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151 F. 12

Docket No. 95.

In re Kuffler

Second Circuit Court of Appeals

Decided January 7, 1907.)

Second Circuit Court of Appeals · decided 1907-01-07

<p>Bankruptcy—Refusal op Discharge—Second Proceeding.</p> <p>The- denial of the application of a bankrupt for a discharge renders the issue as to his right to a discharge res judicata as to debts which were-provable in that proceeding, and, where in a subsequent voluntary proceeding the bankrupt schedules the same debts and the same assets, the second proceeding is a manifest attempt to evade the effect of the former, and the bankrupt should be restrained by the court from prosecuting a •second application for a discharge; but, where a considerable time has elapsed and new debts are also scheduled, the bankrupt has the right to maintain the proceeding as to those, and an order granting a stay should he limited accordingly.</p>

2 counsel of record

Key passage — most relied on by later courts

““Undoubtedly, as in all other judicial proceedings, an adjudication refusing ,a discharge in bankruptcy, finally determines, for all time and in all eourts, as between those parties or privies to it, the facts upon which the refusal was based. But courts are not bound to search the records of other courts and give effect to their'judgments. If there has been a conclusive adjudication of a subject in some other court, it is the duty of him who relies upon it to plead it or in some manner bring it to tlie attention of the court in which it is sought to be enforced. Plaintiffs in error failed to do this. When an application was made by the bankrupt in the District Court for the Southern District of Florida, the judge of that court was, by the terms of the statute, bound to grant it, unless upon investigation it appeared that the bankrupt had committed one of the six offenses which are specified in section 14 of the bankruptcy act as amended. An objecting creditor might have proved upon that application that the bankrupt had committed one of the acts which barred his discharge, either by the production of evidence or by showing that in a previous bankruptcy proceeding it has been conclusively adjudicated, as between him and the bankrupt, that the bankrupt had committed one of such offenses. If that adjudication had been proved, it would have taken the place of other evidence and have been final upon the parties to it. But nothing of the kind took place. Bluthenthal & Bickart inte”

quoted by 1 later decision, including Bacon v. Buffalo Cold Storage Co.

““The failure of the bankrupt to apply for a discharge from his debts in the involuntary proceeding within 12 months after the adjudication foreclosed his right to such a discharge. It is only within that time that he may, under the bankruptcy law, make a lawful application to be relieved from his debts. The record of his failure to make the application in that proceeding was, in effect, a judgment by default in favor of his creditors to the effect that he was not entitled to a discharge from their claims. A judgment by default renders the issue as conclusively res adjudicata as a judgment upon a trial. The result is that the question whether or not the bankrupt was entitled to be discharged from the claims of the creditors scheduled, and provable in the involuntary proceeding was conclusively determined in an action between them and the bankrupt by the record of his failure to apply for a discharge in that proceeding. But the parties to the voluntary were the same, as to the involuntary proceeding, for Kuntz scheduled the same claims and creditors, and the trustee who objected to his discharge was the legal representative of the latter. The bankrupt’s application for a discharge in the vol imtary proceeding presented the same issue which had been conclusively determined against him in the involuntary proceeding, and there was no error in the refusal of the court below to reverse the former judgment and grant the application. The denial of an application for a discharge from d”

quoted by 1 later decision, including In re Bramlett

Relies on Kuntz v. Young · In re Fiegenbaum · In re Meurer

Good law ✅— No negative treatment on recordhow we know

Opinion by (per_curiam) · Decided 1907-01-07

How this case has been cited

Cited by 26 later decisions — most recently May 1950 · most notably Bacon v. Buffalo Cold Storage Co. (1912), In re Schwartz (1937)

8 federal appellate · 13 district ·

70190719101920193019401950decided

Later decisions citing this case, by decade. The current decade is in progress, and our corpus holds fewer opinions from the most recent years, so the latest bars are undercounted — not a real decline.

View the full empirical analysis of this case →

¶1Bankruptcy—Refusal op Discharge—Second Proceeding.

