Summary
In Matter of Alvino (111 F.2d 642) a stay was sought in the Federal court of an action commenced against a bankrupt in the Municipal Court. The action was predicated on a claim to recover damages for fraud in that the bankrupt had obtained money by false representations.
Summary of this case from First Nat. Bank v. HaymesOpinion
No. 303.
May 6, 1940.
Appeal from the District Court of the United States for the Eastern District of New York.
Proceeding in the matter of Stephen W. Alvino, bankrupt, wherein the bankrupt applied for a stay of an action commenced against him in the Municipal Court of the City of New York by the Morris Plan Industrial Bank. From an order staying prosecution of the action, the Morris Plan Industrial Bank appeals.
Reversed with direction.
Henry W. Parker, of New York City, for appellant.
Frank Composto, of Brooklyn, N.Y., for appellee.
Before L. HAND, AUGUSTUS N. HAND, and PATTERSON, Circuit Judges.
The bankrupt filed voluntary petition in bankruptcy. Four months later Morris Plan Industrial Bank commenced an action against him in the Municipal Court of the City of New York to recover $238. The complaint was headed, "Action to recover damages for fraud." The complaint set forth succinctly that the defendant borrowed $255 from the plaintiff and represented that his debts then were only $12, that the representation was false and known by the defendant to be false, that it was relied on by the plaintiff in making the loan, and that the unpaid amount was $238. The bankrupt promptly applied to the bankruptcy court for a stay of the suit, and a stay was granted over the bank's opposition.
The stay was proper only if the claim asserted against the bankrupt in the action in the state court was one "from which a discharge would be a release." Bankruptcy Act, section 11, sub. a, 11 U.S.C.A. § 29, sub. a. Where the action has not been tried, the character of the claim is determined from the plaintiff's pleading, to the exclusion of what the bankrupt may say about the claim in affidavits. In re Adler, 2 Cir., 152 F. 422; In re Northrup, D.C.N.Y., 265 F. 420; In re Gelson, D.C.N.Y., 12 F. Supp. 924, 925. Here the complaint marks the claim unmistakably as one for deceit, for obtaining money by false representation. From such a claim a discharge in bankruptcy is not a release. Bankruptcy Act, section 17, sub. a, 11 U.S.C.A. § 35, sub. a. The bankrupt was not entitled to a stay of the action. Family Small Loan Co. v. Mason, 4 Cir., 67 F.2d 207.
The court below was in error in holding that the bank should have submitted proof of fraud. It did enough when it showed the court a copy of the complaint filed in the action in the state court. The order is reversed, with direction to deny the stay.