Blake v. Clary

Walton, J. An insolvent debtor’s discharge, if fraudulently obtained, may be annulled on petition of a creditor who, at the time the discharge was granted, had no knowledge of the fraud. But such a petition can not be maintained by a creditor who had such knowledge. His remedy is to resist the granting of the discharge, it. S., c. 70, § 49. And the knowledge of an attorney is the knowledge of his client. Rogers v. Palmer, 102 U. S. 263; Sartwell v. North, 144 Mass. 188. And see Bank v. Chase, 72 Maine, 226, where the authorities are collated and the doctrine of imputed notices fully discussed. It is claimed that in this case the insolvent debtor settled with several of his creditors, and thereby induced them not to prosecute appeals which had been taken from a decree granting him a discharge; and that by these means he obtained a discharge in the appellate court which he otherwise would not have obtained. And it is claimed that these settlements were a fraud upon the petitioners and entitle them to have the discharge annulled. There is no direct evidence that these petitioners had personal knowledge of these settlements before the debtor obtained his discharge. But the evidence leaves no doubt that their attorneys had such knowledge some nine or ten months before the discharge was finally obtained in the appellate court. And this knowledge was not obtained by confidential communications or other means which would justify them in withholding it from their clients. It was obtained in open court. The insolvent [158] debtor’s counsel moved to have the appeals dismissed on the ground that the appellants, and others who had become parties to the appeals, had been settled with; and they produced and placed on file the written evidence of such settlements ; and the petitioners’ counsel were present and had knowledge of the proceedings, and took part in the discussions which followed. This knowledge on their part, thus obtained, is imputable to their clients, and bars the latters’right to maintain their petition to have the discharge, subsequently obtained by the debtor, annulled on account of these settlements. And on this ground we think the verdict of the jury sustaining the discharge was clearly right; and that the motion to have the verdict set aside and a new trial granted must be overruled.. Motion overruled. Peters, C. J., Virgin, Libbey, Haskell and Wi-iitehouse, JJ., concurred.