U.S. Supreme Court
Davis v. Aetna Acceptance Co., 293 U.S. 328 (1934)
Davis v. Aetna Acceptance Co.
Argued November 9, 1934
Decided December 3, 1934
293 U.S. 328
1. A creditor to whom a bankrupt owes money on a promissory note and against whom the bankrupt has committed an act of conversion by an unauthorized sale of personal property mortgaged to secure the note may prove on the note, " a fixed liability as evidenced by an instrument in writing," Bankruptcy Act, § 63(1), or may waive the tort and prove on the implied assumpsit, § 63(4), but he cannot escape the discharge by electing to ignore the bankruptcy proceedings and suing on the tort. P. 293 U. S. 331.
2. Section 17(2) of the Bankruptcy Act, which excepts from discharge liabilities for "willful and malicious injuries" to the property of another, does not embrace a technical conversion, committed against the mortgagee of personal property by the mortgagor in possession, by an unauthorized sale, if the act was not in fact willful or malicious, but done innocently in the honest though mistaken belief that authority to sell existed. P. 293 U. S. 331.
3. Section 17(4) of the Bankruptcy Act, which excepts from discharge liabilities of a bankrupt created by his fraud, embezzlement, etc., while acting in any "fiduciary capacity," refers to strict trusts, chanroblesvirtualawlibrary
existing before the wrongs creating the excepted liabilities are committed, and not to trusts ex maleficio arising from the wrongs themselves. P. 293 U. S. 333.
4. A dealer in automobiles purchased a car by means of a loan of money, to secure which he delivered to the lender his promissory note for the amount borrowed, a chattel mortgage covering the car, a "trust receipt" agreeing to hold the car as the property of the lender for the purpose of storage, and not to sell, pledge, or otherwise dispose of it without the lender's consent in writing, and, finally, a bill of sale, absolute in form.
That the transaction amounted merely to a mortgage for the security of the loan with a covenant by the mortgagor not to sell without the mortgagee's consent, and did not constitute the former a fiduciary for the latter within the meaning of § 17(4) of the Bankruptcy Act. P. 293 U. S. 334.
273 Ill.App. 628 reversed.
Certiorari to review the affirmance of a judgment recovered by the Acceptance Company against Davis in an action of trover counting on the sale of a mortgaged automobile. Davis' special plea of a discharge in bankruptcy was overruled. The Supreme Court of Illinois refused leave to appeal.