Opinion
Submitted May 2, 1944 —
Decided June 14, 1944.
The facts appearing in this case indicate that the fraud which resulted in the renewal of an existing loan and the lending of additional money to defendant below affected the entire sum represented by the note sued on, and not merely the increase of the original loan, in which defendant's wife was also involved.
On appeal from the District Court.
Before Justices PARKER, HEHER and COLIE.
For the appellant, Samuel N. Poritz.
For the respondent, Charles W. Symanski.
This is plaintiff's appeal from a judgment in its favor for $45.35, plaintiff claiming that the amount of the judgment should have been $300, the face of a promissory note dated October 10th, 1942, made by defendant-respondent. The defense to the claim of $300 seems to have been that in January, 1943, defendant had gone through bankruptcy, and (inferentially, though the case does not directly state) had been discharged. The claim of plaintiff on that phase of the case was that the discharge was ineffective because the debt of $300 had been fraudulently incurred, and consequently not discharged by the bankruptcy proceeding. That there was a fraudulent statement inducing the transaction of October 10th, 1942, is apparently conceded: but the claim for defendant-respondent is that on October 10th, 1942, plaintiff already held a note of defendant and his wife for $254.65, not the result of any fraud: that defendant applied on October 10th for an increase of the loan to $300, signed the note now in suit (the wife not joining therein) and received the old note and the difference of $45.35; and hence, as claimed for defendant, the false statement inducing the transaction of October 10th, 1942, was referable only to the increase of $45.35 and not to the renewal of the previous loan of $254.65, so that the latter was barred by the bankruptcy. The District Court so held, and entered judgment for the $45.35 only.
We consider that this was error. The legal effect of the transaction of October 10th, 1942, was the extinguishment of the existing debt of defendant and his wife, the amount of which was $254.65, and the creation of a new debt of defendant alone, induced by fraud, of $300. The argument that defendant received only $45.35 in cash ignores the fact that he received a renewal of the $254.65 for which he was liable, based on admitted fraud, to which the bankruptcy was no bar.
The judgment will be reversed and a new judgment entered in this court for $300 and costs.