Hilton Credit Corporation v. Edwin Emil Jaggli

Some time after appellee’s discharge in voluntary bankruptcy, appellant instituted suit against him in a California state court on allegation that its claim was within the exception from discharge under § 17(a) (2) of the Bankruptcy Act, 11 U.S.C.A. § 35 (a) (2), of “liabilities for obtaining money or property by false pretenses or false representations”. The Referee on ancillary petition by appellee enjoined appellant from prosecuting the action, and on petition for review the District Judge affirmed. We reverse.

The claim, which was in the amount of $4,380.30, had constituted appellee’s principal scheduled debt. It consisted of charges which appellee had cumulatively made, during the course of his moving from Virginia and becoming located in California, for services, accommodations, food and other items which he obtained by the use of a “Carte Blanche” credit card issued to him by appellant.

Ever since the Bankruptcy Act was enacted, it has been the policy of the bankruptcy courts, such as to have caused the practice to become crystalized into a rule on general discretion, that where a creditor brings a suit against the bankrupt after discharge, the question whether the claim…