Hatten v. Speyer

1 Johns. 37

• Court: New York Supreme Court
• Decided: February 15, 1806
• Status: Published

Opinion

Livingston, J.

now delivered the opinion of the court. On-the trial óf this cause, I thought the demand barred by the proceedings under the bankrupt act. This opinion was expressed at the time, but the parties chose, without toy intó make a case which presents' for decision, a question of some importance, but 'of no great difficulty. Whether ¿person,who has received money prior to his bankruptcy, under a promise to put it out, on bond and mortgage, and which he failed to do’, be liable, notwithstanding" his certificate, in a special action on the case for such neglect. This is stating the question in' its most favourable aspect for the plaintiff, for ítmáy be doubted, whether being early apprised of her monies not being placed in this way, she did not approve and ratify her agent’s conduct. But "I am willing to meet the question as here put, being satisfied, after considerable reflection, that the‘ defendant is protected from any suit, that can be brought against him, on account of his dealings with the plaintiff.

A bankrupt being compelled to surrender all his property for the benefit of creditors, and having'done so fairly, is entitled, and such is one object of the law, to be protected against the claims of all, who were creditors before i^e act of bankruptcy. He is, in the terms of the act, “ dis- ' “ charged from all debts due by him at the time he became- “ bankrupt, and irom all which were or might have been proved under the commission.” Now, if this demand could have been proved, what right have we to repeal the statute, and hold the party liable ? It was admitted, at least it was not denied, that an fiction for money had and' received^ might have been brought, and that then the” certificate would have been a bar. This involves in it another admission, which is, that the sum in controversy might have been proved under the commission, and thus brings the defendant’s case within the letter of the act. But plain and imperative as its tone is, because the plaintiff has had ingenuity enough to resort to a special action, it is expected that we are to pronounce the discharge a nullity, and to render the bankrupt liable for an old debt. In this action, it is supposed, the damages are so very uncertain, that they can only be settled by a jury, and, therefore, not susceptible of proof before commissioners ; and that a bankrupt’s discharge does not depend on the intrinsic merits, or real nature of the demand, but on the form in which his adversary shall elect to sue him. What was meant by the contingency, or uncertainty of this demand, and its difficulty of liquidation, I could not understand. Its payment depended on no future, or doubtful event; the plaintiff, at the time of the bankruptcy, could have sworn to what was due. No claim can be of more easy, or prompt liquidation, whether the one or other form of action be pursued. The sum received with interest, was all that could be recovered in any way, and if compound, instead of common interest, were allowed, only a few more figures would be ‘necessary. Here then could occur nothing of that uncertainty, whkhis a hindrance to making proof under.a commission, and by which is intended a difficulty, from the nature of the demand, in determining, without a trial, what damages the party is entitled to. It would have been better, and more consistent with the spirit of a system of bankrupt law, and the humanity due to debtors, to have excluded from proof such claims only, as were contingent, or as originated in torts ; as actions for assault and battery, tresspass on land, slander, and the like, in which the damages, instead of being governed by certain and known rules, depend almost entirely on discretion, and are so arbitrary, that the party, if left to his own oath, would be totally a.t a loss to fix the amount. This appears to have been the understanding of Mr. Justice Butter, who, in Johnson v. Spiller,

* observes “ that it is not to be taken a for granted that a demand in trover cannot be proved “under a commission ; where the demand can be liquidated, it “ may. It is only personal damage, as for an assault &c. “ that cannot be proved.” But extensive as the exclusion has become, It is very certain that there is yet no obstacle to proving a debt, originating in the receipt of monies to another’s use. It only remains to see, whether by recurring to a particular form of action, the bankrupt may be placed at the mercy of creditors. It would be somewhat extraordinary, if a positive and plain injunction of a statute could be frittered away in this manner, or that the substantial right of any party should be varied, if not prostrated, by an option, left with those whose interest, and feelings naturally lead to an abuse of it. I should struggle hard, could any authoritative precedent be produced, to get rid of it, but none exists. The only rule prescribed being the practicability of proving a debt under a commission, it will be unsafe to resort to any other, especially to one which can only mislead, by concealing from view the true and essential merits of the case. It is said, however,,that Lord Mansfield broke in upon the rule in the case of Goodtitle v. North,* and considered the form of action, as the only test of a bankrupt’s liability. Nothing more was decided in that case, than that bankruptcy was no plea to an action of trespass for mesne profits, on account of the damages being so uncertain. It is true, Lord Mansfield, in giving his opinion, does say, “ the form of action is decisive,” which principle is also recognized and adopted in Parker v. Norton, * where trover was brought for a bill of exchange, and a bankruptcy, which happened after the conversion was held to be no defence, though it was conceded that it would have been so, if the action had been for money had and received. Of these cases, it is sufficient to say, that neither of them has any binding force here, and that the reasons on which they proceed are not such as to induce us to adopt them. It is refining away one of the most important provisions of the bankrupt law—it savors of extreme • hardship towards unfortunate debtors, and establishes a mode of reviving suits for old demands, which, with a little ingenuity and fiction, may be extended to almost every debt a merchant may owe, at the time of his bankruptcy. Judgment must be entered for defendant.

1 Doug. 167, in note.

Doug. 584.

. U. S. vol. 5, p. 69.

6 D. & E. 695.