Gleason v. Thaw

• Decision Date: 24 February 1911
• Docket Number: 51 (1,371).
• Citation: 185 F. 345
• Parties: GLEASON v. THAW.
• Court: U.S. Court of Appeals — Third Circuit

185 F. 345

GLEASON v. THAW.

No. 51 (1,371).

United States Court of Appeals, Third Circuit.

February 24, 1911

Houston Frew & Wilson and John B. Gleason, for petitioner.

Stone &amp Stone, for trustee.

Before GRAY, BUFFINGTON, and LANNING, Circuit Judges.

GRAY Circuit Judge.

This is a petition to review, under section 24(b) of the bankruptcy act (Act July 1, 1898, c. 541, 30 Stat. 553 (U.S. Comp. St. 1901, p. 3432)), a final order of the District Court of the United States for the Western District of Pennsylvania, in bankruptcy, staying an action brought by the petitioner against the bankrupt.

The petition recites the fact that the petitioner, John B Gleason, brought an action in 1908, in the Circuit Court of the United States for the Southern District of New York, which was stayed by the court below, sitting in bankruptcy, and upon a petition for review of that order, the same was affirmed by this court (Gleason v. O'Mara, 180 F. 417, 103 C.C.A. 563); that thereupon that action was discontinued, and another action was commenced in the said Circuit Court for the Southern District of New York, on the 8th day of December, 1909, wherein the petitioner was plaintiff and Henry Kendall Thaw, bankrupt, was defendant. The cause of action set forth in this new suit is in the same form and based upon the same facts as those set forth in the prior suit. It is asserted, however, in the complaint, that the services rendered, and for which compensation was sought, were property obtained from the said plaintiff by the said defendant by false pretenses or false representations.

The complainant sets out at great length his interviews with the defendant, Thaw, in which are alleged to have occurred the false pretenses and representations by which the plaintiff was afterwards induced to engage his services for one year as leading counsel for the said defendant in relation to the defendant's impending trial under indictment for murder. He also alleges that thirty thousand dollars was paid to the plaintiff by the said defendant, as his chief counsel, to be used in his discretion for the general purposes of his defense, and that out of this sum the plaintiff made certain disbursements, for the defendant and at his request, amounting to the sum of $10,115.

The petition of Harry K. Thaw, the bankrupt, to the said District Court for the Western District of Pennsylvania, in bankruptcy, was thereupon preferred, in which, inter alia, it is stated that the debt for which said action was brought against him by the petitioner, in the Southern District of New York, was one which would be discharged by the act of bankruptcy, and that if such suit is not stayed, great injury would be done to the said petitioner, and he would be precluded from setting up his bankruptcy as a release from said debt. Upon the presentation and consideration of this petition, the court below, on the 15th day of March, 1910, ordered and directed an injunction, as prayed for, restraining the said Gleason, his agents, etc., from taking any further steps or proceeding in said action until the question of the discharge of the said Thaw, as bankrupt, be determined, or until further orders of the court.

The petition for review of this order in matter of law, under section 24(b) of the bankruptcy act, brings before us the single question, whether the debt sued for in the action brought by the petitioner against the bankrupt, in the Circuit Court for the Southern District of New York, was a liability for obtaining property by false pretenses or false representations, within the meaning of section 17a(2) of the bankruptcy act, as amended in 1903 (Act Feb. 5, 1903, c. 487, Sec. 5, such liabilities are exceptions to the provable debts from which a bankrupt may be discharged. By the act of 1898, as it originally stood, judgments in actions for frauds were made such exceptions, and as such would be binding upon a court of bankruptcy. The amendment of 1903 changed this language to 'liabilities for obtaining property under false pretenses or false representations,' so that debts which are such liabilities are now excluded from the provable debts of which the bankrupt may be discharged. While enlarging somewhat the scope of such exceptions, this amendment imposed upon the court of bankruptcy the duty of determining whether the debt sought to be excepted was or was not such a liability. The order of the court below is supported by a well-reasoned opinion, with which we agree and to which little need be added by this court.

The very ingenious and forceful argument presented to this court by the petitioner for review, is founded mainly upon the proposition that:

'The right to command services of the value of $80,000.00 is property; the services also are property; the test is value-- not degree of intangibility.'

Several decisions in the federal courts, as well as...