In re Kuffler

PER CURIAM. The bankrupt has appealed from an order of the District Court for the Eastern District of New York setting aside an order of adjudication in bankruptcy in a voluntary proceeding commenced in December, 1905, dismissing the bankruptcy proceeding, and enjoining the bankrupt permanently from further prosecution thereof. This order was made upon the application of certain creditors of the bankrupt whose debts were included in his schedule. It appeared upon the application that the appellant was adjudged a bankrupt August 8, 1899, in a proceeding in the District Court for the' Southern District of New York; that November 5, 1899, he filed a-petition in that proceeding for a discharge from his debts; that specifitions in opposition to his discharge were filed by his creditors; and that October 12, 1903, upon the application of the opposing creditors, and after hearing the bankrupt, the court dismissed -his1 application for a discharge for want of proper prosecution. It further appeared that debts scheduled in the present proceeding to the amount of $70,000 were scheduled in the former proceeding, and. a few small debts scheduled in the present proceeding were not scheduled in the former proceeding, and that the property scheduled in the present' proceeding was of trifling value. If the application in the court below had been directed to obtaining a stay of any application for a discharge from the debts scheduled in the former proceeding, and the court below had limited its order- accordingly, we should have no difficulty in affirming the order. Obviously it was the principal purpose of the present proceeding to enable the bankrupt to renew his unsuccessful application to be discharged from his debts in the former proceeding, and to that extent to resuscitate the former proceedings. If this were permitted, the creditors who successfully opposed his discharge in the former proceeding would be compelled to litigate over again the issue which had been finally adjudicated in their favor. They should not be subjected to this hardship. If any of these creditors should seek to enforce by an action his debt against the after-acquired property of the bankrupt, not having procured a stay in the second bankruptcy proceeding, he might be met with a discharge in that proceeding as a bar to his action. Under the act of 1898 the denial of an application for a discharge from debts provable in one proceeding in bankruptcy renders the- issue of the right to a discharge res ad judicata as to such debts in a- subsequent proceeding; and a failure of the bankrupt to apply for a discharge within 12 months after the adjudication in the earlier proceeding, has the same effect. Kuntz v. Young, 131 Fed. 719, 65 C. C. A. 477. Where the same debts and the same assets are scheduled in the two proceedings, one being commenced subsequent to the' termination of the other, it is manifest that the last proceeding is merely an attempt [14] to evade the former one. To permit it would be to sanction a fraud, upon the court; As this court said in Re Fiegenbaum, 121 Fed. 69, 57 C. C. A. 709: “Not only should the court of bankruptcy protect the creditors from an attempt to retry an issue already tried and determined between the same parties, but the court, for its own protection, should arrest, in limine, so flagrant an attempt to circumvent its decrees.” The present case differs, however, from the Fiegenbaum Case, because in that ease the second proceeding was commenced _within a very short time after the denial of the bankrupt's discharge in the former proceeding, while here two years have elapsed; and it differs in the further and more important fact that some debts are scheduléd in the second proceeding which were not provable in the first. It is the right of an insolvent debtor who may have acquired property and incurred debts subsequent to an adjudication of .bankruptcy to prosecute a second proceeding' to obtain his discharge. The effect of an order like the one under review would be to deprive him of that right. We conclude, therefore, that the order should be reversed, but without prejudice to an application by the creditors, such as has been suggested.