¶2The- denial of the application of a bankrupt for a discharge renders the issue as to his right to a discharge res judicata as to debts which were-provable in that proceeding, and, where in a subsequent voluntary proceeding the bankrupt schedules the same debts and the same assets, the second proceeding is a manifest attempt to evade the effect of the former, and the bankrupt should be restrained by the court from prosecuting a •second application for a discharge; but, where a considerable time has elapsed and new debts are also scheduled, the bankrupt has the right to maintain the proceeding as to those, and an order granting a stay should he limited accordingly.

¶3Appeal from the District Court of the United States for the Eastern District of New York.

¶4For opinion below, see 144 Fed. 445.

¶5*13S. S. Myers, for appellant.

¶6J. G. Moses, Benjamin Tuska, and Page, Crawford & Tuska, for appellee.

¶7Before WALLACE, LACOMBE, and TOWNSEND, Circuit Judges. ■

¶8PER CURIAM.

¶9The bankrupt has appealed from an order of the District Court for the Eastern District of New York setting aside an order of adjudication in bankruptcy in a voluntary proceeding commenced in December, 1905, dismissing the bankruptcy proceeding, and enjoining the bankrupt permanently from further prosecution thereof. This order was made upon the application of certain creditors of the bankrupt whose debts were included in his schedule. It appeared upon the application that the appellant was adjudged a bankrupt August 8, 1899, in a proceeding in the District Court for the' Southern District of New York; that November 5, 1899, he filed a-petition in that proceeding for a discharge from his debts; that specifitions in opposition to his discharge were filed by his creditors; and that October 12, 1903, upon the application of the opposing creditors, and after hearing the bankrupt, the court dismissed -his1 application for a discharge for want of proper prosecution. It further appeared that debts scheduled in the present proceeding to the amount of $70,000 were scheduled in the former proceeding, and. a few small debts scheduled in the present proceeding were not scheduled in the former proceeding, and that the property scheduled in the present' proceeding was of trifling value.

¶10If the application in the court below had been directed to obtaining a stay of any application for a discharge from the debts scheduled in the former proceeding, and the court below had limited its order- accordingly, we should have no difficulty in affirming the order. Obviously it was the principal purpose of the present proceeding to enable the bankrupt to renew his unsuccessful application to be discharged from his debts in the former proceeding, and to that extent to resuscitate the former proceedings. If this were permitted, the creditors who successfully opposed his discharge in the former proceeding would be compelled to litigate over again the issue which had been finally adjudicated in their favor. They should not be subjected to this hardship. If any of these creditors should seek to enforce by an action his debt against the after-acquired property of the bankrupt, not having procured a stay in the second bankruptcy proceeding, he might be met with a discharge in that proceeding as a bar to his action. Under the act of 1898 the denial of an application for a discharge from debts provable in one proceeding in bankruptcy renders the- issue of the right to a discharge res ad judicata as to such debts in a- subsequent proceeding; and a failure of the bankrupt to apply for a discharge within 12 months after the adjudication in the earlier proceeding, has the same effect. Kuntz v. Young, 131 Fed. 719, 65 C. C. A. 477. Where the same debts and the same assets are scheduled in the two proceedings, one being commenced subsequent to the' termination of the other, it is manifest that the last proceeding is merely an attempt *14to evade the former one. To permit it would be to sanction a fraud, upon the court; As this court said in Re Fiegenbaum, 121 Fed. 69, 57 C. C. A. 709:

“Not only should the court of bankruptcy protect the creditors from an attempt to retry an issue already tried and determined between the same parties, but the court, for its own protection, should arrest, in limine, so flagrant an attempt to circumvent its decrees.”

¶11The present case differs, however, from the Fiegenbaum Case, because in that ease the second proceeding was commenced _within a very short time after the denial of the bankrupt's discharge in the former proceeding, while here two years have elapsed; and it differs in the further and more important fact that some debts are scheduléd in the second proceeding which were not provable in the first.

¶12It is the right of an insolvent debtor who may have acquired property and incurred debts subsequent to an adjudication of .bankruptcy to prosecute a second proceeding' to obtain his discharge. The effect of an order like the one under review would be to deprive him of that right.

¶13We conclude, therefore, that the order should be reversed, but without prejudice to an application by the creditors, such as has been suggested.

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