In re Moore

• Decision Date: 21 October 1901
• Citation: 111 F. 145
• Parties: In re MOORE.
• Court: U.S. District Court — Western District of Kentucky

111 F. 145

In re MOORE.

United States District Court, W.D. Kentucky.

October 21, 1901

The following is the opinion of Bagby, referee:

On the 13th day of September, 1900, said John W. Moore, was by the grand jury of the circuit court of McCracken county Kentucky, indicted for keeping and maintaining a nuisance in the nature of a disorderly house; and on the 6th day of April, 1901, he was by the verdict of a petit jury in the circuit court of said county found guilty of the charge in the indictment and his fine fixed at $400, upon which judgment was entered and a capias pro fine awarded. Thereafter, on the 30th day of April, 1901, said Moore filed his petition in bankruptcy, and subsequently was adjudicated bankrupt. Afterwards the commonwealth of Kentucky filed herein its claim for amount of the judgment aforesaid. To this claim of the commonwealth of Kentucky the trustee of the bankrupt's estate has filed exceptions, and asked that same be disallowed and expunged for the reason that same is not a provable debt in bankruptcy. The issue created by the exceptions of the trustee to the claim of the commonwealth of Kentucky filed in this proceeding is whether a judgment upon a fine under an indictment for the offense of keeping and maintaining a disorderly house is a provable debt, within the provisions of the present bankrupt law. In their rulings upon this question the courts have not been uniform, and, because of the importance of the interests involved and to be determined by the judgment of the court in this case, I have deemed it proper that the court should give some reasons for the conclusions reached by the judgment rendered herein.

Section 63 of the present bankrupt act reads as follows: 'Debts Which may be Proved. (a) Debts of the bankrupt may be proved and allowed against his estate which are (1) a fixed liability, as evidenced by a judgment or an instrument in writing, absolutely owing at the time of the filing of the petition against him, whether then payable or not, with any interest thereon which would have been recoverable at that date or with a rebate of interest upon such as were not then payable and did not bear interest; (2) due as costs taxable against an involuntary bankrupt who was at the time of the filing of the petition against him plaintiff in a cause of action which would pass to the trustee and which the trustee declines to prosecute after notice; (3) founded upon a claim for taxable costs incurred in good faith by a creditor before the filing of the petition in an action to recover a provable debt; (4) founded upon an open account, or upon a contract express or implied; and (5) founded upon provable debts reduced to judgments after the filing of the petition and before the consideration of the bankrupt's application for a discharge, less costs incurred and interests accrued after the filing of the petition and up to the time of the entry of such judgments. ' A literal application of the section quoted makes every debt, claim, and demand against a bankrupt provable which exist at the time the petition in bankruptcy is filed. And from all such debts the bankrupt is released by his discharge according to section 17 of the bankrupt act. 'Except such as (1) are due as a tax levied by the United States, the state, county, district or municipality in which he resides; (2) are judgments in actions of frauds, or obtaining property by false pretenses or false representations, or for willful or malicious injuries to person or property of an other; (3) have not been fully scheduled in time for proof and allowance, with the name of the creditor if known to the bankrupt, unless such creditor had notice or actual knowledge of the proceedings in bankruptcy; or (4) were created by his fraud, embezzlement misappropriation or defalcation while acting as an officer or in any fiduciary capacity. ' Section 17 of the bankrupt statute. Reading together sections 63 and 17 of the bankrupt act, it appears that, with the exceptions named in section 17, a discharge in bankruptcy releases the bankrupt from all the provable debts, which are specifically named in section 63. The general ill effects resulting from a literal application of these provisions of the bankrupt law would be so far-reaching and disastrous to the public welfare, I cannot believe that such was the intention of congress in the passage of the act. It is a rule of construction that a thing which is within the letter of the statute is not within the statute, unless it be within the intention of the makers of the law; and the court, in order to ascertain the intention of the lawmaking body, will look at the whole statute and all its parts; and it is the duty of the court, when satisfied of this intention, to give effect thereto, and not defeat it by adhering too closely to the mere letter of the statute. Oates v. Bank, 100 U.S. 244, 25 L.Ed. 580.

