Wright, In re, 78-2159

Decision Date15 November 1978
Docket NumberNo. 78-2159,78-2159
Citation584 F.2d 83
PartiesIn re Lynda C. WRIGHT, Bankrupt. John A. BAILEY, Plaintiff-Appellant, v. Lynda C. WRIGHT, Defendant-Appellee. Summary Calendar. *
CourtU.S. Court of Appeals — Fifth Circuit

John A. Bailey, pro se.

Elaine Brady, Houston, Tex., for defendant-appellee.

Appeal from the United States District Court for the Southern District of Texas.

Before GOLDBERG, AINSWORTH and HILL, Circuit Judges.

JAMES C. HILL, Circuit Judge:

This appeal presents the question of whether the rendition of professional services evidenced by a bankrupt's promissory note and reduced to state court judgment constitutes "property" within the meaning of Section 17a(2) of the Bankruptcy Act. On defendant's motion to dismiss, the United States Bankruptcy Court held that the underlying nature of the note was the rendition of legal services and thus did not constitute property under the Act. The District Court affirmed. We agree.

The first class of liabilities excepted from discharge under the Bankruptcy Act are those based upon the obtaining of money or property by false pretenses or representations. 1A Collier on Bankruptcy, P 17.16 at 1628.3 (14th ed.). Professional services of all kinds, including legal services, are excluded from the definition of "property" as it pertains to the Bankruptcy Act. Gleason v. Thaw, 236 U.S. 558, 35 S.Ct. 287, 59 L.Ed. 717 (1915); Hisey v. Lewis Gale Hospital, 27 F.Supp. 20 (W.D.Va.1939).

It is now axiomatic that where a provable claim is reduced to judgment by default, dischargeability may be dependent upon the nature of the claim behind the judgment. 1 1A Collier on Bankruptcy, P 17.16(4) at 1643 (14th ed.); See In Re Houtman, 568 F.2d 651 (9th Cir. 1978); Matter of Pigge, 539 F.2d 369 (4th Cir. 1976). The same reasoning must hold true with respect to promissory notes. The nature of the claim underlying the debt instrument is determinative of its dischargeability. Hence, though a promissory note allegedly induced by fraud was given to the plaintiff here, extrinsic evidence reveals that the nature and consideration for the promissory note was the rendering of legal services by the plaintiff. Such services are not "property" under § 17a(2) to which discharge can be excepted.

Plaintiff's reliance on Fidelity & Deposit Company of Maryland v. Arenz, 290 U.S. 66, 54 S.Ct. 16, 78 L.Ed. 176 (1933) is misplaced. The underlying basis for the execution of the surety bond in Fidelity was in no manner conditioned upon or related to the performance of services by the surety. In contradistinction, the promissory note in the instant case was unequivocally executed as a consequence of debt owed by the bankrupt for legal services rendered to him. Furthermore, unlike the surety bond, which was executed by the surety as a result of fraudulent misrepresentations of financial condition made by the bankrupt, the promissory note in the present case was not executed by the plaintiff, but by the bankrupt himself. Thus, section 17a(2) will not except...

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  • Brown, Iii v. Felsen
    • United States
    • U.S. Supreme Court
    • June 4, 1979
    ..."created more difficulties and more problems then it has solved." Tr. in No. 76 B 56 (Colo., Dec. 14, 1976), p. 13. 4 See In re Wright, 584 F.2d 83, 84 (CA5 1978); In re McMillan, 579 F.2d 289, 293, and n. 6 (CA3 1978); In re Houtman, 568 F.2d 651, 653-654 (CA9 1978); In re Pigge, 539 F.2d ......
  • Swate, Matter of
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • November 21, 1996
    ...115 S.Ct. 732, 130 L.Ed.2d 636 (1995). The nature of a claim underlying the debt determines its dischargeability. See In re Wright, 584 F.2d 83, 84 (5th Cir.1978). Because the nature of Swate's obligations created by the Agreement Incident to Divorce and later merged into the Post Divorce F......
  • In re Brown
    • United States
    • United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Middle District of Tennessee
    • May 3, 1984
    ...existence of a debt must be determined by substance not metaphysics. See Pauley v. Spong, 661 F.2d 6, 9 (2d Cir.1981); Bailey v. Wright, 584 F.2d 83, 85 (5th Cir.1978); Williams v. State of Washington, 529 F.2d 1264, 1270 (9th Cir.1976). A restitution order of a state criminal court—whether......
  • Benich, Matter of
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • March 10, 1987
    ...523.15(3) & (5) (1986); S.Rep. No. 989, 95th Cong., 2d Sess. 77-79 (1978), U.S.Code Cong. & Admin. News 1978, p. 5787.6 In re Wright, 584 F.2d 83, 84 (5th Cir.1978); Lyon v. Lyon, 115 Utah 466, 206 P.2d 148 (1949).7 In re Calhoun, 715 F.2d 1103, 1111 n. 15 (6th Cir.1983). See also In Re Kni......
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