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Supreme Court of the United States
Argued April 13, 1885. ; May 4, 1885, Decided
No Number in Original
[*556] [**1038] [***248] MR. JUSTICE HARLAN delivered the opinion of the court.
On the first day of June, 1877, each of the appellants, who were defendants below, received from the District [****3] Court of the United States for the Southern District of New York his discharge from all debts and demands which by the Revised Statutes of the United States, Title Bankruptcy, were made provable against his estate, and which existed on the 3d day of July, 1875 -- other than such debts as were by law excepted from [**1039] the operation of a discharge in bankruptcy. ] The statute excepts from the operation of a discharge any "debt created by the fraud or embezzlement of the bankrupt, or by defalcation as a public officer, or while acting in a fiduciary capacity; but the debt may be proved, and the dividend thereon shall be a payment on account of such debt." Rev. Stat. § 5,117. To this action, brought by appellees against appellants upon a [*557] cause of action accruing prior to July 3, 1875, the latter made defence, in part, upon the ground that their respective discharges in bankruptcy relieved them from all liability to plaintiffs. In the Supreme Court of New York there was a verdict and judgment in favor of the plaintiffs for the sum of $17,517.86. That judgment having been affirmed in the Court of Appeals, the question to be determined upon this writ of error is, whether [****4] the claim or demand of the plaintiffs is one from which they were relieved by their discharges in bankruptcy. If the debt was of that character, the judgment below must be reversed; otherwise, affirmed.
The evidence before the jury tended to establish the following facts: That for some years prior to June, 1875, the plaintiffs were doing business in the city of Rochester, New York, as partners, under the style of Lowrey & Bradner, while, during the same period, the defendants were engaged in business in the City of New York, under the style of Strang & Holland Bros.; that the special business of plaintiffs was the purchase of wool, which they forwarded [***249] to the defendants, as commission merchants, to sell on account; that plaintiffs, for the accommodation of defendants, often furnished them with promissory notes, for the purpose of enabling them to carry on business; that the defendants took care of these notes, paying the same at maturity out of the proceeds of the property consigned, and with money remitted by the plaintiffs; that in the transactions between the parties the plaintiffs were credited with those notes, with the proceeds of property sold on their account, [****5] and with money remitted by them, and were charged with the amounts paid to take up the notes; that on or about March 1, 1875, the defendants requested the plaintiffs to furnish them with four promissory notes, for about $4,000 each, to enable them to raise money thereon, and to be credited to plaintiffs on their account, in accordance with the course of business existing between the parties -- such notes to be of odd amounts and made as of different dates before the time they were transmitted to the defendants, so that they might appear to be given for real indebtedness; that, pursuant to that request, the plaintiffs made and transmitted to defendants their four promissory [*558] notes, for $4,325.50, $4,326.25, $4,327.13, and $4,327.15, each at four months, dated, respectively, on the 1st, 9th, 15th and 20th days of February, 1875, and each payable to the plaintiffs at the office of the defendants, in the City of New York, and indorsed by the plaintiffs; and that, on or about April 4, 1875, Strang represented to plaintiffs that his firm had not used, nor been able to use, those notes, because they were made payable at their office, and requested plaintiffs to lend them four other [****6] notes of the same amount, payable at the Metropolitan National Bank, in New York City, to be used in the place of those dated in February.
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114 U.S. 555 *; 5 S. Ct. 1038 **; 29 L. Ed. 248 ***; 1885 U.S. LEXIS 1794 ****
STRANG & Another v. BRADNER & Another.
Prior History: [****1] IN ERROR TO THE SUPREME COURT OF THE STATE OF NEW YORK.
This action was commenced by defendants in error as plaintiffs in a court of the State of New York, to recover of the plaintiffs in error a sum which they alleged they had been compelled to pay, through false and fraudulent representations of one of the members of a partnership, consisting of the defendants, made in the course of partnership business. The defendants set up a discharge in bankruptcy. Judgment for the plaintiffs, which was affirmed by the Supreme Court, and the judgment of that court affirmed by the Court of Appeals. The case was remitted by the Court of Appeals to the Supreme Court when the final judgment was entered, which the defendants below, as plaintiffs in error, sued out this writ of error to review. The federal question involved was, the effect of the certificate of discharge in bankruptcy. The facts which raise the question are stated in the opinion of the court.
discharges, bankrupt, partnership, promissory note, fraudulent, indorsers, relieved, damages
Bankruptcy Law, Discharge & Dischargeability, Exceptions to Discharge, Embezzlement & False Representations, Governments, Fiduciaries, General Overview, Torts, Fraud & Misrepresentation, Actual Fraud, Business & Corporate Compliance, Enforcement, Duties & Liabilities of Parties, Forgery, Fraud & Mistake, Business & Corporate Law, Management Duties & Liabilities, Fiduciary Duties, Duty of Good Faith & Loyalty, General Partnerships, Causes of Action, Rights of Partners, Authority to Act, Duty of Care