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.
By the express provisions of section 17 of the bankrupt act of 1898,1 a discharge in bankruptcy releases a bankrupt from all of his provable debts except those which are specifically excepted by statute.2 The exceptions have been discussed in detail elsewhere.3 It is generally said that the discharge does not extinguish the debt itself.4 The pre-existing debt has sufficient legal effect to serve as a consideration for a subsequent promise to pay it.5 If eviction may be had for non-payment of rent, a discharge in bankruptcy is a bar to an action to recover rent; but such proceeding is not a payment of the rent, and it does not prevent eviction for non-payment.6 While it has been said that a discharge in bankruptcy extinguishes the debt,7 this statement, from the context, means that an express promise to pay such debt is necessary; and that a part payment upon such prior debt is not sufficient.8 It is said that a discharge in bankruptcy releases the bankrupt, so that a prior creditor can not bring an action to set aside a prior fraudulent conveyance,9 but this means that the right of bringing such suit is in the trustee.10 A debt which is barred by a discharge in bankruptcy can be used as a set-off according to some authorities,11 though not according to others.12
1 See Sec. 3131.
2 United States. In re Julius, 217 Fed. 3, L. R. A. 1915C, 89.
Florida. Bluthenthal v.. Jones, 51 Ha. 396, 120 Am. St. Rep. 181, 41 So. 533 [affirmed, Bluthenthal v. Jones, 203 U. S. 64, 52 L. ed. 390].
Ceorgia. Morris v. Perkins, 148 Ga. 554, 97 S. E. 526.
Illinois. Nelson v. Petterson, 229 111. 240, 13 L. R. A. (N.S.) 912, 82 N. E. 229.
Kansas. First National Bank v. Hoffman, 102 Kan. 465, 171 Pac. 13.
Kentucky. Dycus v. Brown, 135 Ky. 140, 28 L. R. A. (N.S.) 190, 121 S. W. 1010.
Maine. Gordon v. Texas Co., - Me. -, 109 Atl. 368.
Massachusetts. Barry v. New York Holding & Construction Co., 229 Mass. 308, 118 N. E. 639.
Mississippi. Alabama Great Southern Ry. Co. v. Crawley, 118 Miss. 272, 79 So. 94.
Montana. Rate v. American Smelting & Refining Co., 56 Mont. 277, 184 Pac. 478.
New Hampshire. Morency v. Landry, - N. H. -, 108 Atl. 855.
South Dakota. Drake v. Vernon, 26 S. D. 354, 128 N. W. 317.
West Virginia. Ruhl-Koblegard Co. v. Gillespie, 61 W. Va. 584, 10 L. R. A. (N.S.) 305, 56 S. E. 898.
Wisconsin. Jefferson Transfer Co. v. Hull, 166 Wis. 438, 166 N. W. 1.
3 See Sec. 3142 et seq.
4 Sound Credits Co. v. Powers, 100 Wash. 668, 171 Pac. 1031.
See Sec. 3166 et seq. 5 See Sec. 632 and 3166.
6 Carter v. Sutton, 147 Ga. 496, 94 S. E. 760.
7 Needham v. Matthewson, 81 Kan. 340 [sub nomine, Matthewson v. Need-ham, 26 L. R, A. (N.S.) 274, 105 Pac. 436].
See also, Rate v. American Smelting & Refining Co., 56 Mont. 277, 184 Pac 478.
8 See Sec. 3169.
9 Ruhl-Koblegard Co. v. Gillespie, 61 W. Va. 584, 10 L. R. A. (N.S.) 305, 56 S. E. 898.
If a discharge in bankruptcy is granted, it has retroactive effect and relates to the date of the adjudication,13 since, by the terms of the statute,14 it discharges provable debts, and since provable debts are those which exist at the time of the filing of the petition.15 The fact that an application for a discharge is once refused upon the objection of certain creditors, does not prevent a subsequent discharge from operating as a bar against the claims of such creditors.16
In order to prevent a discharge from operating as a bar, such creditors must show that their debts fall within one of the classes of exceptions specified in the statute.17. The fact that the petition in bankruptcy sets up two or more grounds of bankruptcy, one of which is of a sort which will prevent a discharge, does not prevent a discharge given in such proceeding from having full legal effect,18 at least if the decree of bankruptcy does not show that it was rendered upon the ground which would prevent the granting of the discharge.19
The validity and effect of a discharge depends on the provisions of the law under which it was given and not on the provisions of any former law. The fact that certain debts existed under the bankrupt act of 1867 and could not be barred by a discharge obtained thereunder, and were kept alive by subsequent judgment, does not prevent them from being barred by a discharge obtained under the bankrupt act of 1898, if by the terms of such act they would be barred.20 A discharge was refused to a debtor in a state insolvent court. The cause of such refusal did not appear on the record, and it might have been, by virtue of a provision in the state statute controlling such proceedings, because the debtor's assets did not make more than fifty per cent. of the proved claims, and a majority of his creditors in number and value would not consent to his discharge. Such refusal was held not to be such an adjudication as to prevent a discharge thereafter given him by a federal court of bankruptcy from barring debts owing by him when such discharge was refused by the state court,21
10 See Sec. 3158.
11 Wilson v. Kelly, 10 S. Car. 216.
12 Francis v. Dodsworth, 4 C. B. 202.
13 Morris v. Perkins, 148 Ga. 554, 97 6. E. 526; Rate v. American Smelting & Refining Co., 56 Mont. 277, 184 Pac, 478.
14 See Sec. 3131. 15 See Sec. 3137.
16 Bluthenthal v. Jones, 51 Fla. 396,
120 Am. St. Rep. 181, 13 L. R. A. (N. S.) 629, 41 So. 533.
17 See Sec. 3142 et seq.
18 In re Julius, 217 Fed. 3, L. R. A. 1915C, 89.
19 In re Julius, 217 Fed. 3, L. R. A. 1915C, 89.
20 In re Hernnan, 106 Fed. 987, 46 C. C. A. 77 [affirming, 102 Fed. 753].
Whether the discharge bars the debt in question must be determined in the first instance by the court in which an action on the debt is pending. The question whether a debt is contracted by fraud may be passed upon by a state court whenever such question comes before it, but its action is not necessarily conclusive upon the federal court. Under a petition to the court of bankruptcy for an injunction against issuing or serving execution on a judgment of a state court, the adjudication of the state court that such debt was created by the bankrupt's fraud was not conclusive on the bankrupt court.22
After a discharge in bankruptcy has been granted, a state court may, nevertheless, render judgment for the purpose of fixing the claim as a provable debt, or for the purpose of fixing the liability of sureties and the like; and rights of the bankrupt are sufficiently protected if the judgment provides, by its terms, that it shall not be enforced against the bankrupt but that it shall be operative only as evidence of a claim against his estate and the like.23