The decision of the highest court of a state upon a motion,
accompanied by affidavits as proof, to perpetually enjoin the
collection of a judgment obtained in a court of the state on the
ground of the discharge of the defendant in bankruptcy, raises a
federal question which may be reviewed by this Court.
Hennequin v. Clews, 111 U. S. 676
affirmed and followed in holding, on similar facts in this case,
that there was no such fraud in the creation of the debt, and no
such trust in respect to the possession of the bonds, as to bar the
operation of the discharge in bankruptcy.
This was a motion to dismiss, united with a motion to affirm.
The facts which make the case are stated in the opinion of the
Mr. CHIEF JUSTICE WAITE, delivered the opinion of the Court.
This record shows that on the 18th of April, 1874, Acalus L.
Palmer recovered a judgment in the supreme court of New York
against Erwin A. Hussey for $32,128.57 on account of certain bonds
of the United States which had been placed in his hands by Palmer,
and for which he bound himself by a writing, the material part of
which is as follows:
"These bonds we hold subject to the order of A. L. Palmer at ten
days' notice, agreeing to collect the coupons for his account free
of charge and to allow him two percent per annum interest on the
par value of said bonds, said interest to commence and count June
1st, 1866, interest on the 7-30 bonds payable June and December
15th; on 5-20, May and November 1st. "
"E. A. HUSSEY & CO."
Page 119 U. S. 97
In the complaint it was alleged that the bonds "were received by
the defendant from the plaintiff as his agent and broker, in a
fiduciary capacity, upon the arrangement and agreement as
contained" in the foregoing paper;
"that the said defendant, without the authority or permission of
the plaintiff, has fraudulently and willfully sold, disposed of,
and misapplied the said bonds, and has refused to deliver up the
same to the said plaintiff, who has frequently demanded the same
from him, and given the notice so to do, as required by the
This was denied in the answer. The suit was begun September 7,
On the 20th of January, 1868, Hussey filed his petition in
bankruptcy, and was duly adjudicated a bankrupt January 24th. On
the 17th of May, 1880, he received his final discharge. The record
does not show when his application for a discharge was made to the
bankrupt court. On the 12th of June, 1880, he moved the supreme
court to perpetually enjoin the collection of the judgment in favor
of Palmer because of his discharge. In his affidavit in support of
this motion, and which presents the grounds of the relief asked, it
"That, among other grounds of objection to my discharge in
bankruptcy made by the plaintiff, it was charged that I have been
guilty of improper and undue delay in said proceedings; that that
question was presented to the court, and fully explained, and the
court decided that I was not guilty of laches, and was entitled to
In opposition to the motion, the counsel of Palmer filed a
counteraffidavit setting forth the grounds of defense, and, among
others, that the judgment was an adjudication that "the bonds were
received in a fiduciary capacity," and were "fraudulently and
willfully sold, disposed of, and misapplied by Hussey."
The supreme court, both at special and general term, denied the
motion on the ground that the judgment on its face showed that the
debt was created by fraud, and while Hussey was acting in such a
fiduciary capacity as to prevent the discharge in bankruptcy from
operating as a release. This
Page 119 U. S. 98
order was reversed by the Court of Appeals, and the execution of
the judgment perpetually enjoined, because the fraud and trust
established by the findings were not of a character to bar the
effect of the discharge. To reverse that judgment, this writ of
error was brought, which Hussey now moves to dismiss because no
federal question was raised or decided, and with this motion he has
united a motion to affirm under Rule 6, § 5.
The motion to dismiss is denied. Palmer, in his affidavit, which
in this case takes the place of technical pleading, specially set
up and claimed an immunity, under § 5117 of the Revised Statutes,
from the operation of the discharge in bankruptcy because of the
fraudulent and fiduciary character of his debt, and the decision
was against him. This gives us jurisdiction, since the exemption
depends on the construction and effect of § 5117, which provides
"No debt created by the fraud . . . of the bankrupt, or . . .
while acting in any fiduciary character, shall be discharged by
proceedings in bankruptcy."
As the affidavit of Hussey set forth the date of the
adjudication in bankruptcy, and the date of discharge, the question
of delay in making an application, and the construction and effect
of § 5108 may also perhaps have been raised on the record. The
opinion of the Court of Appeals shows that both of these questions
were actually presented to and decided by that court. 87 N.Y.
Upon the facts set forth in the affidavit of Hussey, which are
not denied in the counteraffidavit of the attorney of Palmer, and
upon the facts as they appear in the record of the judgment to be
enjoined, it is clear that under the ruling of this Court in
Hennequin v. Clews, 111 U. S. 677
there was no such fraud in the creation of the debt, and no such
trust in respect to the possession of the bonds by Hussey as to bar
the operation of the discharge. By § 5119 of the Revised Statutes,
the certificate of discharge is made conclusive evidence, in favor
of the bankrupt "of the fact and regularity of such discharge." We
must presume, therefore, that the application was made within the
time required by § 5108, or, if not, that any delay there may
Page 119 U. S. 99
been was satisfactorily explained before the discharge was
granted. The certificate is conclusive on this question.
As these are the only federal questions presented, and one has
been already settled by our decision in Hennequin v. Clews
and the other needs no further argument, the motion to affirm is