Opinion
July 8, 1982.
Present: McGuane, Lenhoff, Greenberg, JJ.
Bankruptcy, Discharge. Bills and Notes, Promissory note; Consideration. Partnership, Individual liability of partner.
Report of court's dismissal of defendant's report. Action heard in the Springfield Division by Goldblatt, J.
Richard Corbert for the plaintiff.
Norton H. Goldstein, pro se.
This is a case on a promissory note which was executed by the Defendant and one Jerome J. Forbes in favor of the Chicopee Bank Trust Company in the principal sum of $10,180.01 at 8 percent interest. The Plaintiff is liquidating agent for said bank. The Defendant, in his answer, set up the defenses of want of consideration, mutual mistake of fact, and law of estoppel.
The trial court found for the Plaintiff in the amount of $14,823.06 which included an attorney's fee of $2,964.61.
At the trial, there was evidence tending to show that the Defendant and the said Jerome J. Forbes had a real estate partnership doing business as Times Development Company. In 1969, the Defendant and Forbes signed a note with Chicopee as follows:
"Jerome J. Forbes Norton H. Goldstein D/B/A Times Development Company"
for the principal sum of $9,000.00.
In 1970, the partnership filed for an arrangement under Chapter XI relating to bankruptcy. Chicopee was listed as a creditor for the 1969 note. On March 12, 1970, Chicopee signed an acceptance to a Plan of Arrangement for a 10 percent payment on its claim which at that time was for the sum of $10,856.25. On July 20, 1980 a final decree was entered in the Bankruptcy Court.
On November 1, 1972, the note in question was signed by the Defendant and Forbes although no further funds were advanced. There was evidence that the Chapter XI arrangement did not extinguish their personal liability on the prior note. There also was evidence that they wished to preserve their credit standing. Forbes later went through personal bankruptcy proceedings.
The first issue presented in this appeal is whether or not the discharge of the partnership in bankruptcy also discharges the individual partners?
The Bankruptcy Act of 1938 as amended, Section 5J states:
"The discharge of a partnership shall not discharge the individual general partners thereof from the partnership debts. A general partner adjudged a bankrupt either in a joint act or separate proceedings may, pursuant to the provisions of this act, obtain a discharge from both his partnership and individual debts". COLLIER ON BANKRUPTCY Par. 9.32 (10) (14th ed.). Also in COLLIER, BANKRUPTCY MANUAL § 5.06 states:
"Under Section 5J the liability of individual general partners for the firm debts is not released by the discharge of the partnership but the individual partner when adjudicated either in a joint or separate proceeding, may obtain a discharge from both his partnership and individual debts"
In this case the only petition for bankruptcy was for the partnership. Mr. Forbes subsequently filed individual bankruptcy. The Defendant has not.
On this issue of consideration for the second note, we agree with the trial judge that there was adequate evidence of consideration. Finding no prejudicial error, the report is dismissed.