Opinion
Argued October 9, 1891
Decided December 1, 1891
A.C. Fransioli for appellant. Sam'l J. Crooks for respondent.
The defendant, upon showing a discharge from his debts made August 25, 1890, in proceedings in bankruptcy commenced in 1878, moved for a perpetual stay of proceedings against Fannie J. Byrnes, as assignee, from collecting a judgment rendered against him on August 8, 1877, in the Supreme Court of this state in favor of Maria Mulock. The judgment purported to have been rendered in an action commenced in September, 1873, upon a promissory note for $2,500, executed by the defendant June 1, 1870, and payable to the order of Fannie J. Byrnes one year after date, with interest. This note, soon after its delivery, was transferred to Mrs. Mulock, and she recovered judgment. In March, 1879, Mrs. Mulock assigned the judgment to Fannie J. Byrnes, and she, as assignee thereof, opposed the motion upon proof that the note upon which such judgment was rendered was given to her by the defendant upon an indebtedness alleged to have been incurred by the defendant while acting in a fiduciary character, as an agent in the collection of rents, prior to June, 1870.
The opposition to the motion was based upon section 5117 of the Revised Statutes of the United States, providing that: "No debt created by the fraud or embezzlement of the bankrupt, or by his defalcation as a public officer, or while acting in a fiduciary character, shall be discharged by proceedings in bankruptcy; but the debt may be proved and the dividend thereon shall be a payment on account of such debt."
The first question that presents itself on this state of facts is whether the creditor has shown the case of a debt incurred by the defendant while acting in a fiduciary character, within the meaning of the Bankrupt Law. The creditor here has attempted to show that the relation of principal and agent existed between her and her husband, and that he collected her rents as her agent, and she argues from that fact that he was acting in a fiduciary character in transacting such business.
It has been frequently held in cases of controlling authority that the language of the Bankrupt Law does not apply to cases of implied trusts; but only to those technical trusts which are actually and expressly constituted by the parties. ( Chapman v. Forsyth, 2 How. [U.S.] 202; Neal v. Clark, 95 U.S. 709; Cronan v. Cotting, 104 Mass. 245; Hennequin v. Clews, 77 N.Y. 427; Palmer v. Hussey, 87 id. 303.)
It was held in the Chapman case, under the Bankrupt Law of 1841, that a factor who receives the goods of another to sell and remit proceeds, was not acting in a fiduciary character, within the meaning of that act. Justice McLEAN, delivering the opinion of the court, saying: "The cases enumerated, `the defalcation of a public officer,' `executor,' `administrator,' `guardian,' `trustee,' are not cases of implied but special trusts, and the `other fiduciary capacity' mentioned must mean the same class of trusts. The act speaks of technical trusts and not those which the law implies from the contract."
In Neal v. Clark, the court adopted the same construction and applied it to the act of 1867.
It was held in Hennequin v. Clews ( 77 N.Y. 427), that the Bankrupt Law of 1867, although differing somewhat in language from that of 1841, was not changed in meaning and was subject to the same construction, and the definition given to the words "fiduciary character" in that act by the Chapman case were adopted and applied in construing the similar provision in the act of 1867. Judge CHURCH, in writing the opinion in that case, adopts the language of Justice McLEAN and says the same view has been taken in the cases of Cronan v. Cotting ( 104 Mass. 245), Grover v. Clinton (8 Natl. Bk. Reg. 312), Owsley v. Cobin (15 id. 489), In re Smith (8 id. 401.)
Judge FINCH said in Palmer v. Hussey ( 87 N.Y. 307), that: "It is settled in this court, in supposed accordance with the doctrine of the federal courts, that the `fiduciary capacity' intended by the Bankrupt Act, relates to technical trusts, not merely such as the law implies from the contract, but actual and expressly constituted," citing Hennequin v. Clews; and further, that the evidence and the affidavits in the case under consideration "show no other or different trust or fiduciary relation than such as may be said always to exist in a case of agency. In every such case there is an element of trust and confidence, so that a breach of duty may be said to be a breach of trust, but the agent is, nevertheless, not a fiduciary within the meaning of the Bankrupt Act."
There are other questions involved in the case, which we think are fatal to the appeal, but the point considered is so clearly settled by authority that it is unnecessary to spend time in further discussion.
The order should be affirmed, with costs.
All concur.
Order affirmed.