Karger v. Orth

• Decision Date: 24 November 1911
• Docket Number: 17,313 - (42)
• Citation: 133 N.W. 471,116 Minn. 124
• Parties: JULIUS KARGER and Another v. JAMES J. B. ORTH
• Court: Minnesota Supreme Court

133 N.W. 471

116 Minn. 124

JULIUS KARGER and Another v. JAMES J. B. ORTH

Nos. 17,313 - (42)

Supreme Court of Minnesota

November 24, 1911

Julius Karger and Solomon Karger appealed from an order of the district court for Hennepin county, Holt, J., granting defendant's motion for an order staying execution and all proceedings upon a judgment recovered by appellants against defendant. Affirmed.

SYLLABUS

Judgment.

A fact determined by a judgment cannot be controverted by the judgment creditor, to show that the judgment is not affected by the discharge in bankruptcy of the judgment debtor.

Discharge in bankruptcy -- misappropriation of fund by partner.

Misappropriation by a partner of partnership funds is not a misappropriation by him while acting in a "fiduciary capacity," within the meaning of the provision excepting certain debts from the effect of a discharge in bankruptcy.

A. L Brice, for appellants.

Tappan & Silverthorn, for respondent.

OPINION

SIMPSON, J.

In August, 1910, the respondent filed his petition in bankruptcy, and was, on November 26, 1910, discharged from all debts and claims provable under the national bankruptcy act, except such as are by law excepted from the operation of such discharge. In February, 1911, the district court of Hennepin county issued its order permanently staying execution upon a certain judgment in the sum of $10,598.60 recovered March 16, 1909, by appellants against the respondent. This appeal is taken from such order; the appellants claiming that the judgment and the debt upon which it was obtained were not affected by the discharge in bankruptcy.

By the bankruptcy act of 1898, as amended in 1903 (Act of Feb. 5, 1903, c. 487, § 5, 32 St. 798 [U.S. Comp. St. Supp. 1909, p. 1310]), it is provided:

"Sec. 17. Debts Not Affected by a Discharge. 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. * * *

(4) Were created by his fraud, embezzlement, misappropriation or defalcation while acting as an officer or in any fiduciary capacity."

An examination of the record discloses that the judgment here involved was entered after trial and verdict by the jury in appellants' favor. The action was brought to recover on two promissory notes, each in the sum of $5,000, made by the defendant, respondent herein, to the plaintiffs, appellants herein, and the complaint sets out two causes of action thereon. The answer admitted the making of the notes, alleged plaintiffs and defendant were for some years prior to the making thereof, copartners; that the notes were given to cover cash withdrawn by defendant from the partnership, that it was agreed that the defendant's share of the profits of the partnership, when the same were ascertained, should be applied in payment of the notes, and that defendant's share of such profits had been ascertained, and were in excess of the amount of the notes. Plaintiffs, by their reply, admitted the partnership, alleged that the defendant had misappropriated and converted partnership funds, and that as a settlement and adjustment of the matter the notes, together with certain cash payments and transfer of property, were given by the defendant to plaintiffs, that in such settlement defendant's share of the profits in the partnership had been agreed upon, and that he had been credited therewith and had released all...