American Surety Co. v. Koff

Order of the County Court, Nassau County, granting reargument of a motion to vacate and set aside a subpoena in a supplementary proceeding, and upon reargument adhering to the decision denying the motion, insofar as appealed from, reversed on the law and the facts, with ten dollars costs and disbursements, and the motion granted, with ten dollars costs. The judgment debtor obtained a discharge in bankruptcy on September 18, 1943, after the judgment upon which the subpoena was issued had been obtained. The finding of the court below that the judgment was based upon a debt created by the debtor’s misappropriation of funds entrusted to him in a fiduciary capacity is not supported by the record. The debt arose upon an agreement to indemnify the creditor in connection with a bond which the creditor had given to the debtor’s employer. Despite the allegation of the complaint that the debtor was employed in a trust capacity, it appears from the record that he was merely a salesman. The fact that he made collections for his employer did not impose upon him the status of fiduciary referred to in clause (4) of subdivision a of section 17 of the Bankruptcy Act (TJ. S. Code, tit. 11, § 35, subd. [a], cl. [4]). (7 Remington on Bankruptcy, § 3589, p. 851; 1 Collier on Bankruptcy [13th ed., 1923], § 17, pp. 636-639.) The record does not warrant the conclusion that the debtor willfully or maliciously, within the meaning of clause (2) of subdivision a of section 17 of the Bankruptcy Act (U. S. Code, tit. 11, § 35, subd. [a], cl. [2]), converted collections belonging to his employer. On the contrary, prior to the debtor’s consent to the entry of a judgment foj.’ an amount less than that allegedly converted, the judgment creditor, in an affidavit submitted in connection with r summary judgment motion, asserted that it was under no obligation to prove, any conversion but merely that it had acted in good faith in making its payments as surety. Close, P. J., Hagarty, Carswell, Adel and Lewis, JJ., concur.