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.
Since the amendment of 1903 omits the general term "fraud" and covers "liabilities for obtaining property by false pretenses or false representations," obtaining services by false pretenses or representations is held not to be within such provision of the statute.1 Accordingly, a claim for legal services which are rendered by false and fraudulent representations, is not a claim for property within the meaning of this section, and it is barred by a discharge in bankruptcy.2
Actual fraud is included in this provision of the bankrupt act.3 A debt which is incurred by one who has purchased goods without the intention of paying for them,4 and who intends to resell such goods and to appropriate the proceeds,5 or by one who borrows money, knowing that he will be unable to repay it,6 or by one who induces the sale on credit by false and fraudulent statements as to his own financial condition,7 or by false representations as to the condition of his business and the profits thereof,8 is created by fraud. A loan, induced by fraudulently giving worthless bonds as security therefor,9 or an accommodation note fraudulently procured by false representations that accommodation notes executed prior thereto had not been put into circulation,10 or a note and mortgage which A induces X to execute to B, to obtain a loan from B to X, where A concealed from X the fact that A was indebted to B and that A had used the money derived from this loan in part to pay off his own debt to B, instead of using it to discharge a debt owing from X, as he promised to do,11 are all liabilities created by fraud.
19Nelson v. Petterson, 229 111. 240, 13 L. R. A. (N.S.) 912, 82 N: E. 229.
20 Gregory v. Williams, - Kan. -, 189 Pac. 932.
1 Gleason v. Thaw, 185 Fed. 345, 34 L. R. A. (N.S.) 894.
2Gleason v. Thaw, 185 Fed. 345, 34 L. R. A. (N.S.) 894.
3 Ames v. Moir, 138 U. S. 306, 34 L. ed. 951 [affirming, 130 111. 582, 22 N. E. 535]; Louisville Dry Goods Co. v. Lanman, 135 Ky. 163, 28 L. R. A. (N. S.) 363, 121 S. W. 1042.
4 Ames v Moir, 138 U. S. 306, 34 L. ed. 951 [affirming, 130 IIl. 582, 22 N. E. 535]; Louisville Dry Goods Co. v. Lanman, 135 Ky. 163, 28 L. R. A. (N. S.) 363, 121 S. W. 1042.
5 Ames v. Moir, 138 U. S. 306, 34 L. ed. 951 [affirming, 130 111. 582, 22 N. E. 535],
6 Bullis v. O'Beirne, 195 U. S. 606, 49 L. ed. 340.
7 Friend v. Talcott, 228 U. S. 27, 57 L. ed. 718 [affirming, Talcott v. Friend, 179 Fed. 676, 43 L. R. A. (N. S.) 649]; Broadnax v. Bradford, 50 Ala. 270; Turner v. Atwood, 124 Mass. 411 (the action in which this question arose being "tort or contract"); Row-ell v. Ricker, 79 Vt. 552, 66 Atl. 569.
The opposite result was reached in Roth v. Pechin, 260 Pa. St. 450, 103 Atl. 894, apparently on the theory that the amendment of 1903 did not affect the pre-existing law; and that accordingly, under the doctrine of Crawford v. Burke, 195 U. S. 176, 49 L. ed. 147, a discharge in bankruptcy was a bar to such liability.
8 Morse v. Hutchins, 102 Mass. 439.