Hubbell v. Cramp , 1844 N.Y. LEXIS 187 ( 1844 )

The Chancellor.

The bankrupt act of August, 1841, makes the discharge and certificate, when duly granted, a full and complete discharge of all debts 'of the bankrupt which are provable under that act. And to render a debt provable under, the act, it is not necessary that it should have been stated in the petition, presented to the district court in which the proceedings in bankruptcy were instituted. For if the name of a creditor was left out of the list of creditors by mistake, or because the bankrupt was not aware of the existence of the debt, or because he supposed it had been paid by the drawer, or by a prior endorser of a note, that would .not prevent the «’editors from proving their debt under the act, so as to entitle them to a share of the bankrupt’s property and effects. The statute does not require absolute certainty in the petition, either as to the list of the creditors or as to the inventory of the property of the bankrupt. But it requires that the bankrupt shall set forth both, according to the best of his knowledge and belief. And as the presenting such a petition is necessary to give the court jurisdiction in the case, if it can afterwards be shown that the bankrupt intentionally or knowingly omitted the names of any of his creditors, or wilfully misstated the places of their residence, or the amount of their debts, I am not prepared to say that the discharge cannot be avoided on that account; although that may not be one of the frauds referred to, in the fourth section of the bankrupt act, for which the discharge may be impeached.

The answer in the present suit, however, shows the necessary facts to give the district court-of the northern district of New-York jurisdiction of the case. For it states, among other things, that the defendant Cramp presented a petition to that court, in March, 1842, such petition setting forth to the best of his knowledge and belief, a list of his creditors, their respective places of residence and the amount due to each, together with an accurate inventory of his property, &c., verified by his oath, And the fact that the names of the complainants, who held a note upon which Cramp was only second endorser, were not inserted in the list of creditors, is not sufficient to induce a belief that his petition was false; as not containing a correct list of his creditors according to the best of his knowledge and belief. The jurisdictional facts being thus stated in the answer, and sworn to, must be taken as true, for the purpose of this application. That being the case, the act makes the discharge and certificate conclusive evidence, in favor of the bankrupt; and a full and complete bar to all suits against him, unless the same is impeached for some fraud, or wilful concealment of his property or rights of .property. The regularity of the subsequent proceedings, therefore^ cannot be inquired into in this collateral way, where there is no fraud in the case.

Besides; it appears, in this case, that the complainants were aware of the fact that Cramp had been discharged, under the bankrupt act, previous to the filing of their bill in this cause. And if they intended to impeach his discharge, either for fraud or for an irregularity which was not apparent on the face of the proceedings, they should have set forth the facts in their bill; instead of leaving the court or the officer who granted the injunction, to infer that the judgment still remained in full force as against this defendant and his property. (Hilten v. Lord Granville, 4 Beav. Rep. 130.) The complainants having omitted to impeach the discharge, by their bill, they cannot, in this state of the suit, read. affidavits to sustain their injunction,by impeaching the discharge, without giving the bankrupt any opportunity to answer them. For, by the express provisions of the bankrupt act, even where the discharge is impeached for fraud, the bankrupt is entitled to a previous notice, in writing, of the intention to impeach it; specifying the'alleged fraud or concealment.

The injunction should therefore have been dissolved, in this case, notwithstanding the affidavits which were read in opposition to the application. The order appealed from must be reversed with costs; and the injunction dissolved.