Lemcke v. Booth

Currier, Judge, delivered the opinion of the court. The question is here presented whether a factor or commission merchant stands in a fiduciary relation to his principals in respect of the proceeds of sales of commission goods, within the meaning of section 33 of the bankrupt act of 1867 (U. H. Stat. at Large, 533). The section provides that “no debt created by the fraud or embezzlement of the bankrupt, or his defalcation as a public officer, or while acting in any fiduciary character, shall be discharged under the act.” The corresponding provision in the bankrupt act of 1841 excluded from its benefits “ all persons owing debts created in consequence of a defalcation as a public officer, or as executor, administrator, guardian or trustee, or while acting in any other fiduciary capacity.” The [388] “fiduciary capacity ” here mentioned was held by the Supreme Court of the United States to refer to technical trusts of the character of those previously mentioned, and not to trusts raised by implication of law. It was therefore held that an indebted factor or commission merchant was not a fiduciary debtor within the meaning of the act of 1841. (Chapman v. Forsyth, 2 How. 202.) But the above-recited provisions of the two acts (of 1841 and 1867) are quite dissimilar. Blatchford, J., in the matter of Seymour on habeas corpus, 6 Int. Rev. Rec. 60, distinguishes the two provisions, and comments upon Chapman v. Forsyth as follows: “ The Supreme Court held that a discharge under the act of 1841 did not release the bankrupt from any such debts (as were mentioned in the clause of the act of 1841, above quoted), and that no debt fell within the description of a debt created by a defalcation while acting in any other fiduciary capacity, unless it was a debt created by a defalcation while acting in a capacity of the same class and character as the capacity of executor, administrator, guardian and trustee. The court held that the language of the act of 1841 was not broad enough to include every fiduciary capacity, but was limited to fiduciary capacities of a specified standard and character. That was clearly so under that act. But in the act of 1867 the language seems to have been intentionally made so broad as to extend to a debt created by a. defalcation of the bankrupt while acting in any fiduciary capacity, and not to be limited to any special fiduciary capacity. Therefore, under the act of 1867,” says the judge, “ no debt created by the defalcation of a bankrupt while acting in any fiduciary capacity will be discharged.” These views are approved by Nelson, J., in his decision In re Kimball, 6 Blatchf. 292. A commission merchant acts in a fiduciary character, and the trust attaches to the goods consigned to him for sale on commission and to their proceeds when the goods are sold. (Chapman v. Forsyth, supra; Duguid v. Edwards, 50 Barb. 288.) Concurring in the views of Judge Blatchford as above quoted, 4pie judgment will be affirmed. The other judges concur.