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Raphiel v. Morris Plan Industrial Bank of New York.

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT


December 11, 1944

RAPHIEL
v.
MORRIS PLAN INDUSTRIAL BANK OF NEW YORK.

Appeal from the United States District Court for the Southern District of New York.

Author: Frank

Before L. HAND, AUGUSTUS N. HAND, and FRANK, Circuit Judges.

FRANK, Circuit Judge.

Under § 14, sub. c of the Bankruptcy Act, 11 U.S.C.A. § 32, sub. c, there are seven grounds for refusing a discharge. Where a discharge is barred under § 14, sub. c(2-7) because of a wrongful act of the debtor, a future discharge will be denied only in regard to those who were creditors at the time that the wrongful act occurred, or became creditors within the time specified by the Act. But the doctrine adopted by the district court would prevent the discharge in bankruptcy as to all creditors for all time when the wrong committed is a bar under § 14, sub. c(1). Neither § 14, sub. c nor any other provision of the Act makes such a differentiation, and there is nothing in the legislative history to justify it. We cannot believe that Congress had any such intention. The court below properly followed our earlier decision, In re Lesser, 2 Cir., 234 F. 65.*fn1 But, as we think that decision was wrong, we hereby overrule it. We do so the more readily because on one can possibly have relied upon that decision to his detriment except to the extent that appellee may have done so in filing its specifications and in asserting its position on this appeal; such reliance we do not consider sufficient to block the eradication of an obviously unsound precedent.

Appellant should be granted a discharge from all debts except those involved in the earlier bankruptcy proceedings.

Reversed.


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