said proceeds, and that such sale, conversion, or appropriation was made with the intent to commit upon the plaintiff a positive fraud, involving intentional wrong, then the court holds that the defendants' conduct was such that their discharge in bankruptcy is not a legal defense to plaintiff's claim for such damages, if any, as he may have sustained by reason of such sale, conversion, or appropriation.’ The court refused to hold as law in the case, at the request of the defendants, that the discharge in bankruptcy was a bar to any recovery in the case by plaintiff under his declaration.

There was sufficient evidence for the court to find the facts as they were hypothetically stated in the plaintiff's propositions, and also substantially as they were alleged in the declaration, but whether such debt or liability was released by the discharge in bankruptcy depends on the proper construction to be given to the act of congress. Section 17 of the present bankruptcy act (30 Stat. 550, 551 [U. S. Comp. St. 1901, p. 3428]), is as follows: ‘A discharge in bankruptcy shall release a bankrupt from all of his provable debts, except such as (1) are due as a tax levied by the United States, the state, county, district or municipality in which he resides; (2) are judgments in actions for frauds, or obtaining property by false pretenses or false representations, or for willful and malicious injuries to the person or property of another; (3) have not been duly scheduled in time for proof and allowance, with the name of the creditor, if known to the bankrupt, unless such creditor had notice or actual knowledge of the proceedings in bankruptcy; or (4) were created by his fraud, embezzlement, misappropriation or defalcation while acting as an officer or in any fiduciary capacity.’ The construction contended for by the defendants is that, even if the plaintiff's demands be held to be a debt created by the fraud of the defendants, still such debt was barred by the discharge in bankruptcy, because it was not created while they were acting as officers or in any fiduciary capacity. Leaving out matter not applicable to this case, the section reads: ‘A discharge in bankruptcy shall release a bankrupt from all of his provable debts, except such as * * * (4) were created by his fraud, embezzlement, misappropriation or defalcation while acting as an officer or in any fiduciary capacity.’ The defendants were not acting as officers, and it is conceded that they were not acting in any fiduciary capacity, within the meaning of the statute; but appellants insist that the phrase ‘while acting,’ etc., qualifies and limits all that precedes it in this, the fourth exception, so that the act of fraud, embezzlement, or misappropriation must have been committed while the defendants were acting as officers or in some trust capacity. While the meaning of the statute is not as clear as it might have been made, we are of the opinion the true construction is this: That the discharge will not release a bankrupt from his debt created (1) by his fraud; (2) by his embezzlement; (3) by his misappropriation; (4) by his defalcation while acting as a public officer or in any fiduciary capacity. Such is the grammatical construction of the sentences as punctuated, and while punctuation is not necessarily a part of the statute, and is not controlling, and even be wholly disregarded when necessary to give effect to the intention of the legislature, otherwise appearing, still it is proper for consideration in determining the grammatical construction of written language, and may shed some light on the meaning of a statute, when otherwise doubtful. Osborn v. Farwell, 87 Ill. 89, 29 Am. Rep. 47; 23 Am. & Eng. Ency. of Law, 334; 11 Am. & Eng. Ency. of Law, 521, and cases there cited; Hamilton v. Steamboat, etc., Co., 16 Ohio St. 428;Joy v. St. Louis, 138 U. S. 32, 11 Sup. Ct. 243, 34 L. Ed. 843;Cushing v. Worrick, 9 Gray, 385;State v. Jernigan, 7 N. C. 18.

But other reasons, of a more potent character, may be given for the construction we adopt. In the first place, the former bankruptcy act of 1867 excepted...