Goodman v. Herman

• Decision Date: 24 February 1903
• Citation: 72 S.W. 546,172 Mo. 344
• Parties: GOODMAN et al., Appellants, v. HERMAN
• Court: Missouri Supreme Court

72 S.W. 546

172 Mo. 344

GOODMAN et al., Appellants, v. HERMAN

Supreme Court of Missouri, Second Division

February 24, 1903

Appeal from Greene Circuit Court. -- Hon. Jas. T. Neville, Judge.

Affirmed.

Heffernan & Heffernan for appellants.

(1) Plaintiffs' debt against defendant, being created by fraud, as such was exempt from operation of the bankrupt law. 1 Story, Eq. Jur., sec. 187; Howland v. Carson, 28 Ohio St. 628; Johnson v. Warden, 4 Vt. 457; Coddington v. Bay, 20 Johns. 637; Matteson v Kellogg, 15 Ill. 547. (2) The fraud mentioned in the bankrupt act involves, it is true, moral turpitude, but it need not amount to a crime. It is a fraud of the same character as would entitle the party defrauded to rescind a contract on account. Stewart v. Emerson, 52 N.H 301; Homer v. Spelman, 78 Ill. 206; Morse v Hutchins, 102 Mass. 439. (3) A record is conclusive of all the material facts litigated therein against the parties thereto. Thompson v. Roberts, 24 How. 223; Cocoran v. Canal Co., 4 Otto 740; In re Chiles, 22 Wall. 166. A commission merchant stands in a fiduciary relation to his principals with respect to the proceeds of sales of commission goods in his charge, and debts incurred in said capacity are not discharged under that act. Lemake v. Booth, 47 Mo. 385; Brunswig v. Taylor, 2 Mo.App. 351. Such indebtedness is not released, though put into judgment, the fiduciary character of it depending not upon its form but upon the manner of its origin. Brooks v. Yocum, 42 Mo.App. 516. Bk. of Am. v. Crandall, 87 Mo. 208; Ames v. Moir, 138 U.S. 951. The case of Oliver v. Forsyth, 177 U.S. 723, is decisive, in which it is held that the judgment sued need not be based upon an action for fraud. Bump on Bankruptcy, 637-638. (4) Any evidence that tended to show the origin of the debt is proper. R. S. U. S. 1875, sec. 5117; Sampson v. Sampson, 80 N.C. 332; Howland v. Carson, 28 Oh. St. 642; Township v. Dunkle, 114 Ind. 262; Sherwood v. Mitchell, 4 Denio 435; McDonald v. Davis, 105 N.Y. 508; Stedman v. Patchin, 34 Barb. 218; Young v. Rummell, 2 Hill 478; Wood v. Jackson, 8 Wend. 1; Bank v. Crandall, 87 Mo. 208; Bank v. Franciscus, 15 Mo. 187; Council v. Horton, 88 N.C. 222. (5) In order to render a debt fraudulent when contracted under representations of the bankrupt, the intention to deceive is an essential element of the fraud. Broadway v. Bradford, 50 Ala. 270; Bump on Bankruptcy (9 Ed.), 728. A certificate of discharge in bankruptcy will not defeat the plaintiff's right of action for the defendant's false and fraudulent representations. Morse v. Hutchins, 102 Mass. 439. A discharge is no bar to an action for a debt created by fraud. Stokes v. Mason, 12 B. R. 498; s. c., 10 R. 1261.

W. D. Tatlow for respondent.

(1) The judgments were not rendered in actions for fraud or obtaining property by false pretenses or false representations. They were judgments on accounts for merchandise rendered in ordinary actions of assumpsit. The only charge of fraud is in the affidavits for attachment where one ground of attachment stated is that the debt was fraudulently contracted; other grounds were stated also. (2) Whether an action is for fraud or obtaining property by false pretenses is determined by the petition; and the bankrupt act means to exempt from the effect of the discharge only judgments in actions where the issue of fraud or false representation was tendered by the petition. To ascertain whether there is such a judgment the court must look at the pleadings and the record. Appellants sought to prove by evidence aliunde that the defendant actually made false representations. But plaintiffs did not sue for damages sustained by false representations or fraud, but sued in assumpsit on an account for goods sold and delivered, and so the judgment recites, without saying anything about fraud or false pretenses. The fourth clause of section 17 of the bankrupt law refers exclusively to frauds committed by a party while acting as an officer or in a fiduciary capacity. There was no fiduciary relation between plaintiffs and defendant when the merchandise was purchased. Indeed, the false representation is claimed to have been made, not to plaintiffs in person, but to a commercial agency of which they were members.

