The general rule is that a provable debt is a dischargeable debt.
If a debt is provable, it is usually discharged whether actually proved or not. But this general rule has its exceptions.
197. In re Little, 137 Fed. 521.
198. See SEC. 86, supra.
A discharge in bankruptcy releases the debtor from all provable debts, except (1) taxes, (2) liabilities for obtaining money under false pretenses, or for wilful and malicious injuries to person or property, or for alimony, or for maintenance or support of wife or child, or for seduction, or for criminal conversation, (3) those not duly scheduled where no notice to debtor, (4) those created by fraud, embezzlement, misappropriation and defalcation.
SEC. 17 of the Bankruptcy Act enumerates the debts not dischargeable by a discharge in bankruptcy. Debts may be not dischargeable (a) because not provable, and (b) because they are excepted whether provable or not. Let us consider seriatim the different cases of debts not discharged.
(1) Debts not provable.
If a debt is not a provable debt, manifestly it ought not to be discharged by the bankruptcy proceeding. If a creditor cannot prove his claim against the estate, he ought not to be deprived of that claim by bankruptcy proceedings.
We have seen that the great class of claims not provable are those that are for unliquidated damages growing out of commission of tort not reduced to judgment when the petition is filed. If reduced to judgment prior to the petition it is dischargeable, as it then becomes a fixed liability,199 unless the injury was wilful or malicious.200 But if the tort is 'waived' and claim made in contract it is then provable and hence dischargeable.201
199. Ex parte Harrison (D. C. Mass.) 272 Fed. 543; In re Wilson (D. C. Md.) 269 Fed. 845.
200. See paragraph (4), this section.
201. See SEC. 68, supra.
(2) Taxes not dischargeable.
A claim by the sovereign or subordinate governing body for taxes is provable, and has priority as a provable claim, but if assets are insufficient to pay it, the discharge in bankruptcy does not discharge it.
The wording of the law is that debts that "are due as a tax levied by the United States, the State, county, district or municipality in which he (the debtor) resides."
Local assessments levied by a taxing body are taxes within the meaning of this provision, and not dischargeable.202
(3) Debts not dischargeable if they are "liabilities for obtaining property by false pretenses or false representations."
These liabilities are not discharged. It is the purpose of the law to assist honest debtors. An act of this sort might prevent the debtor from getting his discharge; but even if he obtains it, it will not bar this sort of liability. The fraud referred to here is positive fraud, or fraud in fact involving intentional wrong, not constructive fraud or fraud in law which may exist by reason of general rule of law without the imputation of bad faith or immorality.203
If the liability is reduced to judgment it does not change the rule that it is not dischargeable.204
Where a person obtains property by representing himself to be solvent, the liability thereby created is not dischargeable in bankruptcy.205
202. In re Ott (D. C. la.) 95 Fed. 274.
203. Henneguin v. Clews, 111 U. S. 76 (former law).
204. In re Haskel, 228 Fed. 819.
205. In re Kalk, 270 Fed. 627.
(4) Debts not dischargeable if they are "liabilities for wilful and malicious injuries to the person or property of another."
To come within this provision the injury must have been intentional, otherwise it is a dischargeable liability.206 Thus it was held that where a debtor built a fire in the street and after he had left it supposedly extinguished and a small boy's clothes caught fire, and he was burned, there was no wilful or malicious injury and the liability (which had been reduced to judgment) was dischargeable.207 And where a person illegally drove a car while intoxicated, and in so doing injured another, the liability was discharged, unless he wilfully or intentionally committed the injury.208
But if the injury is wilful or malicious there is no discharge, as, for example, a judgment for assault and battery.209
(5) Debts not dischargeable if they are liabilities for alimony due or to become due, or for maintenance or support of wife or child, or for seduction of an unmarried female, or for criminal conversation.
Public policy forbids that a debtor should obtain a discharge for liabilities of this sort.
Alimony is not in the nature of a debt and is neither provable or dischargeable. It is not affected by bankruptcy proceedings.210
206. Tinker v. Colwel, 193 U. S. 473; McClellan v. Schmidt, 235 Fed. 986.
207. McClellan v. Schmidt, supra.
208. Ex parte Harrison, (D. C. Mass.) 272 Fed. 543.
209. McChristal v. Clisbee, 190 Mass. 120.
210. Welty v. Welty, 195 111. 335; Audobon v. Schifeldt, 181 U. S.
Money owing for maintenance of wife or child is of the same nature and not dischargeable.211
Liabilities for seduction and criminal conversation. The law on this point was in doubt until the amendment of 1903.
Liability arising out of breach of promise of marriage is dischargeable.212
If accompanied with seduction there is doubt.213
(6) Debts not dischargeable, if they have not been duly scheduled.
" Have not been duly scheduled in time for proof and allowance, with the name of the creditor if known to the bankrupt, unless such creditor had notice or actual knowledge of the proceedings in bankruptcy."
A debt is not discharged if the debtor does not schedule it, unless the creditor has notice of the proceedings. Precaution should be taken by the debtor to give correct name and address, although it has been held that the absence of street number does not prevent the claim from being duly scheduled.214
(7) Debts not dischargeable if "they were created by his fraud, embezzlement, misappropriation or defalcation while acting as an officer or in any fiduciary capacity."
This language refers to those who are acting as public officers, or who are acting as trustees by reason of their office, and not to cases of implied trusts.215 Any officer, whether the office is public, or private, who defaults with funds held by him in his official capacity thereby creates a debt that is not discharged.216
211. Blackstock v. Blackstock, 265 Fed. 549.
212. In re Fife, 109 Fed. 880; In re Komar, 234 Fed. 378.
213. In re Komar, supra,
214. Kreitlein v. Ferger, 238 U. S. 31.
215. Crawford v. Burke, 195 U. S. 176.
Crawford v. Burke, decided under the former law, held that the word 'fiduciary' was meant to refer to express trusts not to trusts by implication and therefore would not refer to a misappropriation by a broker or other agent of money in his possession belonging to his principal (although any defalcation by an officer, public or private, would not be dischargeable whether the trust were express or implied.) But it has been held that such a misappropriation by a person who is not an express trustee is not dischargeable because it is a wilful or malicious injury and our Suprene Court has suggested that this clause as to wilful or malicious injury may have been put in to overcome Crawford v. Burke.217
If the bankrupt after the petition in bankruptcy makes a new promise to pay the debt, this promise revives the debt.
A new promise to pay a debt discharged or dischargeable in bankruptcy raises a new obligation to pay it. In some but not all the states such new promise must be in writing. In any case it must be a definite promise, not a mere admission that the debt once existed.
216. Bloemecke v. Applegate, (C. C. A. 3rd Cir.) 271 Fed. 595.
217. Mclntyre v. Kavanaugh, 242 U. S. 138; see also Baker v. Bryant Fertilizer Co. (C. C. A. 4th Cir.) 271 Fed. 473.