The opinion
Untermyer, J.
(dissenting). The defendants were discharged from the liability asserted in the complaint unless the conversion of the plaintiff’s shares of stock was “ willful and malicious.” (Bankruptcy Act, § 17, subd. 2; U. S. Code, tit. 11, § 35, subd. 2.) The burden of establishing that it was willful and malicious rather than accidental or negligent was upon the plaintiff who asserted that the liability was excluded from the operation of the discharge. (Kreitlein v. Ferger, 238 U. S. 21 ; Matter of Levitan, 224 Fed. 241 ; *373 Manheim v. Loewe, 185 App. Div. 601 ; Niles v. Havens, 198 id. 546.) Not only does it seem to me that that burden was not met, but the defendant’s uncontradicted proof at the trial fully sustains the conclusion of the trial judge that there is “ no proof of a deliberate or knowing disregard of plaintiff’s rights by any of the defendants or their employees and no proof of bad faith, fraud or moral turpitude on the part of any of the defendants or their employees.” I am prepared to concede that if the defendants’ employees were guilty of intentional conversion of the plaintiff’s property, the defendants, however innocent, nevertheless would have incurred liability for that character of wrong (McIntyre v. Kavanaugh, 242 U. S. 138 ), and that the claim would not have been discharged. But the uncontradicted evidence here is to the effect that the plaintiff’s securities accidentally, though perhaps negligently, were included as collateral for the loan made to the defendants by the First of Boston Corporation. Instead- of “ safe-keeping ” .the plaintiff’s certificate in the separate custodian’s account maintained for that purpose, it was inadvertently placed with other securities intended for hypothecation. Under these circumstances neither the defendants nor their employees were guilty of an act of conversion which can fairly be described as “ willful and. malicious.” (Wood v. Fisk, 215 N. Y. 233 .)
It may be true, as Mr. Justice O’Malley observes, that the facts justify an inference of negligence on the part of the defendants’ employees in the disposition of the plaintiff’s property. No doubt that negligence is imputed to the defendants by operation of law. But the defendants were discharged in bankruptcy from liability for all acts of conversion except such as were “ willful and malicious ” and including such as resulted from negligence. Conceding, therefore, that the defendants’ employees were negligent in using the plaintiff’s securities as they did, this constituted a liability which was discharged by bankruptcy.
Judgment reversed, with costs, and judgment directed in favor of the plaintiff, with costs. Settle order on notice, reversing findings inconsistent with this determination, and containing such new findings of fact proved upon the trial as are necessary to sustain the judgment awarded herewith.