If the claim of the commonwealth of Kentucky filed herein is a provable debt, within the contemplation of the bankrupt law then the bankrupt will be discharged from so much of the fine adjudged against him by the state court as the bankrupt's estate is insufficient to satisfy. And it is not contended that the claim is in any sense entitled to priority. For the court to so rule, should the estate of the bankrupt be insufficient to pay his creditors in full, would relieve the bankrupt from the fine imposed upon him as a punishment by the state court, and to that extent would operate as a pardon of his offense. I cannot believe that such was the intention of congress. It is a familiar rule of construction applicable to statutes that the government is not bound by a statute, unless expressly named therein. Laws are prima facie presumed to be made for subjects only, and the government will not be presumed to be binding itself by them unless this intention affirmatively appears. In England the crown is not reached, except by express words or by necessary implication, in any case where it would be ousted of any existing prerogative or interest. And so in the United States the states and national government are not bound by a general statutory provision whereby any of their prerogative rights, titles, or interests will be impaired, unless by express words or irresistible implication. Thus the statutes of limitation are no bar to claims by the government unless the government is included by express words. 23 Am.& Eng.Enc.Law, pp. 365-367. Section 34 of the bankrupt act of 1867 provides 'that a discharge duly granted under this act shall * * * release the bankrupt from all debts, claims, liabilities and demands which were or might have been proved against his estate in bankruptcy, and may be pleaded, by a simple averment that on the day of its date such discharge was granted to him, * * * as a full and complete bar to all suits brought on and such debts, claims, liabilities or demands. ' Mr. Bishop, in his work on Statutory Crimes (section 103), referring to this section, says it 'is of no avail against a suit by the government'; and in this connection the distinguished author quotes with approval U.S. v. Herron, 20 Wall. 251, 22 L.Ed. 275, wherein it is decided by the supreme court that debts due to the United States are not within the provisions of the bankrupt act of 1867, and are not barred by a discharge under such act, chiefly for two reasons: '(1) The United States are not named in any of the provisions of the act, except the one which provides as to all debts due the United States, and all taxes and assessments under the laws thereof. (2) That many of the provisions describing the duties, obligations, and rights of creditors, * * * if held to include the United States, could not fail to become a constant and irremediable source of public inconvenience and embarrassment.' The effect of a discharge under section 17 of the present bankrupt statute has been very ably considered in the case of In re Baker (D.C.) 3 Am.Bankr.R. 101, 96 F. 963, wherein the court holds that the claim of a state is not within the provisions for the release of debts owing by the bankrupt by his discharge in bankruptcy, unless expressly made so, and declares that the legislature will not be taken to have postponed the public right to that of an individual, except in cases where such purpose has been most plainly manifest, and in support of its views cites Johnson v. Auditor, 78 Ky. 282, and the action of the United States supreme court in U.S. v. Herron. In reference to the last-named case the court says that the differences between the acts of 1867 and 1898 'are insufficient to indicate an express intention on the part of congress, in the passage of the present act, to establish a different rule as to the devesting of the government, national or state, of its rights or remedies, than that which obtained under the act of 1867, as construed by the supreme court in U.S. v. Herron, supra. If congress had intended that the bankrupt's discharge should operate as a release of his debts owing to the government, it would undoubtedly have so provided in unmistakable terms, especially in view of the rule of construction which has been established and so uniformly followed for so many years.' Whether a discharge in bankruptcy will release a debtor from a fine came before Judge Lowell in the United States district court at Boston. A sentence of one year's imprisonment and a fine of $500 had been imposed on O'Donnell for complicity in the bribery of a certain alderman in Lowell. He had served his imprisonment, and contended that his discharge in bankruptcy exempted him from the payment of the...