Zavelo v. Reeves

Citations

• 227 U.S. 625
• 33 S. Ct. 365
• 57 L. Ed. 676
• 1913 U.S. LEXIS 2337

Syllabus

<p>In the absence of' any proof to that effect in the record, a promise by the bankrupt made between the petition and the discharge to pay the balance of his provable debt to one of his creditors who advanced money to enable him to effect a' composition without obtaining any undue preference over the other creditors, will not, be regarded as an act of extortion' or attempted extortion in violation of § 29b 5. of the Bankruptcy Act, prohibiting acting or forbearing to act in bankruptcy proceedings.</p> <p>A discharge, while releasing the bankrupt from legal liability to pay a provable debt,' leaves him under a moral obligation that is sufficient, to support, a new promise to pay it.</p> <p>The'theory of bankruptcy is that the discharge does not'destroy the debt but does destroy the remedy.</p> <p>As a general rule, the discharge when granted relates back to the inception of the proceeding, and the bankrupt becomes a free imán as to new transactions as of the date of the transfer of his property to the trustee.</p> <p>This court by promulgating General Orders and Forms in Bankruptcy construed § 63a 4 as confining the discharge to provable debts existing on the day of the petition and having it relate back thereto. Under the Bankruptcy Act of 1898 an express piomise to pay a provable debt is good although made after the-petition and before the discharge.</p> <p>Obligations created after the filing of the petition and before the discharge arc not provable under § 63 and therefore are not included in’ the discharge.</p> <p>As § 12 of the Bankruptcy Act requires that money for effecting the composition’ be deposited before the application to authorise it, it contemplates that the bankrupt may acquire such money by use of his credit.</p>