Halligan v. Dowell
| Decision Date | 22 January 1917 |
| Docket Number | 28800 |
| Citation | 161 N.W. 177,179 Iowa 172 |
| Parties | JOSEPH HALLAGAN et al., Executors, Appellees, v. SIMEON A. DOWELL, Appellant |
| Court | Iowa Supreme Court |
Appeal from Taylor District Court.--H. K. EVANS, Judge.
IN his lifetime, Patrick Hallagan obtained a judgment against defendant Dowell in a court of the state of Indiana. He brought action in this state upon that judgment. So far as we are concerned with it, defendant pleaded that, since the rendition of the judgment, he had been discharged in bankruptcy, and thus freed from liability under the alleged judgment. In reply, plaintiff alleged that the judgment sued on was within stated exceptions made in the Bankruptcy Act and therefore not dischargeable in bankruptcy. The trial court awarded a recovery upon the foreign judgment, and defendant appeals.
Reversed.
W. C Van Houten and Frank Wisdom, for appellant.
William M. Jackson, for appellees.
I.
The Bankruptcy Act (Act July 1, 1898, c. 541, 30 Stat. at Large 544 [U.S. Comp. St. 1901, page 3418], as amended by Act February 5, 1903, c. 487, 32 Stat. 797 [U.S. Comp. St. Supp. 1911, p. 1493], excepts from the operation of the discharge, inter alia, cases where the liability is created by "willful and malicious injury to the * * * property of another" or "fraud * * * misappropriation or defalcation while acting * * * in any fiduciary capacity." Appellee asserts that his judgment, against which a discharge is set up, is within both exceptions; appellant, that it is within neither. Manifestly, we cannot reach the question presented by this dispute until we have proof that the judgment sued on rests on a willful and malicious injury or breach of duty in a fiduciary capacity, within the meaning of the exceptions in the act. The judgment sued on is silent concerning what it rests upon. But it is permitted to go behind the judgment, and ascertain from the pleadings and the record the basis of the judgment (Bever v. Swecker, 138 Iowa 721, 116 N.W. 704); to ascertain what induced the formal award for one party against the other . These point out how required proof may be made.
It is equally well settled on whom is the burden of the proof. We shall say no more at this point than that such burden was on plaintiff appellee; that it was for him to show by a preponderance of the evidence that the judgment upon which he sues was not affected by the discharge in bankruptcy because the liability upon which his judgment is bottomed is within said exceptions. The discharge is, prima facie, a release from all debts. But the creditor may show, notwithstanding, and has the onus upon this, that his debt is one within the excepted class. If he fails to make such proof, his debt will be taken to be one of the ordinary character. Sherwood v. Mitchell, 4 Denio (N.Y.) 435. He must show that the claim sued on is not within the terms of the bankruptcy discharge. Van Norman v. Young, (Ill.) 81 N.E. 1060. The burden rests upon the party attacking a discharge in bankruptcy to show some cause why it is not effectual. Stevens v. King, 16 A.D. 377, 44 N.Y.S. 893; In re Peterson's Estate, 118 N.Y.S. 1077. The plaintiff has the burden of showing by sufficient evidence that his claim was one of those excepted from the effect of the discharge. Larsen v. Hyman, 126 N.Y.S. 100; Broadway Trust Co. v. Manheim, 95 N.Y.S. 93; 3 Remington, Bankruptcy (2d Ed.), Sec. 2685; Black, Bankruptcy, Sec. 716; Alling v. Straka, 118 Ill.App. 184; and see Collier, Bankruptcy (7th Ed.), page 329.
As seen, neither party gets anything from the face of the judgment, and both must found their claims upon the record behind the judgment.
The appellee asserts that, by the record, the judgment sued on finds, of necessity, that defendant was liable because of willful and malicious injury, or fraud, misappropriations or defalcation, while acting in a fiduciary capacity. The position of appellant is that, if it be conceded that the judgment might rest upon such a finding, it could as well rest upon something which is not within the exception of the Bankruptcy Act; that it appears affirmatively that it does rest upon something other than that; and, at worst, that the evidence does not sustain the claim which appellee makes for the judgment any more strongly than it does the claim of the appellant.
