Burnham v. Noyes

Soule, J. A discharge in bankruptcy bars all claim against the bankrupt on account of his wrongful conversion or withholding of goods or chattels, where the conduct of the bankrupt is free from fraud. U. S. Rev. Sts. §§ 5067, 5114, 5119. But if the debt is created by the fraud of the bankrupt, it is not affected by the discharge. U. S. Rev. Sts. § 5117. The declaration alleges that the defendant obtained possession of the check by the fraudulent representation that he wished to examine it, made with a fraudulent purpose to cheat and defraud the plaintiff, and that, having thus obtained the check, he kept it and converted it to his own use, with the same fraudulent purpose, knowing when he took it that it was rightfully the plaintiff’s. The check was signed by George N. Noyes & Co. and indorsed by Dearborn Brothers. If the allegations were proved, the demand would be clearly within the class of debts excepted from the operation of the discharge. Morse v. Hutchins, 102 Mass. 439. The instruction on this branch of the case was correct. The fraud of the defendant was an essential element in the case which the plaintiff must make out in order to prevail. It was not enough to prove that the defendant was wrongfully in possession of the check. If the proof went only thus far, it would establish a demand barred by the discharge in bankruptcy. The instruction of the learned judge who presided at the trial of the case, “ that if the defendant did any acts, in relation to suppressing and retaining the check, which were unlawful for him to do, thereafter no presumption existed that he was innocent of wrongful intent in so taking and retaining it, but, in that case, the burden was upon the defendant to prove, and that he must satisfy the jury, that he acted honestly and under a belief that he had a right so to take it and retain it,” leaves out of view the fact that fraud by the defendant is an integral part of the plaintiff’s case, as to which the burden of proof is on him, and the principle of law that such burden is on him to the end. The defence which it was sought to establish was not by way of confession and avoidance, but was by negativing the existence of fraud, one element to be proved by the plaintiff. If the check was rightfully the plaintiff’s, any act which the defendant might do in relation to suppressing or retaining it, which it was un 88 lawful for him to do, would be equally unlawful, that is to say, equally in violation of the rights of the plaintiff, whether the defendant had obtained the check openly and honestly, with a belief that he was entitled to it, or by fraud and with intent to cheat the plaintiff. This instruction, therefore, was erroneous, and the verdict cannot stand. Exceptions sustained.