Bacon v. Buffalo Cold Storage Co.

193 F. 34, 113 C.C.A. 358, 1912 U.S. App. LEXIS 1044
Court of Appeals for the Fifth Circuit·Decided January 9, 1912·No. No. 2,205·Published·Cited by 31 cases

Opinions

GRUBB, District Judge

(after stating the facts as above). [1] The appeal presents the single question whether the failure of a bankrupt to apply for a discharge within the time required by law raider an earlier petition is a good ground for denying his discharge when applied for by the bankrupt under a later petition, in which no new assets are scheduled, as to creditors who held provable claims under the first petition, and whether it is proper to grant the discharge limiting the operation of it in cases, as in this case, in which there are also creditors whose claims are not provable under the first petition, to such claims.

Section 1, stilxl. 12, Act 1898, defines a discharge as “the release of the bankrupt from all his debts which are provable in bankruptcy, except such as are excepted by this act.” Section 14 provides that the court shall grant the discharge unless upon the hearing it appears that the bankrupt has done any one of the six certain things specified in the section. No one of them covers the ground for denying this bankrupt’s discharge by the court below. Section 17 provides that a discharge shall release a bankrupt from all his provable debts except four classes therein specified, none of which includes the debts excepted from the operation of this bankrupt's discharge by the court below. The argument is made with force, as this bankrupt was not shown to have been guilty of any offense depriving him of the right to a discharge, and as the excepted debts were provable in bankruptcy, and not comprised in any of the excluded classes, their exclusion, in effect, ingrafts on the bankruptcy act an additional ground for denying a discharge, by implication, when the act expresses the grounds for denying the bankrupt his discharge and the classes of debts excluded from its operation when granted.

The only express limitation upon the bankrupt’s right to renew his application for a discharge is the fifth ground mentioned in section 14, that in voluntary proceedings the bankrupt has been granted a discharge in. bankruptcy within six years. His right to renew his application in the event of a former denial or a failure to apply for a discharge within the required time has no expressed limitation in the bankruptcy act. If none is to be implied, it is open to the bankrupt, who has been denied a discharge after contest, to immediately file a second petition, and, within 30 days, renew* his application and compel liis creditors to relitigate his right to a discharge; and, in the event of the bankrupt’s failure to obtain his discharge under the second petition, to file a third and others without limit for the same purpose, and in the meantime prevent his creditors from collecting debts as to which he has been repeatedly held not to be entitled to a discharge. So the bankrupt could accomplish the same thing by intentionally failing to apply for his discharge within the statutory time, if convinced that he was not entitled thereto, and when pursued by his creditors, filing other petitions, without limit as to number, and thus suspending indefinitely the collection of debts as to which he had [36] no right 'to be discharged in bankruptcy. Such a situation would make the bankruptcy law in its practical administration oppressive and intolerable, and has led the courts to read into the law, by implication, the common-law principle of res adjudicata as a defense to an application for a discharge by a bankrupt who has already applied for a discharge from the same debt under a former petition and been denied it, or who, having filed a former petition, has failed to apply for his discharge thereunder until after the expiration of the time fixed by law therefor.

The principle is stated by the Circuit Court of Appeals for the Eighth Circuit in the case of Kuntz v. Young, 131 F. 719, 65 C. C. A. 477, as follows:

“A failure of the bankrupt to apply in due time for, or a refusal by the court to grant a discharge from the debts provable under one petition in bankruptcy, renders the question of a right to a discharge from those debts in a proceeding under a subsequent petition res adjudicata.”

This case has been followed by the Circuit Courts of Appeals for the First and Second Circuits as well as by numerous District Courts, and to secure uniformity of decision in the different circuits, if for no other reason, we incline to this view. Bluthenthal v. Jones, 208 U. S. 64-66, 28 Sup. Ct. 192, 52 D. Ed. 390 (dictum); Kuntz v. Young, 131 Fed. 719, 65 C. C. A. 477; In re Fiegenbaum, 121 Fed. 69, 57 C. C. A. 409 (Second Circuit); In re Kuffler, 151 Fed. 12, 80 C. C. A. 508 (Second Circuit); Id., 168 Fed. 1021, 93 C. C. A. 671 (certiorari denied by Supreme Court, 214 U. S. 520, 29 Sup. Ct. 701, 53 L. Ed. 1066); In re Silverman, 157 Fed. 675, 85 C. C. A. 224 (Second Circuit); In re Elby (D. C.) 157 Fed. 935; In re Stone (D. C.) 172 Fed. 947; In re Bramlett (D. C.) 161 Fed. 588; Pollet v. Cosel, 179 Fed. 488, 103 C. C. A. 68.(First Circuit) 30 L. R. A. (N. S.) 1164; In re Weintraub (D. C.) 133 Fed. 1000; In re Schnable (D. C.) 166 Fed. 383; In re Pullian (D. C.) 171 Fed. 595; In re Levenstien (D. C.) 180 Fed. 957; In re Westbrook (D. C.) 186 Fed. 414.

Doubt has arisen as to the procedure in cases in which the bankrupt is held to be entitled to his discharge under the second petition from certain debts incurred subsequently to the .filing of the first petition, but not as to such debts as were provable under the first petition. As the matter relates to the effect of a discharge upon a particular debt or debts, it would seem that the creditor should be remitted to the court in which he seeks to enforce his debt, to limit its effect, if pleaded by the bankrupt, as a discharge from it. In the case of L. Ed. 390, the Supreme Court said, as to the effect of an unlimited discharge granted under a second petition and without opposition from the creditor who sought to limit its effect when pleaded in a subsequent action to enforce the debt:

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Bacon v. Buffalo Cold Storage Co., 193 F. 34, 113 C.C.A. 358, 1912 U.S. App. LEXIS 1044 (5th Cir. 1912).

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