Galich, Application of
| Decision Date | 03 June 1969 |
| Citation | 59 Misc.2d 836,300 N.Y.S.2d 670 |
| Court | New York County Court |
| Parties | Application of Gail N. GALICH and Albin Galich for an Order Cancelling of Record a Judgment in Favor of Sibley, Lindsay & Curr Company, Divisin of Associated Dry Goods Corporation. |
Petitioners were adjudicated bankrupt on petitions filed by them October 17, 1966 and wee discharged in bankruptcy on March 17, 1967. As appears from copies of the schedules of unsecured claims (Schedule A--3), an oligation due respondent, Sibley, Lindsay & Curr Company, was included among those owing to other unsecured creditors.
More than a year having elapsed since the discharge in bankruptcy, the judgment would normally be subject to being discharged of record in the docket of judgments in the Monroe County Clerk's Office, pursuant to Section 150 of the Debtor and Creditor Law. However, Sibley, Lindsay & Curr Company, the respondent, objects to the discharge on the ground that the judgment arose out of the purchase of certain items of clothing by petitioners between September 12, 1966 and October 1, 1966 totalling $1,028.43, and that such purchases were made within a period of approximately two weeks before the filing of the petition in bankruptcy.
It further appears that petitioners filled out a credit form for the respondent one and one-half months prior to filing a petition in bankruptcy. This credit application, the respondent argues, constituted a false statement in writing respecting petitioners' financial condition. This, together with the purchases so close in time to the filing of the petition in bankruptcy, was done with the obvious intention of defrauding it, the respondent claims, and because of the fraud, the judgment is not dischargeable.
Respondent supports its position by reference to Section 17 of the Bankruptcy Act (11 U.S.C., Section 35(a)(2)):
'A discharge in bankruptcy shall release a bankrupt from all of his provable debts * * * except such as * * * are liabilities for obtaining * * * money or property on credit * * * in reliance upon a materially false statement in writing respecting his financial condition made or published or caused to be made or published in any manner whatsoever with intent to deceive * * *'
An examination of the record discloses that three days after the petition in bankruptcy was filed, an action for the value of the merchandise sold was commenced by respondent against the petitioners by the service of a summons and complaint, dated October 20, 1966. A motion was then brought by petitioners in the U.S. District Court for the Western District of New York, where the bankruptcy proceeding was pending, for an order restraining respondent from taking any further steps in the action. The motion was denied by decision and order dated December 27, 1966 with the provision that respondent be restrained, pending the bankruptcy proceedings, from collecting upon any judgment which might be obtained against the petitioners.
On January 20, 1967 respondent obtained an order in this court for a summary judgment against the petitioners and judgment was entered January 24, 1967 in the Monroe County Clerk's Office for the sum of $1,287.70.
It does not appear from the record that an application was ever made by respondent to amend its complaint to allege fraud or to include allegations upon which an action in fraud could be based or deduced. Instead, the respondent now seeks a full hearing upon the issue of whether or not the acts of the petitioners prior to and at the time of purchasing the merchandise falls within the type of conduct which would constitute false pretenses or false representations, therefore rendering the judgment not dischargeable.
Although respondent did not object to the petitioners' discharge in bankruptcy, this does not bar it from raising this objection at this time. (Beneficial Finance Co. v. Meyers, 33 Misc.2d 69, 223 N.Y.S.2d 923).
The discharge of the debt in bankruptcy would ot in any event be binding upon the court for there remains with it always the independent duty of determining whether one of its judgments should be cancelled and discharged. (Multiple Trading Corporation v. Saggese, 178 Misc. 1077, 37 N.Y.S.2d 296; Bronx County Trust Company v. Cassin, 170 Misc. 962, 10 N.Y.S.2d 986; Belsey v. Devereaux, 150 Misc. 337, 269 N.Y.S. 127, affirmed 242 A.D. 603, 271 N.Y.S. 1018).
The respondent's position would have greater force if its action against petitioners was still pending or, indeed,...
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Norton, In re
...the action resulting in the judgment. Matter of Proctor Securities Corp. v. Handler, 7 Misc.2d 9, 162 N.Y.2d 209; Application of Galich, 59 Misc.2d 836, 300 N.Y.S.2d 670, 673. See Security National Bank of Long Island v. Boccio, 60 Misc.2d 547, 548, 303 N.Y.S.2d 610, 611, where the Court fo......
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People v. Mosesson
...them from subsequently asserting their claim as not affected by the discharge (In re Weitzman, D.C., 11 F.2d 897; Application of Galich, 59 Misc.2d 836, 300 N.Y.S.2d 670). The purpose of our bankruptcy laws is humane in nature. They set forth the policy of our government to aid individuals ......