Martin v. Rosenbaum
| Decision Date | 28 March 1964 |
| Docket Number | No. 18795.,18795. |
| Citation | 329 F.2d 817 |
| Parties | Sidney MARTIN, Appellant, v. Samuel ROSENBAUM, Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Robert G. Leff, Beverly Hills, Cal., for appellant.
Blanchard & Crispi, and Richard H. Levin, Los Angeles, Cal., for appellee.
Before BARNES, HAMLEY and BROWNING, Circuit Judges.
This is an appeal from an order of the district court affirming, on petition for review, an order of a referee in bankruptcy, permanently restraining appellant from proceeding to collect a judgment he had recovered against the bankrupt in the California State courts.
Jurisdiction below rested on 11 U.S.C. §§ 11, sub. a(15) and 11, sub. a(10). Jurisdiction here, on 28 U.S.C. § 1291 and 11 U.S.C. § 47.
The facts need to be stated in some detail. Samuel Rosenbaum (appellee here) was, in the years 1956 to 1958, in the business of operating a meat market known as Meat Town, Inc., in Newark, New Jersey. He attempted to expand his business, found he was losing money, and decamped for California, leaving owing to creditors around $12,000, of which he owed Jersey Packing Company some $4,000.00.
In California, he worked as a butcher, found his New Jersey creditors were pursuing him to California; and on January 24, 1961, filed his debtor's petition in bankruptcy, listing the Jersey City Packing Company debt of $4,000.
Previously, on March 25, 1959, Sidney Martin (plaintiff and appellant herein) had filed an action in the Superior Court of Los Angeles County, No. 719567, against Rosenbaum in three common counts (open book account, account stated, goods sold and delivered) and one count of "obtaining property by false pretenses and false representations, by purchasing goods on credit when he knowingly and intentionally did not intend to pay for them." The three common counts sought judgment for $3,991.93; the fourth or fraud count sought $3,990.50.
The false representations alleged in the fourth cause of action were that "the defendant represented to plaintiff that he was solvent and in good credit, and had sufficient assets over and above all his liabilities." The period of time when meat was purchased, as shown by the accounts attached to the complaint was June 12 to July 12, 1958. On June 12, 1958, Rosenbaum owed Martin $4,195.91; he paid $6,625.92 during June and still owed $1,701.57 because of additional purchases. From July 1 to July 12, 1958, Rosenbaum paid Martin $1,700.14, and on the 12th owed him $3,991.93. During this twelve day period in July (and despite the $1,700.14 payment), Martin's fourth cause of action charges that "defendant had no intent whatsoever to pay the plaintiff for the merchandise so acquired from the plaintiff."
Rosenbaum defaulted in the State court suit, and in accordance with the rules of the California Superior Court and the State law and local court rules respecting the proof of a cause of action and the amount of the default judgment when any cause of action is based on fraud, Martin submitted an "Affidavit of Proof" (Exhibit B in evidence below).
The affidavit set forth the amount of the obligation as "$3,990.50." Based on the affidavit of proof, a minute order was entered on August 8, 1959 (dated August 4, 1959). It granted judgment for $3,990.50, interest of $250.22 and costs of $27.25. A judgment of default was also entered, in the same sums, on August 4, 1959. Neither the minute order nor the default judgment specified that the judgment was based upon fraud.1
Turning back to the bankruptcy proceedings, we find that Sidney Martin filed a proof of claim in the bankruptcy proceeding on June 21, 1961. Paragraph 4 thereof recited that "the original olbigation (sic) was $3,990.50; judgment including costs and interest entered in Los Angeles Superior Court for $4,269.95; payments thereon of $520 interest to date of $259.10, balance $4529.05 (sic)"; and paragraph 8 thereof stated: "* * * that no judgment has been rendered thereon, except judgment entered in LASC # 719567, certified copy annexed hereto and made part hereof."
No certified copy was ever annexed to the proof of claim, nor was it ever offered in evidence at any of the hearings hereinafter mentioned, nor was it produced until the time of argument on appeal, as mentioned in note 1.
Appellant sought to enforce his judgment by supplementary proceedings, some before and some after the appellee's bankruptcy.
On October 18, 1961, appellee was granted a discharge in bankruptcy. No objection was filed by any creditor to such discharge.
On November 7, 1961, a petition was filed by appellee, reciting his discharge, the alleged harassment by appellant in the form of examination in supplementary proceedings in the State court, and requesting the issuance of an order to show cause why appellant should not be permanently enjoined from requiring the bankrupt to appear in supplementary proceedings then pending in the State Superior Court, or from otherwise enforcing his judgment. On the hearing of the order to show cause, the appellant was so restrained.
Appellant then filed a petition for rehearing, with points and authorities. Appellee filed a reply, with authorities and defenses. A hearing was had on November 28, 1961. The referee again ruled that the judgment represented an obligation dischargeable in bankruptcy. Findings appropriate were made and entered (Tr. pp. 58-64).
On March 20, 1962, appellant filed a petition with the district court for a review of the referee's order (Tr. pp. 65-70). The referee filed his certificate for the review of his order. Both sides submitted authorities, and orally argued the matter on September 10, 1962. On March 21, 1963, the district court affirmed the referee.
No full transcript of the hearing before the referee is before us, because appellant states, it was "unnecessary." A partial transcript was introduced below, and is in evidence. It relates primarily to the bankrupt's explanation to the referee as to how the debt sued on was incurred, and whether or not the judgment recovered for the debt could have been based on fraud, even though neither it nor the State court's minute entry recited or referred to fraud.
Appellant urges seventeen points on which he relies, which he summarizes as follows:
"Although the Bankruptcy Court below is clothed with equity jurisdiction to determine whether a claim founded in a judgment should be within or excluded from the effect of a discharge, such jurisdiction * * * should be exercised only in unusual circumstances and where specific embarrassment arises, and * * * it is the duty of the party seeking such injunctive relief to first show the court that such circumstances and embarrassment exist, and * * * here the bankrupt failed to show such circumstances."
Because the judgment in the State court was entered upon appellee's default, urges appellant, it admits that the material allegations of the complaint are conclusive as to the issues tendered by the complaint. Therefore, says appellant, the referee had no authority to inquire into and hear evidence extrinsic to the judgment.
Appellant admits:
"That in ascertaining whether a judgment has been discharged in bankruptcy, broad language of the case law has stated that a Bankruptcy Court may go behind the...
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Martin v. Martin
...Bankruptcy (1956) § 619, p. 78; see also 2 Collier on Bankruptcy (14th ed. 1969) § 38.02, pp. 1397--1400.)10 Accord Martin v. Rosenbaum (9th Cir. 1964) 329 F.2d 817, 820; In re Johnson (3d Cir. 1963) 323 F.2d 574, 578; Poolman v. Poolman (8th Cir. 1961) 289 F.2d 332, 334; Den Haerynck v. Th......
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