Under § 63a of the Bankruptcy Act, including among provable
debts "(1) a fixed liability, as evidenced by a judgment . .
absolutely owing at the time of the filing of the petition . . . ,"
a judgment founded on a tort (personal injuries caused by
negligence) is a provable claim. P.
267 U. S.
468.
294 F. 171 reversed.
Page 267 U. S. 468
Certiorari to a decree of the circuit court of appeals affirming
a decree of the district court which confirmed an order of a
referee in bankruptcy disallowing the petitioner's claim.
MR. JUSTICE SANFORD delivered the opinion of the Court.
The petitioner, Lewis, recovered a judgment against the
Montevallo Mining Company for personal injuries caused by its
negligence. The company was thereafter adjudicated a bankrupt in
the Northern District of Alabama. Lewis filed in the bankruptcy
proceeding a proof of claim upon the judgment. The district court
confirmed an order of the referee disallowing this claim upon the
ground that a judgment founded upon a tort was not provable in
bankruptcy. This decree was affirmed by the circuit court of
appeals. 294 F. 171. The writ of certiorari was then granted. 264
U.S. 578.
This decision is in conflict with an unbroken line of decisions
in other circuit courts of appeals and in the district courts.
In re New York Tunnel Co., 159 F. 688, 690;
Moore v.
Douglas, 230 F. 399, 401;
In re Putnam, 193 F. 464,
468.
And see In re Lorde, 144 F. 320;
Ex parte
Margiasso, 242 F. 990;
In re Madigan, 254 F. 221.
We think these prior decisions were correct.
Section 63a of the Bankruptcy Act, [
Footnote 1] entitled "Debts Which May be Proved," provides
that:
"Debts of the bankrupt may be proved and allowed against his
estate which are (1) a fixed liability, as evidence by a
judgment
Page 267 U. S. 469
. . . absolutely owing at the time of the filing of the
petition. . . ."
Section 1(11) declares that the word "debt" as used in the Act
shall, unless inconsistent with the context, be construed to
include "any debt, demand, or claim provable in bankruptcy."
It is clear that a judgment for tort is provable under the
express provisions of § 63a(1). The language is broad and
unqualified. It includes a "fixed liability" evidenced by a
judgment
ex delicto, as well as by a judgment
ex
contractu, and makes the one as well as the other a provable
"debt." There is nothing in the language or in the context which
suggests its limitation to judgments founded on debts or warrants
the reading in of such a limitation.
This conclusion is confirmed by a consideration of other
provisions of the Act. By § 17, as originally enacted, it was
provided that:
"A discharge in bankruptcy shall release a bankrupt from all of
his provable debts, except such as . . . (2) are judgments in
actions for frauds, or obtaining property by false pretenses or
false representations, or for willful and malicious injuries to the
person or property of another. [
Footnote 2]"
This express exception of certain judgments for torts from the
"provable debts" released by a discharge, plainly indicates that
Congress understood that, under § 63a, judgments for torts were
"provable debts," and is strongly persuasive as a construction of
that section.
Furthermore, if a judgment for tort is not a provable claim in
bankruptcy under § 63a, it could not, under § 1(11), be considered
in determining whether one against whom an involuntary petition has
been filed is insolvent within the meaning of § 1(15), providing
that:
Page 267 U. S. 470
"A person shall be deemed insolvent . . . whenever the aggregate
of his property . . . shall not . . . be sufficient in amount to
pay his debts."
The result of this would be that a person having property in
excess of his other debts could not be adjudged an involuntary
bankrupt under § 3b of the Act although owing judgments for tort
exceeding the amount of his property. Clearly Congress did not
intend so anomalous a result.
The trustee contends, however, that, despite the broad language
of § 63a(1), the decision in
Wetmore v. Markoe,
196 U. S. 68,
necessarily leads to the conclusion that only judgments founded in
debt are provable claims. It was there held that, under § 17 of the
Act, the arrears of alimony previously awarded to the wife of the
bankrupt for the support of herself and their minor children under
a final decree of absolute divorce was not a provable debt which
was released by the bankrupt's discharge. The ground of the
decision was that the court could look into the proceedings to
determine the nature of the liability which had been reduced to
judgment; that a decree awarding alimony was not in any just sense
a debt which had been put into the form of a judgment, but rather
the legal means of enforcing the obligation of the husband to
support his wife and children which was imposed upon him by the
policy of the law, and that it could not be presumed, in the
absence of a direct enactment, that Congress intended that the
Bankruptcy Act should be made an instrument by which the wife and
children should be deprived of the support which it was the purpose
of the law to enforce. It is clear that this decision rested on the
peculiar and exceptional nature of a decree for alimony. There was
no suggestion in the opinion that an ordinary claim
ex
delicto that had been previously reduced to judgment was not a
provable debt, and we think that its reasoning neither leads to nor
warrants such a conclusion.
Page 267 U. S. 471
Nor is there anything to support this conclusion in
Schall
v. Camors, 251 U. S. 239,
which dealt solely with unliquidated claims arising in tort not
previously reduced to judgment, and held merely that such
unliquidated claims, not being included in the enumeration of
provable debts under § 63a, could not be liquidated and proven
under the provisions of § 63b.
The decrees of the district court and of the circuit court of
appeal are reversed, and the cause is remanded to the district
court for further proceedings in accordance with this opinion.
Reversed and remanded.
[
Footnote 1]
Act of July 1, 1898, c. 541, 30 Stat. 544.
[
Footnote 2]
By the amendments of 1903 and 1917, the word "judgments" in
clause 2 was changed to "liabilities," and other changes were made
which are not here material. 32 Stat. 797, c. 487, § 5; 39 Stat.
999, c. 153.