II. The plaintiff Hallagan sold to one Tanner a large number of cattle, and took back mortgages for the purchase money. It is admitted in the present suit that the cattle were thus mortgaged; that the mortgage was recorded and the notes remain unpaid. The mortgagor sold the cattle to one Eldridge, who was not made a defendant in the Indiana suit, and he and one Brown shipped the cattle and sold them to Helm and Lewis. Some of the proceeds of the sales reached the defendant Dowell, and he credited it on a note which he held against the mortgagor Tanner. All the persons named were concerned in taking, shipping and selling the two loads shipped to Indianapolis, out of which Dowell received money which he applied on the Tanner note. In the Indiana court, causes of action were joined against all said named persons and others, and both joint and several liabilities were charged. For the claim that the judgment sued on is founded upon a liability of Dowell as garnishee, and not upon willful and malicious injury to the property of plaintiff, or fraud, misappropriation or defalcation while acting in a fiduciary capacity, the defendant appellant argues as follows:
(a) There were at least four causes of action presented: (1) to recover the value of certain cattle; (2) to recover the proceeds of the sale of the same cattle; (3) an attachment and garnishment for money due from the defendants jointly, on account of receipts by them of money paid for the cattle and sold and converted, such money being received by defendants, they knowing of such unlawful conversion; (4) that Dowell and the others should as garnishees be held indebted to the Sanson Company.
(b) The principal suit impleaded Tanner, the mortgagor, Brown, Helm, Lewis, Murray, Thayer, Burns, the Sanson Company and the present defendant Dowell. The jury returned a verdict in favor of all these defendants other than the Sanson Company and Dowell. Of necessity, the judgment entered cannot affect others than the Sanson Company and Dowell. The company, through its agents, received most of the cattle. Tanner, whom the jury acquitted, sold the mortgaged property. Brown, who is exonerated, sold the two carloads the proceeds of which Dowell received. Helm and Lewis, to whom those two carloads were sold, and all the other defendants acquitted, were more or less concerned in the taking and selling of the cattle. For this it is claimed, and it certainly has much more force, that the acquittance of these other defendants is, in effect, a finding that no wrongful conversion took place; wherefore Dowell could not have been a party thereto and, therefore, could not have been found guilty of any wrongful and malicious injury to the property of plaintiff, or of fraud, defalcation or misappropriation.
(c) The Indiana court charged the jury plaintiff believed that Dowell and others were indebted to the Sanson Company; that he had filed an undertaking in attachment and the defendants therein had filed a general denial, and, since, plaintiff has dismissed its complaint, attachment and garnishment as to the two Murrays, Braskett and Halstead. This being so, no garnishees were left except Dowell and Burns, and whatever finding there is against any garnishees must, of necessity, refer to these two, and no one else. The court further charged that Burns and Dowell had made notes to the Sanson Company; that, if these notes were in good faith assigned before the date of the garnishment, the plaintiff could not recover against the garnishees; but if not made in good faith, and in bad faith to avoid proceedings in garnishment, then "upon the issue of garnishment you may find for the plaintiff for such an amount as may have been conveyed by such indebtedness of the said Burns and Dowell, provided you find in favor of the plaintiff and against said defendant company." The jury did find in favor of plaintiff and against Dowell in the principal suit. The jury further found expressly "for the plaintiff against the Sanson Commission Company on the attachment and garnishee proceedings herein." This, says appellant, was a finding that Dowell was indebted to that company, and that the garnishment against him was tenable.
(d) It is undisputed that Dowell received $ 1,061.26 from Brown. Yet the judgment entered was for $ 1,000. From which it is argued that the smaller sum might be all that Dowell owed the Sanson Company; wherefore the judgment may well rest upon the garnishment proceedings. On the other hand, it should not be claimed that, if the jury had found against Dowell on the issue in tort, it would have allowed less than the amount which Dowell confessed to having received through the tort, if one was committed. This is emphasized by the fact that no judgment went against Burns, as to whom the garnishment proceedings were not dismissed, nor was he within the judgment in the principal suit, although he had at least as much connection with the alleged tort as did Dowell. Upon all this it is argued that the charge of the court clearly authorized the jury to find...
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