Chapman v. ForsythAnnotate this Case
43 U.S. 202
U.S. Supreme Court
Chapman v. Forsyth, 43 U.S. 2 How. 202 202 (1844)
Chapman v. Forsyth
43 U.S. (2 How.) 202
Under the late Bankrupt Act of the United States, the existence of a fiduciary debt, contracted before the passage of the act, constitutes no objection to the discharge of the debtor from other debts.
A factor, who receives the money of his principal, is not a fiduciary within the meaning of the act.
A bankrupt is bound to state, upon his schedule, the nature of a debt if it be a fiduciary one. Should he omit to do so, he would be guilty of a fraud, and his discharge will not avail him, but if a creditor, in such case, proves his debt and receives a dividend from the estate, he is estopped from afterwards saying that his debt was not within the law.
But if the fiduciary creditor does not prove his debt, he may recover it afterwards from the discharged bankrupt by showing that it was within the exceptions of the act.
The record was as follows:
The following statement of questions and points of law which arose in this case, and the adjournment thereof into the Supreme Court of the United States for decision, was ordered so be entered, to-wit:
"This was an action of assumpsit for the proceeds of 150 bales of cotton, shipped to and sold by defendants, as the property of the plaintiff, the defendants having been a factor,"
The defendant, Forsyth, pleaded he had been duly discharged as a bankrupt, on his own voluntary petition.
To this the plaintiff replied; the replication was demurred to, and
upon the hearing and argument of the demurrer, which presented the whole case, the following questions of law arose, and on which the judges were opposed in opinion:
"1st. Could the defendant be discharged, as a bankrupt, from any part of his debts, on his own petition, when he was indebted, in a fiduciary capacity, in part, within the exception in the first section of the bankrupt law -- that is, were all persons indebted excluded, that held and owed moneys in the capacity of trustees (as a class), from the benefit of the act, although they owed other debts besides the moneys held in trust?"
"2d. Is a commission merchant and factor (who sells for others), or indebted in a fiduciary capacity, within the act, provided he withholds the money received for property sold by him, and which property was sold on account of the owner, and the money received on the owner's account?"
"3d. Whether, when the decree of discharge, and the regular certificate of being a bankrupt, have been obtained without contest in the district court, they are conclusive and binding on all persons named as creditors by the bankrupt in his petition and list of creditors, and whether a creditor, who did not prove his debt, and which the bankrupt owed said creditors in a fiduciary capacity, can come into court, and sue the bankrupt for such fiduciary debt, notwithstanding the decree of discharge and certificate, the debt having been set forth in the petition and list as an ordinary debt, not due in a fiduciary character?"
Which divisions of opinion, at the request of the plaintiff, are certified to the Supreme Court of the United States, for their opinion and certificate on the three questions on which the judges of this Court were opposed in opinion.