U.S. Supreme Court
Strang v. Bradner, 114 U.S. 555 (1885)
Strang v. Bradner
Argued April 13, 1885
Decided May 4, 1885
114 U.S. 555
The rule reaffirmed that the term "fraud," in the clause defining the debts from which a bankrupt is not relieved by a discharge under the Bankrupt Act, means positive fraud or fraud in fact involving moral turpitude or intentional wrong, not implied fraud, which may exist without bad faith.
A claim against a bankrupt for damages on account of fraud or deceit practiced by him is not discharged by proceedings in bankruptcy, nor is a debt created by his fraud discharged even where it was proved against his estate and a dividend thereon received on account.
If, in the conduct of partnership business and with reference thereto, one partner makes false or fraudulent misrepresentations of fact to the injury of innocent persons dealing with him, as representing the firm, and without notice of any limitations upon his general authority as agent for the partnership, his partners cannot escape pecuniary responsibility therefor upon chanroblesvirtualawlibrary
the ground that the misrepresentations were made without their knowledge, especially where the firm appropriates the fruits of the fraudulent conduct of such partner.
This action was commenced by defendants in error as plaintiffs in a court of the State of New York, to recover of the plaintiffs in error a sum which they alleged they had been compelled to pay through false and fraudulent representations of one of the members of a partnership consisting of the defendants made in the course of partnership business. The defendants set up a discharge in bankruptcy. Judgment for the plaintiffs, which was affirmed by the supreme court, and the judgment of that court affirmed by the Court of Appeals. The case was remitted by the Court of Appeals to the supreme court when the final judgment was entered, which the defendants below, as plaintiffs in error, sued out this writ of error to review. The federal question involved was the effect of the certificate of discharge in bankruptcy. The facts which raise the question are stated in the opinion of the Court.