In re New York Tunnel Co.

• Decision Date: 17 February 1908
• Docket Number: 214.
• Citation: 159 F. 688
• Parties: In re NEW YORK TUNNEL CO.
• Court: U.S. Court of Appeals — Second Circuit

159 F. 688

In re NEW YORK TUNNEL CO.

No. 214.

United States Court of Appeals, Second Circuit.

February 17, 1908

Don R Almy, for Riggs' estate.

Gilbert Ray Howes, for Tamburi's estate.

B. S Catchings, for petitioner.

Philbin Beekman & Menken (S. S. Menken and Richard Steel, of counsel), for respondent.

Before LACOMBE, WARD, and NOYES, Circuit Judges.

NOYES Circuit Judge.

The question in this case is whether unliquidated claims, like the petitioners' demands, founded upon torts are provable against a bankrupt estate.

Section 11a of the bankrupt law (Act July 1, 1898, c. 541, 30 Stat 549 (U.S. comp. St. 1901, p. 3426)), provides:

'A suit which is founded upon a claim from which a discharge would be a release, and which is pending against a person at the time of the filing of a petition against him, shall be stayed until after an adjudication or the dismissal of the petition; if such person is adjudged a bankrupt, such action may be further stayed until twelve months after the date of such adjudication, or, if within that time such person applies for a discharge, then until the question of such discharge is determined.'

Thus the act only authorizes the restraining of suits founded upon claims 'from which a discharge would be a release. ' But unless a claim is provable against a bankrupt estate, it is not discharged, and, consequently, is not subject to the control of the bankruptcy court.

Paragraph 'a' of section 63 enumerates the debts of the bankrupt which may be proved against his estate. It includes debts founded upon (1) judgments and written instruments; (2 and 3) taxation of costs; (4) open accounts or express or implied contracts; (5) certain judgments rendered subsequently to bankruptcy. This paragraph manifestly does not include liabilities for torts.

Paragraph 'b' provides:

'Unliquidated claims against the bankrupt may, pursuant to application to the court, be liquidated in such manner as it shall direct, and may thereafter be proved and allowed against his estate.'

This paragraph evidently relates to procedure. It provides for the liquidation of such of the claims enumerated in the preceding paragraph, e.g., for breach of contract, as might require such process. The one paragraph particularly enumerating the debts which are provable, we see no ground for holding that the other opens the door to unliquidated demands of every nature. Moreover, any question about it seems to be settled by the decision in Dunbar v. Dunbar, 190 U.S. 350, 23 Sup.Ct. 757, 47 L.Ed. 1084:

'In section 63b provision is made for unliquidated claims against the bankrupt, which may be liquidated upon application to the court in such manner as it shall direct, and may thereafter be proved and allowed against his estate. This paragraph 'b,' however, adds nothing to the class of debts which might be proved under paragraph 'a' of the same section. Its purpose is to permit an unliquidated claim, coming within the provisions of section 63a, to be liquidated as the court should direct.'

While the Supreme Court in the later case of Crawford v. Burke, 195 U.S. 187, 25 Sup.Ct. 9, 49 L.Ed. 147, stated that another construction of the paragraph was possible, we do not understand that they adopted it. It is urged, however, that a different construction should be adopted in view of an amendment to section 17-- relating to discharges-- adopted in 1903. Act Feb. 5, 1903, c. 487, Sec. 5, 32 Stat. 798 (U.S. Comp. St. Supp. 1907, p. 1026). This section as originally adopted provided as follows:

'A discharge in bankruptcy shall release the bankrupt from all of his provable debts except such as * * * (2) are judgments in actions for frauds, or obtaining property by false pretenses, or false

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