Opinion
45119.
ARGUED MARCH 4, 1970.
DECIDED APRIL 7, 1970.
Trover. Fulton Civil Court. Before Judge Webb.
Jack K. Bohler, for appellant.
Wilkinson Nance, A. Mims Wilkinson, Jr., for appellee.
The issue in a post-bankruptcy trover action when the property has disappeared prior to bankruptcy and the defendant makes no claim to title is whether the conversion was wilful and malicious. However, when a plaintiff has litigated in the bankruptcy court the question of defendant's intent in converting the property, that court's adverse findings will act as an estoppel by judgment on the question of wilful and malicious intent in the trover action.
ARGUED MARCH 4, 1970 — DECIDED APRIL 7, 1970.
Defendant in a trover action appeals from a summary judgment for plaintiff and from the denial of his motion for summary judgment.
In July of 1967, plaintiff filed suit against defendant on a conditional-sale contract for an automobile and obtained a judgment in August for the unpaid balance of $2,754. In September defendant filed a petition in bankruptcy, scheduling plaintiff as judgment creditor (secured) and stating in his petition that the automobile had been taken out of the State without his permission the previous February by a third person and that its whereabouts was unknown. Plaintiff filed an objection to defendant's discharge on the ground that defendant intentionally and wilfully permitted the removal of the automobile from his possession, thereby hindering and defrauding a creditor. Upon a hearing, the referee in bankruptcy found there was no intent on defendant's part to hinder or defraud plaintiff but rather just the contrary — that defendant had in good faith given the use of the automobile to the third person in order to prevent his account from going delinquent. (The third person was to make the payments.) Plaintiff appealed this finding to the United States district court which affirmed the denial of the objection. Defendant was discharged in April of 1968. In May plaintiff filed a trover action, alleging wilful conversion to a third party in total disregard of plaintiff's rights and demanding of defendant the property or its value (which is alleged as $2,754, the balance due on the contract) plus hire ($5,140 to date of filing). Defendant answered by pleading discharge of the debt in bankruptcy; res judicata by reason of the judgment of August, 1967; and, in effect, estoppel by judgment of the bankruptcy court as to the element of wilful conversion. Both parties moved for summary judgment and plaintiff's motion was granted as to liability only.
The Georgia cases dealing with secured creditors vis-a-vis the debtor's bankruptcy are a curious blend of limited factual situations and sweeping, general holdings. The granddaddy case is Berry v. Jackson, 115 Ga. 196 ( 41 S.E. 698, 90 ASR 102), which for years has been read to hold that a discharge in bankruptcy is never a defense to a trover action since the issue in trover is title and not debt. See Birmingham Fertilizer Co. v. Cox Son, 10 Ga. App. 699 ( 73 S.E. 1090). Cf. Crystal Laundry c. v. Continental Loan c. Co., 97 Ga. App. 823, 826 ( 104 S.E.2d 654), reversed on a procedural ground in 214 Ga. 528 ( 105 S.E.2d 727). While it is perfectly true that bankruptcy does not effect a change in the title to property ( Berry, supra), title litigation is not the gist of a post-bankruptcy trover action when the property has disappeared prior to the bankruptcy and the defendant makes no claim to title. The gist is conversion (whether technical or real) and the issue upon a plea of discharge is whether the tort liability was dischargeable. "The material questions on dischargeability are, first, is the obligation provable, and second, is it excepted from discharge under § 17 of the Bankruptcy Act." 9 AmJur2d 564, Bankruptcy, § 756. An exception under § 17a (2) is "wilful and malicious injuries." The "discharge will prevail as against a showing of conversion without aggravated features." Davis v. Aetna Acceptance Co., 293 U.S. 328, 333 ( 55 SC 151, 79 LE 393). "It was an honest debtor and not a malicious wrongdoer that was to be discharged." Tinker v. Colwell, 193 U.S. 473, 488 ( 24 SC 505, 48 LE 754).
The plaintiff here has substantially alleged that defendant's conduct falls within this exception. However, in our opinion the plaintiff is estopped from making this showing by the judgment of the United States district court affirming the specific factual findings of the bankruptcy court concerning defendant's intent when he made the transfer — findings which are inconsistent with wilful and malicious intent. The plaintiff could have litigated this issue either in the bankruptcy proceeding or in a subsequent trover suit in the State court. It chose the former and is bound thereby.
The trial court erred in granting plaintiff's motion for summary judgment as to liability and in denying defendant's motion for summary judgment.
Judgment reversed. Deen and Evans, JJ., concur.