Delta County Bank v. McGranahan

Fullerton, J. In this action the appellant sought to recover from the respondents the sum of $1,417, alleged to be due upon two promissory notes, executed by the respondents to the appellant at Delta, Colorado, on January 4, 1898. To the complaint, which was in the usual form, the respondents answered, averring that the notes were executed without consideration, and that the respondent Anna F. McGranahan had signed the same under duress; such duress consisting of threats to institute a criminal prosecution against her husband, made by the officers of the appellant, if certain property owned by her was not delivered to the appellant, and the notes in suit executed. The respondent T. H. McGranahan defended on the ground that he had been discharged in bankruptcy, from all debts and claims which are made provable by the bankruptcy act of the United States, and that the debts represented by the notes in the suit were such provable debts. Issue was taken [309] on the ansAvers, and a trial had before the court without a jury, resulting in a judgment for the respondents. That Mrs. McGranahan executed the notes in suit, and turned over to the appellant certain of her individual property, in payment of her husband’s debts to avoid a criminal prosecution against her husband, is testified to, not only by herself and husband, but by the oificers of the appellant also. The officers say that Mr. McGranahan, as president of the appellant bank, loaned himself large sums of money, which he was unable to repay; that the creditors of the hank believed the property claimed by Mrs. McGranahan was procured by some of this money so borrowed, and they insisted that the property he turned over to the bank, else McGranahan he prosecuted for having violated the criminal statutes of Colorado; that they communicated this fact to the respondents, and that the property was turned over accordingly; the notes being given in lieu of a mortgage the respondents had placed on the property. This, we think, taken Avith the testimony of the respondents, justifies the finding of duress made by the trial court, and warrants the judgment relieving Mrs. McGranahan from liability on the notes. Thompson v. Niggley, 53 Kan. 664, 35 Pac. 290, 26 L. R. A. 803. It is contended that the discharge in bankruptcy did not release T. H. McGranahan from the obligation of these notes, because, it is claimed, the notes were not scheduled in his list of obligations filed in the bankruptcy proceedings, and because the notes were giA^en for money misappropriated by him while acting in a fiduciary capacity. TVe think, howeArer, that neither of these objections are well taken. The bankruptcy act does not except, from the order of discharge, all claims not duly scheduled; it excepts such unscheduled claims only where the creditor has no notice or actual knowledge of the bankruptcy proceed [310] ings. As the appellant was listed as a creditor of the bankrupt and due notice of the bankruptcy proceedings was sent it in time for it to present all of its claims, it had notice and actual knowledge of the proceedings, and the rule contended for is not applicable. The second objection is one that might have been urged in the bankruptcy proceedings to prevent an order of discharge against this particular debt, but it cannot be urged to except from tbe operation of tbe order claims tbat were plainly included within it. In other words, the order of the bankruptcy court discharging a bankrupt from his provable debts is conclusive, on collateral attack, as to all provable debts of the bankrupt not specially excepted. Tbe judgment is affirmed. Mount, C. J., Hadley, and Dunbar, JJ., concur. Rudkin, Root, and Crow, JJ., took no part.