Van Epps v. Aufdemkamp

YORK, J. Defendant appeals to this court from an order denying motion to quash writ of execution and from the order denying his motion for relief from default under section 473, Code of Civil Procedure.

By complaint in conversion it was alleged by the plaintiff: “That on or about April 2, 1927, the plaintiff was the owner of shares of the preferred stock of Hollywood Mortgage and Finance Corporation, . . . the same being then and there evidenced by certificates of stock of said corporation.

“That on or about said April 2, 1927, at the City of Los Angeles, County of Los Angeles, State of California, the [623]defendant then being in possession of said goods, unlawfully converted and disposed of the same to his own use, to the damage of the plaintiff in the sum of $1,700.00.”

On January 12, 1928, plaintiff recovered a judgment by default for the sum of $1700, and on December 2, 1930, alias execution was issued, and certain property of defendant was levied upon. Thereupon, defendant moved the court to quash the writ of execution on the ground that since recovery of the judgment by default, defendant had been discharged in bankruptcy, and that the judgment was listed in the bankrupt schedule. This motion was by the court denied.

Appellant maintains that the discharge in bankruptcy had the effect of releasing him from the judgment, while respondent, on the other hand, contends that the judgment, being for a wilful and malicious injury to the personal property of another, is not released by the discharge in bankruptcy.

Section 17 of the Bankruptcy Act provides as follows: “Debts not affected by a discharge.. A discharge in bankruptcy shall release a bankrupt from all of his provable debts, except such as .. . (second) are liabilities for obtaining property by false pretenses or false representations, or for wilful and malicious injuries to the person or property of another.” (Sec. 35, tit. 11, Bankruptcy, U. S. Code Annotated, p. 150.)

The question now before this court is whether or not an unlawful conversion of certificates of stock by defendant to his own use, which resulted in damage to the plaintiff, constitutes a wilful and malicious injury. In McIntyre v. Kavanaugh, 242 U. S. 138 [37 Sup. Ct. 38, 61 L. Ed. 205], where the unauthorized sale of certificates of stock held by a firm of brokers as collateral and the appropriation of the proceeds to their own use was held to be a wilful and malicious injury to property within the meaning of the exception outlined in section 17, supra, the court (at p. 207) quoting from Tinker v. Colwell, 193 U. S. 473 [24 Sup. Ct. 505, 48 L. Ed. 754], said: “A wilful disregard of what one knows to be his duty, an act which is against good morals and wrongful in and of itself, and which necessarily causes injury and is done intentionally, may be said to be done wilfully and maliciously, so as to come within the exception.