In re Devereaux, 331.

• Decision Date: 01 April 1935
• Docket Number: No. 331.,331.
• Citation: 76 F.2d 522
• Parties: In re DEVEREAUX. DEVEREAUX v. BELSEY.
• Court: U.S. Court of Appeals — Second Circuit

76 F.2d 522 (1935)

In re DEVEREAUX DEVEREAUX v. BELSEY.

No. 331.

Circuit Court of Appeals, Second Circuit.

Argued March 22, 1935.

Decided April 1, 1935.

Edward Friedman, of New York City, for appellant.

Joseph G. M. Browne, of Brooklyn, N. Y., for appellee.

Before L. HAND, SWAN, and AUGUSTUS N. HAND, Circuit Judges.

SWAN, Circuit Judge.

The appellant, Belsey, brought suit in the Supreme Court of New York County against the appellee, Devereaux, upon two causes of action, one for false imprisonment alleged to be malicious, the other for malicious prosecution. Upon the former he obtained a verdict of $500, and upon the latter a verdict of 6 cents. Judgment was entered against Devereaux for $500.06. Shortly thereafter the judgment debtor filed a voluntary petition in bankruptcy, duly scheduling Belsey's claim as a judgment creditor. In due course the bankrupt was granted a discharge. Thereafter, pursuant to section 150 of the Debtor and Creditor Law (Consol. Laws N. Y. c. 12), he applied to the state court for an order canceling and discharging of record the judgment to the extent of $500 — the damages awarded for false imprisonment. This application was denied by the state court after a hearing in which it inquired into the facts upon which the judgment was predicated, and determined that the arrest and imprisonment of Belsey constituted a "willful and malicious" injury to the person within the meaning of section 17 of the Bankruptcy Act (11 USCA § 35), and consequently the judgment was not affected by the debtor's discharge in bankruptcy. 150 Misc. 337, 269 N. Y. S. 127. From this decision Devereaux appealed to the Appellate Division of the Supreme Court, which affirmed the order without opinion. 242 App. Div. 603, 271 N. Y. S. 1018. Without attempting to carry his appeal further (which would have required the granting of special leave), the bankrupt then filed in the bankruptcy court a petition which set up the foregoing facts, alleged that the bankruptcy court is not bound by the order of the state court, and prayed for a decree that the discharge in bankruptcy released the bankrupt from the judgment and for an injunction against any attempt to enforce it. The court below heard the matter on supporting and opposing affidavits, determined that the arrest and imprisonment of Belsey was not in fact a willful and malicious act on the part of the bankrupt, and granted the requested relief. From this order Belsey has appealed.

After Local Loan Co. v. Hunt, 292 U. S. 234, 54 S. Ct. 695, 698, 78 L. Ed. 1230, it can no longer be denied that the bankruptcy court has jurisdiction as upon an ancillary bill in equity to determine whether the bankrupt's discharge is a bar to a provable debt. Intimations to the contrary in such cases as In re Havens (C. C. A. 2) 272 F. 975, and Hellman v. Goldstone (C. C. A. 3) 161 F. 913, were expressly disapproved. Nevertheless, the exercise of such jurisdiction is not as of course; as Mr. Justice Sutherland's opinion points out, the bankruptcy court is not bound to exercise its authority and "it probably would not and should not have done so except under unusual circumstances such as here exist." In our opinion it still remains true that in general the effect of a discharge is to be raised by pleading it as a bar when the creditor attempts to enforce his claim, or using it to procure cancellation of a judgment entered before discharge, if the state statutes permit this procedure. See Remington, Bankruptcy (3d Ed.) § 3489. Section 11 of the Bankruptcy Act (11 USCA § 29) strongly implies that a creditor will not be stayed beyond the date of the bankrupt's discharge. See In re Scheffler (C. C. A.) 68 F.(2d) 902, 904; In re Byrne (C. C. A. 2) 296 F. 98, 101.

In the Hunt Case the bankrupt sought an injunction to restrain the prosecution of a suit brought by his creditor against his employer upon an assignment of future wages. The highest court of the state had already established the rule that a discharge in bankruptcy did not destroy the lien of such an...