Libbey v. Strasburger

The appellant, who fraudulently contracted the debt due to the plaintiff, secured by a meeting of his creditors a discharge under the provisions of the bankrupt law authorizing a composition. Act of congress approved 22 June, 1874, sec. 17.) The plaintiff did not, however, unite in the proceedings, and did not accept or receive any benefit from them. The defendant, nevertheless, insists that he is discharged from the debt. In this, we think, he is mistaken. The Revised Statutes, section 5117 of the bankrupt act, declares that no debt, created by the fraud or embezzlement of the bankrupt, shall be discharged by proceedings in bankruptcy, and the composition already mentioned is a proceeding in bankruptcy.

The second section relating to it declares that in all cases of bankruptcy now pending, or thereafter pending, a meeting may be called under the direction of the court, etc.; and the Court of Appeals has substantially decided that in construing a section of the bankrupt law, it is to be read and applied in connection with *122every other section of the act. (Ansonia B. & C. Co. v. New Lamp Chimney Co., 53 N. Y., 123.) This rule is applicable to this case, because there is nothing in the language of the section relating to compositions, which in terms enlarges their effect so as to overrule the general and broad provisions of section 5117 (supra). The intention of the law makers was to exclude the fraudulent debts of the bankrupt from the operation of the statute. It was designed to assist honest debtors only. It would be extending its benefits beyond the scope its framers had in view, to declare that debts which under its provisions could 'not be discharged, would by composition proceedings be blotted out, even although the recusant creditor had received no part of the estate.

We think, therefore, that the order appealed from should be affirmed, with ten dollars costs and disbursements of the appeal.

Order affirmed, with ten dollars costs and disbursements.