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Feld Lumber Co. v. Bornstein

Decided: June 25, 1937.

FELD LUMBER COMPANY, A CORPORATION OF NEW JERSEY, PLAINTIFF-REPONDENT,
v.
THEODORE BORNSTEIN, DEFENDANT-APPELLANT



On appeal from the First District Court of the city of Newark.

For the plaintiff-respondent, Harry Phillipson and William Phillipson.

For the defendant-appellant, Frank Cozzoline and Aristo Dallavalle.

Before Justices Lloyd, Case and Donges.

Case

The opinion of the court was delivered by

CASE, J. This is an appeal from a judgment for plaintiff on an award by the judge of the First District Court of the city of Newark, sitting without a jury, in an action for goods sold and delivered.

Subsequent to the date of the last sale sued upon defendant filed his petition in bankruptcy. In due season, and before the present suit was instituted, he obtained his discharge. He proved the discharge at the trial below and contends that thereupon the burden was on the plaintiff to prove that the latter did not have notice or actual knowledge of the bankruptcy proceedings in time to give it an equal opportunity to file its claim with other creditors. It was admitted, however, by or on behalf of defendant, that he had not listed the claim in the bankruptcy schedule, that he had knowingly caused the

omission because he considered that the debt was not his and that he had caused no notice to be sent to the plaintiff. The question on this point is whether, with an admitted purposeful omission on the part of the bankrupt to list the claim or to send a notice, it was necessary for the plaintiff to carry the burden of proving that it did not have actual knowledge, in season, of the bankruptcy. Defendant-appellant argues for the affirmative and relies largely upon Kreitlein v. Ferger, 238 U.S. 21; 50 L. Ed. 1184; Claflin v. Wolff, 88 N.J.L. 308, and City Hall Building and Loan Association v. Star Corp., 110 Id. 570. In all of these cases, however, the claim sued upon was, either admittedly or as construed by the court, listed in the bankruptcy schedules. The statutory provision is that:

"A discharge in bankruptcy shall release a bankrupt from all of his provable debts, except such as * * * (3) 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 * * *." (Section 17 of the Bankruptcy act; Code, Title Bankruptcy, section 35.)

We find nothing in the statute or in either of the mentioned cases to indicate that a bankruptcy may, with knowledge, fail to list a claim and to send notice to a creditor and then, by producing his discharge in bankruptcy, lay upon the creditor the burden of proving that the latter was not adversely affected. Indeed the Kreitlein case says that "the authorities, however, differ as to whether under section 17 (3) the burden is on the plaintiff to show that he had no notice, or on the bankrupt to show that the creditor had notice in time to have proved his claim and had it allowed" and finds it unnecessary "to discuss that mooted point." 1 Collier on Bankruptcy (13 th ed.) 632, et seq., observes with respect to the Kreitlein case that "it may be doubted whether the court in such case intended to lay down the rule that where a schedule omitted the creditor's name, the burden rests upon the plaintiff to show that he had no notice," and with respect to the statute, supra, that "it is clear also that

where the failure to schedule the actual owner of the debt was intentional, such debt will not be discharged unless there was actual notice." Bessette v. Petrucci, 51 R.I. 287; 154 A. 121, and First National Bank v. Bamforth, 90 Vt. 75; 96 A. 600, cited by appellant, do not bear upon the question of burden of proof. It was ...


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