Opinion
November 29, 1938.
January 9, 1939.
Bankruptcy — Debts — Discharge — New promise.
1. A discharge in bankruptcy of a preëxisting debt is the absolute extinguishment of the obligation and not a mere bar of the remedy. [77-8]
2. Even though the debt be discharged, if a new express promise to pay is made, there is a moral obligation present which forms sufficient consideration to make the new promise binding; in case of such promise the creditor sues on the new promise and not on the old. [78]
3. The mere acknowledgment of the debt and expression of an intention to pay are not sufficient to make a new binding obligation, nor can it be created by implication. [78]
4. To create such new obligation there must be a clear, distinct and unequivocal promise to pay the specific debt; the new promise must be without qualification or condition, and must contain all the essentials of a valid express agreement. [78]
Argued November 29, 1938.
Before KEPHART, C. J., SCHAFFER, MAXEY, DREW, LINN, STERN and BARNES, JJ.
Appeal, No. 342, Jan. T., 1938, from judgment of C. P. No. 6, Phila. Co., June T., 1937, No. 1436, in case of Samuel Erwin Kravitz, administrator of Estate of Max Kravitz, deceased, v. William Povlotsky. Judgment affirmed.
Assumpsit. Before ALESSANDRONI, J.
The opinion of the Supreme Court states the facts. The testimony of plaintiff relied upon to establish the new promise was as follows:
"I said, 'Mr. Povlotsky, it is about time that you paid some thought to my father's demands on you, to make good the $2,900 that you owe him. You don't deny the fact that you owe him the money.' He said, 'Of course, I don't deny it. I borrowed it.' I said, 'How about making some payment on account, it's about time.' He said, 'You know I went through bankruptcy.' I said, 'I'm well aware of the fact. But that shouldn't make any difference in this case.' He said, 'It's true it doesn't make any difference, because after all, your father and I are relatives and when I borrowed this money, I borrowed it not on the basis of creditor and debtor, but as a pure personal loan, he did me a favor, and it was never my intention to do him out of that money.' I said, 'If that's the way you feel about it, why haven't you made any payments on account of it?' He said, 'Business is pretty bad. I always intended to pay that money.' I said, 'What are you going to do about it now?' He said, 'I'm going to make small payments.' I said, 'How large?' He said, 'The most I can pay at the present time, is $2 a week.' I said, 'Isn't that rather small on an amount so large?' He said, 'I realize that, but business is bad, and certainly you can't expect me to pay more than $2.' I said 'Very well, I'll accept $2 a week.' He said, 'I'll pay you more as business improves. As business gets better I may send you a check for $100, I may send a check for $50 until the full amount is paid.' To make good his promise, he handed me $2 in cash, and my father and I departed. After that he made twenty-four weekly payments and I was present each time that those payments were received."
Verdict for defendant. Motions by plaintiff for judgment n. o. v. and new trial refused, opinion by LAMBERTON, J., holding, inter alia, that the testimony was insufficient to establish a definite and unequivocal new promise to pay, and that, therefore, it was unnecessary to consider alleged trial errors assigned by plaintiff in support of his motion for a new trial, since the defendant had been entitled to the entry of a nonsuit or to binding instructions. Plaintiff appealed from judgment on the verdict.
Errors assigned related to a ruling on evidence and the refusal of a new trial.
Joseph B. Englander, with him Samuel Erwin Kravitz, for appellant.
George Maxman, for appellee.
Appellee borrowed from Max Kravitz $3,000 on a note dated June 24, 1927. In 1931 appellee was forced into bankruptcy and December 8, 1934, was discharged. The note was listed among the bankrupt's liabilities and it was admitted that the obligation was discharged. Appellant, administrator of Kravitz, who died in 1937, claims under a new oral promise by appellee in 1935, subsequent to his discharge, that he would pay the amount of the note with interest. The court below held that the promise was not distinct and that the estate could not recover.
As stated by the court below, a discharge in bankruptcy of a preëxisting debt is the absolute extinguishment of the obligation and not a mere bar of the remedy: Bolton v. King, 105 Pa. 78, 81; Hobough v. Murphy, 114 Pa. 358, 359; Murphy v. Crawford, 114 Pa. 496, 497. However, even though the debt be discharged, if a new express promise to pay is made, there is a moral obligation present which forms sufficient consideration to make the new promise binding. In case of such promise the creditor sues on the new promise and not on the old: Bolton v. King, 105 Pa. 78; Murphy v. Crawford, 114 Pa. 496, 498.
To establish the legal validity of such a promise certain requisites are necessary. The mere acknowledgment of the debt and expression of an intention to pay is not sufficient to make a new binding obligation, nor can it be created by implication. To create such new obligation there must be a clear, distinct and unequivocal promise to pay the specific debt. The new promise must be without qualification or condition, and must contain all the essentials of a valid express agreement: Bolton v. King, 105 Pa. 78; Murphy v. Crawford, 114 Pa. 496; Yoxtheimer v. Keyser, 11 Pa. 364.
The court below held the testimony of appellant did not conform to these requisites. We agree with that conclusion. The testimony is noted in the reporter's notes.
Judgment affirmed.