This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
The earlier Federal bankrupt laws contained no provision concerning the omission of debts from the schedule. It was accordingly held that, under the clause of the statute providing that the discharge should bar all debts with certain exceptions, of which a debt omitted was not one, a discharge barred debts omitted from the schedule,1 unless such omission was wilful and fraudulent.2 The bankrupt act of 1898 excepts from the operation of the discharge debts which "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." Accordingly a discharge does not bar a debt omitted from the schedule where the omitted creditor has no notice or knowledge of the bankruptcy proceedings in time to prove his claim.3 If the bankrupt knows that a note has been discounted at a certain bank, and schedules such note in the name of the original payee and the bank has no notice or actual knowledge of the proceedings in bankruptcy such note is not barred by such discharge.4 The fact that the debt was omitted in good faith dues not bring it within the operation of the discharge.5 If the creditor has actual knowledge of the proceedings in bankruptcy, his claim is barred by discharge even if omitted from the schedule.6 So a note is barred by discharge, which is scheduled by the debtor as being held by the original payee, although he knows it has been transferred if the transferee has actual knowledge of the proceedings in bankruptcy.7 If the debt is not listed in the schedule it is for the debtor to show affirmatively that the creditor had actual notice of the bankruptcy proceedings, to make the discharge operative as to such debt.8
29 Upshur v. Briscoe. 138 U. S. 365: affirming 37 La. Ann. 148 and 154; which revoked 37 La. Ann. 138.
30 Fulton v. Hammond, 11 Fed. 291.
31 Matteson v. Kellogg. 15 111. 547.
32 Herman v. Lynch, 26 Kan. 435; 40 Am. Rep. 320.
33 Shipley v. Platts, - S. D. - ; 97 N. W. 1
1 Fox v. Paine. 10 Ala. 523: Hoffman v. Haight. 3 Mack. (D. C.) 21; Graves v. Wright, 53 Mich. 425; 19 N. W. 129; Mitchell v. Singletary. 19 Ohio 291; Eberhardt v. Wood, 6 Lea (Tenn.) 467; Thomas v. Jones. 39 Wis. 124.
2 Shepard v. Abbott. 137 Mass. 224; Thomas v. Jones. 39 Wis. 124.
3 Tn re Monroe. 114 Fed. 398; Hughes v. Clark. 109 111. App 107.