Barrett v. Prince

GROSSCUP, Circuit Judge, after stating the facts, delivered the opinion. The sole question in this case is whether the cause of action set out in the return is one provable as a claim against appellee in bankruptcy. If it be thus provable, the detention of the petitioner on the capias was unlawful, and the order of the District Court discharging him is not erroneous. Bankr. Act July 1, 1898, c. 541, § 63, 30 Stat. 562 [U. S- Comp. St. T901, p. 3447]; General Orders in Bankruptcy, 30 (89 Fed. xii, 32 C. C. A. xxx). Though the suit on which the capias was issued was in tort, that alone would not exclude it from claims provable in bankruptcy; for the [304] ¡tort could have been waived, and a judgment had, as upon the im.plied contract. But it is said that under the bankruptcy act—Section 17 as amended ;in 1903 (Act Feb. 5, 1903, c. 487, § 5, 32 Stat. 798 [U. S. Comp. St. :Supp. 1905, p. 684])—a 'discharge in bankruptcy does not release ¡the bankrupt from provable debts created by his fraud, embezzlement, ¡misappropriation or defalcation while acting as an officer, or in any .■fiduciary capacity. It may very well be doubted if within the meaning ■ of this section, the steel shares in the possession of Prince for sale were in his possession in a fiduciary capacity. In the acts of 1841 and •of 1867 it was provided, in almost identical language, that no debt ■ created by fraud or embezzlement, while acting in any fiduciary character, should discharge the bankrupt; and in construing these acts, ■the Supreme Court held in many cases, some of which are almost ¡identical in character with the case under review, that mere confi- ■ dence reposed in the punctuality and integrity of a person with whom ■ one has commercial transactions is not the fiduciary relation that was •-meant to be covered by the excepting portion of the bankruptcy acts. Chapman v. Forsyth, 2 How. 202, 11 L. Ed. 236; Hennequin v. Clews, 111 U. S. 676, 4 Sup. Ct. 576, 28 L. Ed. 565; Palmer v. Huskey, 119 U. S. 96, 7 Sup. Ct. 158, 30 L. Ed. 362; Upshur v. Briscoe, 138 U. S. 365, 11 Sup. Ct. 313, 34 L. Ed. 931; Noble v. Hammond, 129 U. S. 65, 9 Sup. Ct. 235, 32 L. Ed. 621. And this view was ap-plied to the bankruptcy act of 1898 by Mr. Justice Brown, in Re Basch (C. C.) 97 Fed. 761, and by Judge Wheeler in Knott v. Putnam, (D. C.) 107 Fed. 907. But whatever the law may be, a case being properly pléaded, the .appellant has not pleaded, in the record before us, a case of fraud, embezzlement, misappropriation or defalcation in a fiduciary capacity. The return recites that appellee “embezzled and fraudulently con- - verted to his own use” the goods and chattels ■ described, and goes no further. It does not set forth facts that constitute fiduciary rela■tionship, or facts that disclose fraud, embezzlement, misappropriation or defalcation. It satisfies itself with the statement of the conclusion of the pleader, pleading no facts by which such conclusion ■ can be judicially tested. As an indictment, a declaration, or a plea, -intended to make a case of fraud, embezzlement, misappropriation or ■ defalcation in a fiduciary capacity, the statement contained in the re-turn would be open to demurrer. Thus tested—and in our judgment the case made in the return must be thus tested—no case coming within the exception of the discharge clause of the bankruptcy act is shown ¡.in the return. The judgment of the District Court is affirmed.