PASKAY, Bankruptcy Judge
Former Bankruptcy Act — Discharge of Debts — Nondischargeable Torts — Conversion
A judgment for contempt was dischargeable under Section 17a(2) of the Bankruptcy Act because even though the bankrupt removed property at a time when a State court had directed him to refrain from such an act, it was at a time when ownership of the property was in question. Further, a willful and malicious intent to convert the property was not established. See Sec. 17a(2) at ¶ 2146 and Sec. 523(a)(2) at ¶ 9228.
Former Bankruptcy Act — Discharge of Debts — Nondischargeable Torts — Willful and Malicious Injuries
A judgment for contempt was dischargeable under Section 17a(8) of the Bankruptcy Act because the plaintiff failed to prove any willful and malicious intent on the part of the bankrupt when he disobeyed a court order and interfered with certain property claimed to belong to the plaintiff. See Sec. 17a(8) at ¶ 2152 and Sec. 523(a)(6) at ¶ 9232.
[Digest of Opinion]
The bankrupt had entered into a property settlement agreement with the plaintiff, his then wife, in connection with their divorce proceeding. To effectuate the agreement, a quit claim deed was executed conveying certain property owned as tenants by the entireties to the bankrupt, and to the plaintiff. Following execution of the quit claim deed a series of disputes developed concerning the ownership of a chain link fence separating the lots of property conveyed. The plaintiff obtained an order from the state court directing the bankrupt to restore the chain link fence which he had removed the directing him to refrain from disturbing the status quo during the pendency of an appeal on the matter. Although a mandate subsequently was entered by the appellate court, the question of the ownership of the fence was not resolved. More than three years following the order restraining the bankrupt from removing the fence, the bankrupt indeed removed the chain link fence after having given notice to the plaintiff of his intention to do so. The plaintiff thereafter filed a motion for contempt in the state court and was granted a money judgment which, in this action, the plaintiff claimed was nondischargeable in bankruptcy under Sections 17a(2) and (8).
In order to sustain a claim of nondischargeability under either of these sections, the plaintiff must not only establish conversion or injury of property but that it was done willfully and maliciously. Even assuming that the bankrupt was guilty of conversion and of injuring the property of another, the court found that he acted in good faith and without malice. To support this view, the court noted that the property settlement was vague and unspecific as to the ownership of the fence, as was the quit claim deed. Further, the question of ownership of the fence had been repeatedly litigated by the parties and was never resolved with finality. "While one would be less than candid not to recognize that there is no love and affection left after the divorce between the parties and while the Defendant's spirit might have been fueled by his ill feelings toward his former wife while fighting for his clear right to the fence in question, this alone is insufficient to establish the malicious intent to injure the properties of another, although it might have been sufficient to establish an intent to inflict some mental distress on his former wife." Further, the court found that the bankrupt's motivation in removing the fence had no relevancy on the charge of conversion since ownership of the fence had never been established and the control over the fence exercised by the bankrupt was in good faith. Therefore, the judgment for contempt was dischargeable in bankruptcy.