Sanitation Recycling, Inc. v. JAY PEAK LOD. ASS'N, INC.

Decision Date18 March 1977
Docket NumberCiv. A. No. 76-214.
Citation428 F. Supp. 1022
CourtU.S. District Court — District of Vermont
PartiesSANITATION RECYCLING, INC., Plaintiff-Appellant, v. JAY PEAK LODGING ASSOCIATION, INC., Defendant-Appellee.

Joseph C. Palmisano, Barre, Vt., for plaintiff-appellant.

Douglas D. DeVries, Costes & DeVries, Enosburg Falls, Vt., for defendant-appellee.


ALBERT W. COFFRIN, District Judge.

This is an appeal from a decision of the Bankruptcy Judge regarding the dischargeability of a debt owed by defendant Jay Peak Lodging Association, Inc. to plaintiff Sanitation Recycling, Inc. The case arises under § 17(a)(2) of the Bankruptcy Act, 11 U.S.C. § 35(a)(2). The Bankruptcy Judge held that the defendant had not obtained money or property by false pretenses or false representations, and therefore declared the debt in question to be dischargeable. Plaintiff has appealed to this Court, as provided in § 39(c) of the Act, 11 U.S.C. § 67(c). Defendant has moved for dismissal of the appeal because of plaintiff's failure to comply with the time limits placed on him by the Rules of Bankruptcy Procedure.

In regard to the motion to dismiss, we agree with defendant that plaintiff was indeed derelict in its failure to provide a brief in a timely manner, pursuant to Bankruptcy Rule 808. The time limits set forth in the Rules of Bankruptcy Procedure are intended to provide for expeditious resolution of bankruptcy proceedings, and should not be ignored. However, because both the motion to dismiss and the appeal were heard at the same time, the Court has considered and will proceed to decide the case on the merits.

A brief recapitulation of the facts as found by the Bankruptcy Judge is sufficient. Defendant was adjudicated a bankrupt on a voluntary petition filed by it on March 26, 1976. Plaintiff is an unsecured creditor under Schedule A-3 in the amount of $4,550.00. The debt arose as a result of the plaintiff's having furnished 40 chemical portable toilets to the defendant in connection with a "world archery tournament" planned and held by defendant in July, 1975. The total contract price for the rental of the toilets was $4,550.00, with a check for 50 percent or $2,275.00 to be tendered to the plaintiff at the time of delivery and the balance due to be paid when the toilets were picked up after the tournament.

On July 17, 1975 defendant issued its check for $2,275 to the plaintiff. Upon receipt of the check, plaintiff called the drawee bank and was informed that there were not sufficient funds to cover it. Upon presentment, the check was returned for insufficient funds. Nevertheless, plaintiff did cause the toilets to be delivered to the defendant for its use during the archery tournament. During a dispute at the scene of the tournament over the bad check, defendant, at the suggestion of the sheriff, issued a second check, this time for the full contract price of $4,550. This check, too, was subsequently returned for insufficient funds.

At the hearing before the Bankruptcy Judge, plaintiff attempted to establish that the procurement of the toilets by the defendants, based upon representations that the checks they issued would be honored, while they knew that they could not be honored, amounted to the obtaining of property by false pretenses or false representations. The Bankruptcy Judge found that the false representations here did not amount to the kind of fraud which is required in order to bring the case within the ambit of § 17(a)(2) of the Act.

Rule 810 of the Bankruptcy Rules states that the District Judge shall accept the referee's findings of fact unless they are clearly erroneous. But, the District Judge is "free to make his own conclusions of law, and to draw inferences or deductions, different from the referee's, on documentary, undisputed or stipulated evidence." 13 Collier, Bankruptcy ¶ 810.05 (14th ed.). Finding no clear error as to either fact or law, we affirm the decision of the Bankruptcy Judge.

As correctly pointed out by the Bankruptcy Judge, "the burden of proof is upon the creditor who claims that his duly scheduled debt is excepted from the operation of the discharge in Bankruptcy because of the false representation or pretense," citing 1A Collier, Bankruptcy, at 1648 (14th ed.). It is established law that the false representation or false pretense claimed under § 17(a)(2) of the Act must be of a kind involving "moral turpitude or intentional wrong;" fraud implied in law is insufficient. 1A Collier, supra, at 1634; Swanson Petroleum Corp. v. Cumberland, 184 Neb. 323, 167 N.W.2d 391 (1969); Friendly Finance Co. v. Stover, 109 Ga.App. 21, 134 S.E.2d 837 (1964). "Actual fraud," as opposed to fraud implied in law or "constructive fraud," requires intentional wrong or moral turpitude, Pelton's Executor v. Dumas, 117 Vt. 13, 17, 84 A.2d 408 (1951) and it is only this type and degree of fraud...

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  • In re Blackburn
    • United States
    • U.S. Bankruptcy Court — Northern District of Indiana
    • January 12, 1987
    ...In re Taylor, 514 F.2d 1370, 1373 (9th Cir.1975); In re Preston, 47 B.R. 354, 357 (E.D.Va.1983); Sanitation Recycling, Inc. v. Jay Peak Lodging Association, 428 F.Supp. 1022, 1024 (D.Vt.1977); In re Mullin, 51 B.R. 377, 378 (Bkrtcy.S.D.Ind.1985); In re Shebel, 54 B.R. 199, 204 Actual fraud ......
  • Matter of Falk of Bethlehem
    • United States
    • U.S. Bankruptcy Court — District of New Jersey
    • March 24, 1980 opposed to fraud implied in law, where the element of intentional wrong is lacking. See Sanitation Recycling, Inc. v. Jay Peak Lodging Assoc., Inc., 428 F.Supp. 1022, 1024 (D.Vt. 1977); 1A Collier on Bankruptcy, para. 17.16 (14th ed. 1978). Section 17(a)(2) has been interpreted to extend......
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    • April 2, 1981
    ...v. Lubinko, 515 F.2d 260 (9th Cir. 1975); In re Taylor, 514 F.2d 1370, 1373 (9th Cir. 1975); Sanitation Recycling, Inc. v. Jay Peak Lodging Ass'n, Inc., 428 F.Supp. 1022 (D.C. Vt.1977); In re Knight, 421 F.Supp. 1387, 1390-1391 (M.D.La.1976), affirmed without published opinion, 551 F.2d 862......
  • In re Roberts
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    • November 19, 1987 § 523(a)(2)(A), covered implied misrepresentations made in the negotiation of a check. See, e.g., Sanitation Recycling, Inc. v. Jay Peak Lodging Association, 428 F.Supp. 1022 (D.Vt.1977); Richard Farm Bureau v. Durbin, 8 Ohio App.2d 312, 222 N.E.2d 315 (1966); Blue Bonnet Creamery, Inc. ......
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