OPINION

FOX, J.

This cause was tried by the circuit court of Greene county, Missouri, the result of which was a judgment for defendant; from which judgment plaintiffs in due time and form have prosecuted their appeal.

Statement.

This is an ordinary proceeding to revive a judgment heretofore rendered in favor of the plaintiff and against the defendant. The respondent as a defense thereto pleads a discharge in bankruptcy. The appellants by way of replication plead that defendant's discharge in bankruptcy is no bar to the revival of their judgment against the defendant; alleging that the judgment was for goods sold to the defendant, and obtained by defendant from the plaintiffs by false pretense and false representations.

The court treated respondent's discharge as a complete release of all his indebtedness of every character whatsoever, rendered judgment against the plaintiffs for costs, and discharging the respondent from the obligations of the judgment. From this judgment and after an unsuccessful motion for new trial the plaintiffs appealed to this court.

In order to fully understand the disputed questions in this case, it would be well to examine the pleadings and see precisely what is in issue.

The petition to revive the judgment, omitting formal parts, is as follows:

"Come the above-named plaintiffs, Harrington and Goodman, a firm composed of Samuel Goodman, William E. Goodman and Joseph Goodman, and represent to this honorable court that on the second day of February, 1891, plaintiffs recovered in this court a judgment against Daniel H. Herman, the above-named defendant, said judgment being founded upon the sale by plaintiffs of merchandise to the firm of Herman Bros., of which the above-named defendant, D. H. Herman, was a member, amounting at said time to seven thousand one hundred and twenty-nine dollars, and therefor the said plaintiffs recovered against said Daniel H. Herman a judgment for said amount, with interest thereon at the rate of six per cent per annum from said February 2, 1891, to this date, and for costs of said suit; which said judgment was duly entered upon the records of this court in judgment record 38 at page 259; that no part of said judgment has been paid, and the whole amount thereof is due and unpaid; that no part of the costs of said suit has ever been paid by said defendant; and that the lien of said judgment on the lands and tenements of said Daniel H. Herman has expired. Wherefore plaintiffs pray that said judgment thereof be revived against the said Daniel H. Herman and that the lien be revived against the lands and tenements of said Daniel H. Herman, and that a writ of scire facias issue to the said Daniel H. Herman, his tenants and the occupants of his lands, commanding him and them to appear before this court at the next term thereof to show cause, if any he has, why this judgment in form as rendered aforesaid, and the lien thereof on the real estate of the said Daniel H. Herman be not revived, and for such other and further relief as may be proper."

Defendant filed answer to this petition as follows:

"Comes now the defendant in the cause above entitled and for answer to plaintiffs' amended petition, denies each and every allegation in said petition contained, and so having answered prays to be discharged with its costs.

"And for another and further answer to petition of plaintiffs, defendant says that heretofore, to-wit, on the 22nd day of November, 1898, he filed a petition in the district court of the United States for the Southern Division of the Western District of Missouri to be adjudged a bankrupt. That thereafter in the course of said bankruptcy proceedings, the plaintiffs in this case, as well as the other creditors of this defendant, proved up their judgments before the said court and the referee in bankruptcy, George S. Rathbun, against the defendant and against his estate. That afterwards in due course in said proceedings, the petition of this defendant to be adjudged a bankrupt and discharged as such, came on to be heard before the judge of said court, and on such hearing, the plaintiff in this case, as well as certain other creditors of the defendant, filed objections to the defendant being adjudged a bankrupt and discharged as such. That said objections were heard in due course in said United States District Court and were on the 10th day of April, 1899, by said court overruled, and thereupon, on the said day this defendant was adjudged a bankrupt and judgment was entered, finally discharging him as such bankrupt. That by the force and effect of said judgment, the defendant was discharged and relieved from further liability on the account of the alleged indebtedness of the plaintiffs against him, and is no longer responsible therefor.

"Wherefore having so fully answered defendant prays to be discharged with costs."

The replication of plaintiff was in the nature of a confession and avoidance of the new matter alleged as a defense to the action. It is admitted that the defendant was discharged as alleged, in the bankrupt proceedings from all debts against his estate, under said bankrupt act, but plaintiffs aver that the debt evidenced by the judgment sought to be revived, is excepted by law from such discharge for the reason it is alleged that the merchandise purchased by the defendant, for which plaintiffs recovered judgment against the defendant, was by the defendant D. H. Herman obtained and procured from the plaintiffs by false pretenses and false...