M. C. Kiser Co. v. Gerald

SAMFORD, J. Plaintiff declared in three counts claiming for goods sold and delivered and on four separate promissory notes. The complaint was in legal form and sufficient Defendant pleaded discharge in bankruptcy, making proper allegations to bring his defense within the act of Congress pertaining to bankruptcy of 1898, as amended by act of Congress of 1903 (U. S. Comp. St. § 9586 et seq.). Plaintiff replied, that the claim sued on was excepted from the provisions of the Bankruptcy Act, by reason of the fact that the goods and merchandise, the consideration of the obligations sued on were obtained from plaintiff by fraud or fraudulent misrepresentation. Defendant demurred to the replication on the grounds that there is a departure from the original complaint, in that the complaint is on contract or assumpsit and the replication sets up an action for fraud and deceit. The court sustained the demurrer, and on plaintiff taking a nonsuit, because of the adverse ruling of the court on demurrers, final judgment was rendered against the plaintiff, and he appeals. [1] Section 17a of the national Bankruptcy Act, as amended by act of Congress 1903. (U. S. Comp. St. § 9601), provides: “A discharge in bankruptcy shall release a bankrupt from all of Ms provable debts, except such as * * * (2) are liabilities for obtaining property by false pretenses or false representations,” etc. The plaintiff by his replication brings himself well within this exception. Where this is the case, his debt is not affected by a discharge in bankruptcy and is not within the exclusive jurisdiction of "the bankrupt court. [2] When the bankrupt’s discharge is pleaded to an action on such a debt, it is a good replication that the debt was created by fraud, etc., and the court in which the action is brought has jurisdiction to try the issue. Broadnax v. Bradford, 50 Ala. 270; Blackman v. McAdams, 131 Mo. 408, 111 S. W. 599; Jacobson v. Horne, 52 Miss. 186; Argall v. Jacobs, 87 N. Y. 110, 41 Am. Rep. 357. There are many authorities cited in the foregoing adjudicated cases to the same effect. The ease of Strauch v. Flynn, 108 Minn. 313, 122 N. W. 320, cited in appellee’s case, while sustaining appellee’s contention, is opposed to the great weight of authority as well as to good reason. The replication does not set up a new cause of action or change the canse of action declared on, hut simply alleges facts exempting the plaintiff’s claim from the operation of the Bankruptcy Act. The court erred in its rulings on the demurrer, and its judgment is reversed, and a judgment will here be .rendered reinstating the cause. Reversed and rendered.