Opinion
Nos. 76-2158 TT; 76-2159 TT; and 76-2160 TT
October 5, 1979
Discharge of Debts — False Representations — Promise to Execute Documents
A debtor's promise and subsequent failure to execute lease papers or a conditional sales agreement for the purchase of equipment which the debtor has received indicates neither misrepresentation nor an intent to deceive such as to prevent discharge of the debt. See Sec. 17a(2) at ¶ 2146 and Sec. 523(2)(A) at ¶ 9228.
[Digest of Opinion]
During negotiations for the purchase of equipment, the bankrupt signed two purchase orders, the amounts of which constitute the basis for the claim in the instant case. Following delivery of the equipment, the creditor delivered lease papers to the bankrupt who failed to sign them. At the bankrupt's request, a conditional sales agreement was prepared which the bankrupt also failed to sign. The terms of the agreement were altered but the bankrupt again failed to sign them. A voluntary petition in bankruptcy was then filed.
The creditor claimed that the debt owed it for the "sale" of the equipment should not be discharged under Section 17a(2) of the Bankruptcy Act because the equipment was obtained "by false pretenses or false representations. . ." or by "willful and malicious conversion of the property of another." Among the factors that must be indicated to succeed on a claim of false representations are: 1) that the bankrupt made the representations; 2) that at the time he knew they were false; and 3) that he made them with the intention and purpose of deceiving the creditor. The bankrupt's promise to sign the various papers "is not sufficient to make a debt nondischargeable, even though there is no excuse for the subsequent breach." Further, the fact that subsequent to the negotiations and transactions for the purchase of the equipment, the bankrupt filed a petition in bankruptcy does not demonstrate that at the time the bankrupt made the representations, they were false. Neither do these actions indicate that any representations were made with the intention and purpose of deceiving the creditor. Therefore, the debt was dischargeable under Section 17a(2).