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MAYNARD v. ELLIOTT

decided: April 13, 1931.

MAYNARD, ADMINISTRATOR
v.
ELLIOTT, TRUSTEE IN BANKRUPTCY

VARNEY
v.
SAME

SMITH ET AL
v.
SAME

RUTHERFORD
v.
SAME



CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE SIXTH CIRCUIT.

Hughes, Holmes, Van Devanter, McReynolds, Brandeis, Sutherland, Butler, Stone, Roberts

Author: Stone

[ 283 U.S. Page 274]

 MR. JUSTICE STONE delivered the opinion of the Court.

The bankrupts in these cases were endorsers of promissory notes payable to petitioners, some of them within the year after adjudication, allowed by § 57 (n) of the Bankruptcy Act (July 1, 1898, c. 541, 30 Stat. 544, 561) for proof of claims, others at later dates. Petitioners filed proofs of claim upon the endorsements, which were allowed. Proceedings were brought by the trustee to expunge the claims as not provable.

Upon review, the Circuit Court of Appeals for the Sixth Circuit held that as none of the notes was due at the time of the petition, and as neither presentment nor notice of dishonor had been waived, the liability with respect to each of the endorsements was not a provable claim, because contingent, and gave judgment accordingly, 40 F.2d 17, following its earlier decision in First National Bank v. Elliott, 19 F.2d 426. This Court granted certiorari, 282 U.S. 822, to resolve the conflict between the decision below and those of other circuit courts of appeals, in Moch v. Market Street National Bank, 107 Fed. 897 (C. C. A. 3rd), and in In re Semmer Glass Co., 135 Fed. 77 (C. C. A. 2d), appeal dismissed, 203 U.S. 141; see Colman Co. v. Withoft, 195 Fed. 250, 253.

Section 63 of the Bankruptcy Act provides:

"(a) Debts of the bankrupt may be proved and allowed against his estate which are (1) a fixed liability, as evidenced

[ 283 U.S. Page 275]

     by a judgment or an instrument in writing, absolutely owing at the time of the filing of the petition against him, whether then payable or not, with any interest thereon which would have been recoverable at that date or with a rebate of interest upon such as were not then payable and did not bear interest; . . . (4) founded upon an open account, or upon a contract express or implied; . . .

"(b) Unliquidated claims against the bankrupt may, pursuant to application to the court, be liquidated in such manner as it shall direct, and may thereafter be proved and allowed against his estate."

Section 17 provides that "A discharge in bankruptcy shall release a bankrupt from all of his provable debts . . ." with exceptions not now material, and § 1 (11) that "'debt' shall include any debt, demand, or claim provable in bankruptcy." Earlier acts provided for the proof of various types of contingent liability specifically enumerated, including that of the endorser of negotiable paper, § 5, Act of August 19, 1841, c. 9, 5 Stat. 440, 445; § 19, Act of March 2, 1867, c. 176, 14 Stat. 517, 525.

Although the omission of any reference to contingent claims in § 63 of the present Act has led to some confusion and uncertainty in the decisions, it is now settled that claims founded upon contract, which at the time of the bankruptcy are fixed in amount or susceptible of liquidation, may be proved under subdivision (a) (4) of that section, although not absolutely owing when the petition is filed. Williams v. U.S. Fidelity Co., 236 U.S. 549; Central Trust Co. v. Chicago Auditorium, 240 U.S. 581. The sole question now presented is whether the liability of an endorser is of that class.

The obligation of an endorser is at least a "claim," and hence a debt so far as defined by § 1 (11); and the language of § 63, which permits proof of a claim "founded . . . upon a ...


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