John Intyre v. Frederick Kavanaugh
| Decision Date | 04 December 1916 |
| Docket Number | No. 88,88 |
| Citation | 242 U.S. 138,37 S.Ct. 38,61 L.Ed. 205 |
| Parties | JOHN G. McINTYRE, Plff. in Err., v. FREDERICK W. KAVANAUGH |
| Court | U.S. Supreme Court |
Mr. Robert H. Patton for plaintiff in error.
Mr. Myer Nussbaum for defendant in error.
Plaintiff in error was a member of T. A. McIntyre & Company, engaged in business as brokers. During February, 1908, the partnership received certain stock certificates owned by defendant in error, and undertook to hold them as security for his indebtedness, amounting to less than one sixth of their market value. Within a few weeks, without authority and without his knowledge, they sold the stocks and appropriated the avails to their own use. Shortly thereafter both firm and its members were adjudged bankrupts. After his discharge in bankruptcy this suit was instituted against plaintiff in error, seeking damages for the wrongful conversion. He set up his discharge and also personal ignorance of and nonparticipation in any tortious act.
The trial court held the liability was for wilful and malicious injury to property and expressly excluded from release by § 17 (2), Bankruptcy Act, as amended in 1903 (32 Stat. at L. 798, chap. 487, Comp. Stat. 1913, § 9601), and that the several partners were liable. A judgment for damages was affirmed by appellate division (151 App. Div. 910, 135 N. Y. Supp. 1120) and court of appeals (210 N. Y. 175, 104 N. E. 135).
That partners are individually responsible for torts by a firm when acting within the general scope of its business, whether they personally participate therein or not, we regard as entirely clear. Castle v. Ballard, 23 How. 172, 16 L. ed. 424; Re Peck, 206 N. Y. 56, 41 L.R.A.(N.S.) 1223, 99 N. E. 258, Ann. Cas. 1914A, 798. If, under the circumstances here presented, the firm inflicted a wilful and malicious injury to property, of course, plaintiff in error incurred liability for that character of wrong.
As originally enacted, § 17 of the Bankruptcy Act provided:
'A discharge in bankruptcy shall release a 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 representations, or for wilful and malicious injuries to the person or property of another; . . . (4) were created by his fraud, embezzlement, misappropriation, or defalcation while acting as an officer or in any fiduciary capacity.' [30 Stat. at L. 550, chap. 541, Comp. Stat. 1913, § 9601.]
This was amended by Act February 5, 1903, so as to read:
'A discharge in bankruptcy shall release a bankrupt from all of his provable debts, except such as . . . (2) are liabilities for obtaining property by false pretenses or false representations, or for wilful and malicious injuries to the person or property of another, or for alimony due or to become due, or for maintenance or support of wife or child, or for seduction of an unmarried female, or for criminal conversation; . . . or (4) were created by his fraud, embezzlement, misappropriation, or defalcation while acting as an officer or in any fiduciary capacity.' [32 Stat. at L. 798, chap. 487, Comp. Stat. 1913, § 9601.]
The trial court found——
That on February 5, 1908, McIntyre & Company by agreement obtained possession of Kavanaugh's stocks, worth approximately $25,000, and held them as security for his indebtedness, amounting to $3,853.32.
'That almost immediately after taking over said stocks by certificates as aforesaid by the said firm of T. A. McIntyre & Company, composed as aforesaid, and commencing on the very next day, said firm of T. A. McIntyre & Company (the above-named defendants being members thereof), without any notice to the plaintiff, and without his authority, knowledge, or consent, or demand of any kind upon him, sold and disposed of the identical certificates of such stock and scrip so turned over to them as aforesaid, and placed the avails thereof in the bank account of said firm of T. A. McIntyre & Company to the credit of said firm.
'That the various...
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