In essence this is an application to determine whether a consent money judgment entered in the Chancery Division of this Court is affected by the defendant's subsequent discharge in bankruptcy.
In August 1955 the plaintiff filed suit against the defendant charging that he had entrusted defendant with certain shares of corporate stock under an agreement that plaintiff's proprietary interest in the stock was not to be affected in any way. When plaintiff demanded the return of his stock the defendant did not comply with the demand. The prayers of the complaint were that the defendant be directed to return said stock in specie or, if the defendant has converted
the same, that a judgment be rendered for money damages equal to the value of the stock.
The defendant filed an answer denying any wrongdoing and setting up the defenses of gift or loan. Thereafter the parties worked out a settlement of the suit and a consent judgment, signed personally by the defendant as well as by his attorney, was entered.
Said judgment contains the following recital:
"* * * and it appearing that a complaint has been filed herein in which the plaintiff has charged, among other things, that the defendant has unlawfully converted unto his own use, as trustee, certain stocks belonging to the plaintiff, and in addition thereto seeks an accounting with respect to the value of same and dividends thereon, and it appearing that the defendant admits said charges and that the defendant has agreed to pay to the plaintiff the sum of $3,000,
It is, on this 2nd day of April, 1956,
Ordered AND ADJUDGED that judgment be entered against the defendant, Peter Jendrowski, in favor of the plaintiff in the sum of $3,000; * * *."
Thereafter and on May 16, 1957 the defendant filed a petition in bankruptcy, listing therein the aforesaid judgment as one of his debts. On September 3, 1957 defendant was adjudicated a bankrupt and received a discharge. Plaintiff did not participate in the bankruptcy proceedings. Defendant has now applied to this court for a ruling that the judgment entered in this cause on April 2, 1956 has been released by the discharge in bankruptcy.
The pertinent section of the Bankruptcy Act, 11 U.S.C.A. § 35, reads as follows:
"A discharge in bankruptcy shall release a bankrupt from all of his provable debts, whether allowed in full or in part except such as * * * (4) were created by his fraud, embezzlement, misappropriation, or defalcation while ...