U.S. Supreme Court
Schall v. Camors, 251 U.S. 239 (1920)
Schall v. Camors
Argued November 17, 1919
Decided January 5, 1920
251 U.S. 239
Section 63a of the Bankruptcy Act, defining provable debts, does not include a claim for unliquidated damages arising out of a pure tort which neither constitutes a breach of an express contract nor results chanroblesvirtualawlibrary
in any unjust enrichment of the tortfeasor upon which a contract may be implied. P. 251 U. S. 248.
Clause b of that section, in providing that unliquidated claims may be liquidated in such manner as the court shall direct and may thereafter be proved, refers to claims defined as provable by clause a, and not already liquidated, especially those founded upon open account or contract, and has not the effect of admitting all unliquidated claims, including those of tortious origin. Id.
Section 17 of the Bankruptcy Act, which declares that a discharge shall release the bankrupt from all of his "provable debts" except certain classes specified, refers to § 63 for the definition of what debts are provable, and does not, by the excepting clause, add other classes, but merely limits the effect of a discharge, and this is true also of the amendment of February 5, 1903 (c. 487, § 5, 32 Stat. 797, 798). P. 251 U. S. 251.
To permit a person defrauded by a partnership to prove his claim for damages as a quasi-contract or equitable debt of the partnership which profited, and also of the individual partners who did not profit, by the fraud, would ignore the distinction between partnership and individual debts and the respective equities of the two classes of creditors as established by § 5 of the Bankruptcy Act. P. 251 U. S. 254.
Worthless commercial paper, drawn by a partnership, was sold in the course of its business, by means of fraudulent representations, for a full consideration which went to the partnership and did not profit the partners as individuals, save through their interests in the partnership. The firm and its members individually having been thrown into bankruptcy, held that the claim of the defrauded persons, against the individual partners -- as distinct from their claim against the firm and therein their right to participate as partnership creditors in any surplus that might remain of individual assets after payment of individual debts -- was a claim in tort not provable in bankruptcy.
250 F. 6 affirmed.
The case is stated in the opinion. chanroblesvirtualawlibrary