Opinion
December 7, 1961
Present — Bergan, P.J., Coon, Gibson, Herlihy and Reynolds, JJ.
Appeal from an order of a Special Term, Supreme Court, Broome County. On December 11, 1953 plaintiff entered a judgment against defendants individually and as copartners, based on a jury verdict returned November 30. On December 1, 1953 defendants filed a voluntary petition in bankruptcy and were discharged December 12, 1956. Plaintiff filed a claim in the bankruptcy proceedings on the cause of action on which the verdict was returned and received a dividend. At the close of the trial before the jury, the attorneys for plaintiff applied to the court for an order directing the payment of the "reasonable expenses incurred" in proving certain facts on the trial which defendants had refused to admit, in pursuance of subdivision 3 of section 322 of the Civil Practice Act. The court, by order entered January 8, 1954 allowed $1,500 as such expenses and directed that defendants individually and as copartners pay it. The question on appeal is whether the additional allowance for "expenses incurred" is a penalty and not a provable debt within section 63 of the Bankruptcy Act (U.S. Code, tit. 11, § 103). One of the defendants Lino Mion, applied to vacate an execution issued on the order of January 8, 1954, and the court at Special Term has vacated it on the ground the additional allowance for expenses was a provable debt in bankruptcy and hence has now been discharged. (Bankruptcy Act, § 17, U.S. Code, tit. 11, § 35.) The allowance of these expenses was not a "penalty" in the sense of punishment for wrong or error. It is an apportionment of the cost of litigation. If a party will not admit a fact useful to his adversary's case, he merely runs the risk of paying to prove it. He is entirely within his rights in refusing to admit facts; the adverse party has the burden of showing a good case against him and the order to pay for this is an incident to the litigation. In this case the allowance for expenses was an incident, and closely dependent for validity, on the main claim which is provable and which has been discharged. We agree with the Special Term that the allowance for expenses was a provable debt and that the execution should be vacated. Order unanimously affirmed, with $10 costs.