Lewis v. Roberts/Opinion of the Court

The petitioner, Lewis, recovered a judgment against the Montevallo Mining Company for personal injuries caused by its negligence. The Company was thereafter adjudicated a bankrupt in the Northern District of Alabama. Lewis filed in the bankruptcy proceeding a proof of claim upon the judgment. The District Court confirmed an order of the referee disallowing this claim, upon the ground that a judgment founded upon a tort was not provable in bankruptcy. This decree was affirmed by the Circuit Court of Appeals. 294 F. 171. The writ of certiorari was then granted. 264 U.S. 578, 44 S.C.t. 335, 68 L. Ed. 858.

This decision is in conflict with an unbroken line of decisions in other Circuit Courts of Appeals and in the District Courts. In re New York Tunnel Co. (C. C. A.) 159 F. 688, 690, 86 C. C. A. 556; Moore v. Douglas, (C. C. A.) 230 F. 399, 401, 144 C. C. A. 541; In re Putnam (D C.) 193 F. 464, 468. And see In re Lorde (D. C) 144 F. 320; Ex parte Margiasso (D C.) 242 F. 990; In re Madigan (D. C.) 254 F. 221.

We think these prior decisions were correct.

Section 63a of the Bankruptcy Act, entitled 'Debts Which May be Proved,' provides that:

'Debts of the bankrupt may be proved and allowed against his     estate which are (1) a fixed liability, as evidence by a      judgment *  *  * absolutely owing at the time of the filing of the      petition. * *  * '

Section 1(11), being Comp. St. § 9585 declares that the word 'debt' as used in the Act shall, unless inconsistent with the context, be construed to include 'any debt, demand, or claim provable in bankruptcy.'

It is clear that a judgment for tort is provable under the express provisions of section 63a(1). The language is broad and unqualified. It includes a 'fixed liability' evidenced by a judgment ex delicto as well as by a judgment ex contractu, and makes the one as well as the other a provable 'debt' There is nothing in the language or in the context which suggests its limitation to judgments founded on debts or warrants the reading in of such a limitation.

This conclusion is confirmed by a consideration of other provisions of the Act. By section 17 (30 Stat. 550) as originally enacted, it was provided that:

'A discharge in bankruptcy shall release a bankrupt from all     of his provable debts, except such as *  *  * (2) are judgments      in actions for frauds, or obtaining property by false      pretenses or false representations, or for willful and      malicious injuries to the person or property of another.'

This express exception of certain judgments for torts from the 'provable debts' released by a discharge, plainly indicates that Congress understood that under section 63a judgments for torts were 'provable debts,' and is strongly persuasive as a construction of that section.

Furthermore, if a judgment for tort is not a provable claim in bankruptcy under section 63a, it could not, under section 1(11), be considered in determining whether one against whom an involuntary petition has been filed, is insolvent within the meaning of section 1(15) providing that: 'A person shall be deemed insolvent * *  * whenever the   aggregate of his property *  *  * shall not *  *  * be   sufficient in amount to pay his debts.'

The result of this would be that a person having property in excess of his other debts could not be adjudged an involuntary bankrupt under section 3b of the Act (Comp. St. § 9587) although owing judgments for tort exceeding the amount of his property. Clearly Congress did not intend so anomalous a result.

The trustee contends, however, that despite the broad language of section 63a(1), the decision in Wetmore v. Markoe, 196 U.S. 68, 25 S.C.t. 172, 49 L. Ed. 390, 2 Ann. Cas. 265, necessarily leads to the conclusion that only judgments founded in debt are provable claims. It was there held that under section 17 of the Act the arrears of alimony previously awarded to the wife of the bankrupt for the support of herself and their minor children under a final decree of absolute divorce was not a provable debt which was released by the bankrupt's discharge. The ground of the decision was that the court could look into the proceedings to determine the nature of the liability which had been reduced to judgment; that a decree awarding alimony was not in any just sense a debt which had been put into the form of a judgment, but rather the legal means of enforcing the obligation of the husband to support his wife and children which was imposed upon him by the policy of the law; and that it could not be presumed, in the absence of a direct enactment, that Congress intended that the Bankruptcy Act should be made an instrument by which the wife and children should be deprived of the support which it was the purpose of the law to enforce. It is clear that this decision rested on the peculiar and exceptional nature of a decree for alimony. There was no suggestion in the opinion that an ordinary claim ex delicto that had been previously reduced to judgment was not a provable debt; and we think that its reasoning neither leads to nor warrants such a conclusion.

Nor is there anything to support this conclusion in Schall v. Camors, 251 U.S. 239, 40 S.C.t. 135, 64 L. Ed. 247, which dealt solely with unliquidated claims arising in tort, not previously reduced to judgment, and held merely that such unliquidated claims, not being included in the enumeration of provable debts under section 63a, could not be liquidated and proven under the provisions of section 63b.

The decrees of the District Court and of the Circuit Court of Appeal are reversed, and the cause is remanded to the District Court for further proceedings in accordance with this opinion.

Reversed and remanded.