Fidelity Casualty Co. v. Golombosky , 133 Conn. 317 ( 1946 )

A considerable part of the majority opinion is devoted to the argument that the purpose of the Bankruptcy Act was to relieve an honest debtor from the weight of oppressive indebtedness and not to furnish a means of escape for the dishonest one whose debt is founded in fraud. I have no quarrel with this argument. My position is that, having obtained a judgment in another state for what bears the indicia of an honest debt and having sued upon that judgment in this state, the plaintiff may not, in this action, attack the character of the debt by evidence of fraud dehors the record. That is not to say that the plaintiff has no other means of setting aside the discharge as to the debt because of fraud in its creation. See Brown v. Hannagan,210 Mass. 246, 96 N.E. 714.

The authorities are in substantial agreement that in such cases a judgment itself is not conclusive of the nature of the debt but that the courts may examine the record to ascertain the nature of the cause of action upon which it is based. In Boynton v. Ball,121 U.S. 457, 466, 7 S. Ct. 981, 30 L. Ed. 985, it was said that the debt does not necessarily merge in the judgment, that "it still remains the same debt on which the action was brought in the state court." (The italics are mine.) In Wisconsin v. Pelican Ins. Co., 127 U.S. 265, 292, 8 S. Ct. 1370, 32 L. Ed. 239, the court stated that the essential nature of a cause of action was not changed by recovering judgment upon it. It added that while a court was not precluded from ascertaining the nature of the claim it could not go behind the judgment for the purpose of examining into its validity. In reference to actions brought on judgments of another state, the court quoted Justice Story to the effect that the federal. constitution did not make the judgments of other states domestic judgments of the state in which recovery was sought and stated that they were not reexaminable on their merits in the latter state. In In re Adler, 152 F. 422, 423, 81 C.C.A. 564, the court said: ". . . we are of the opinion that the law does not require the district court to enter into an investigation dehors the pleadings to ascertain the nature of the action."

By the weight of authority, while the trial court may go behind the judgment into the record to ascertain the character of the action in such cases, it may not go behind the record to establish a different cause. 8 C.J.S. 1591.

As to decisions cited in the majority opinion as holding a contrary view, some relate to proceedings before judgment and others are based upon independent actions in equity, distinguishing them from the instant case. See Brown v. Hannagan, supra; Howland v. Carson, 28 Ohio St. 625. Some, indeed, hold that the judgment simply establishes the debt and that the creditor may prove that this arose out of fraud by extrinsic evidence where a discharge in bankruptcy is pleaded as a defense. See Young v. Grau, 14 R.I. 340; Gehlen v. Patterson, 83 N. H. 328,141 A. 914. I cannot accept the reasoning behind these latter decisions. "To determine the character of the liability upon which the appellant's judgment was founded, we must look to the suit in which it was rendered." In re Hammond, 98 F.2d 703, 704. The note in suit was not obtained by fraud and the plaintiff presumably knew the entire situation when he accepted it. Blackman v. McAdams, 131 Mo. App. 408,411, 111 S.W. 599.

Such a proceeding as the plaintiff attempted and the majority opinion sanctions will require the trial here of a new cause of action arising in another state. Pursued to its logical conclusion, the action on the contract judgment will disappear temporarily from consideration and one for defalcation will take its place. When, and if, it is decided in that proceeding that the "original debt" had its basis in a defalcation, presumably the bar of the discharge will be removed and execution will issue on the Pennsylvania judgment, although that judgment is based upon a contract between the parties including a provision for the payment of a 10 per cent attorney's fee. "A judgment creates a debt, on the ground that a liability is ascertained and established, by the decision of a tribunal, which might rightfully adjudicate upon it; and such adjudication derives its whole force and effect from the laws of the state under whose authority it is made." Wood v. Watkinson, 17 Conn. 500,506. I agree with the trial court that the debt in the instant case was that "created" by the judgment.

This was the position we took in Consolidated Plan of Connecticut, Inc. v. Bonitatibus, 130 Conn. 199, 33 A.2d 140, upon which the trial court relied, and upon which no attack is made by the plaintiff in the instant case. The plaintiff, indeed, refers to it as a sound decision but distinguishable on the facts. In my opinion, the Bonitatibus decision is sound, is applicable, and has so far become the established law of the state as to make it unwise to overrule it even by implication.