# Appendix — Pitchford v. Kuzemchak > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385605_0135%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1970 - **Citation:** 400 U.S. 833 ## Text -_. a e : F bed Sore, . eo Fis s ‘ oF ee fa ’ ’ rr . o te Ny eee Lee — Fk lh psu Ka e+ - Pa e . Al ed) Re ae a | | sh Filed: 3/23/70 . IN THE SUPREME COURT OF THE STATE OF a, MEXNGO o° a ._ No, 8823 “ ames PETER KUZEMCHAK and\OIS KUZEMCHAK, , le Plaintiffs- Appellees,’ _ ne = es oy — ‘ las . -CRPIT SHFORD and JEAN PITCHFORD, Defendants-Appellants, Pe ce oe : . FRANK. BROWN and BENNIE BROWN, and FRANK > BROWN and’ BENNIE BROWN, d/b/a,BROWN REALTY. and BROWN TITLE oo nes LOS LUNAS, NEW ICO, Pree a, en ishees. - | Appeal from the District Court of Bernalillo a ‘County » "SWOPE; -District J — ; Hanna, tlereey & Carpenter ' Albuquerque, New Mexico _ Attornéys for Plaintiffs- Appellees a Menig & Sager © a, _ Edward T. Curran ct : | | ‘ Albuquerque,New Mexico = ° . f _Attorneys for.Defendants-Appellants | 2 , A2 ‘® - OPINION WATSON, JUSTICE. In 1964, the Kuzemchaks, shelved herein, filed their complaint against the -Pitchfords, appellants herein, ‘alleg- ing. at in a written agreement to. purchase their home the Pitchfords had assumed and agreed to pay the out- ; standing mortgage thereon. They further alleged that the ‘Pitchfords’. failure to pay: the mortgage in accordance with © the agreement resulted in a deficiency judgment on its foreclosure which the- Kuzemchaks had been required’ to. . pay and for whichgthey sought judgment against the Pitch- fords. The. trial tourt dismissed the complaint on the ” theory that the ceed given to the Pitchfords, which, con- veyed the: home, recited only that. ig wés ‘subject to the mortgage, and that the a@ceptance of thd deed superseded the’ agreement amd. eliminated the obligafion in it. On ap- peal we rev etsed. Kuzemchak v. ‘Pitchford, 78 N.M: 378, 431 P.2d 756 (1967). The trial court, our mandate, entered judgment for ‘the Kuzenichaks Pitchfords. The result. wag a judgment for breach of con- tract based, upon a complaint that alleged solely the br ‘each oe ae the agreement to pay the mortgage. On October 16, 1968, a writ of garnishment was issued upon gt On October 21, 1968, involuntary pe- titions in badkruptcy were filed against the Pitchfords, - who‘ thereupon asked the trial court to release the writ of ‘garnishment because the judgment was discharged by their . .bankruptcy.. This request was granted by ex parte order; but after-a hearing-ujpon-a motion to vacate this order, filéd by the*Kuzemchaks, the court vaéated it and let the garnishment proceed. This appeal followed. ‘The: issue presented by the motion to vaente was ~. whether the judgment indebtedness was one dischargeable d against the . . AB ‘by t the norm eh act (11. US.CA. ey 35[a] (21) ‘ Both, parties filed requested findings and conclusions 9n this. is-. sue, and the Cowt adopted the plaintiffs’. (judgment hold- - ers ) submitted findings and: ‘conclusions to the effect that the judgment. was not discharged by _ appellants’ bank- ruptey. besa Section iv: ( a) ( 2) of the Federal alikcheaieey Act, n : US.C.A. Sec: 35- (a) (2), excepts from discharge in- bank- Yuptcy " ‘Vjabilitiés for obtaining money or Property by} ‘false ” pretenses « or false representatigns :. ‘ Appellants sole point is: os ee pas ; “PE IS ERROR FOR A COURT TO DETERMINE A> 7: JUDGMENT. NOT DIS@HARGEABLE IN BANK- _.* RUPTCY UNDER 11.U.S. SEC: 35° a. (2), WHEN ~ THE TRIAL COURT'S JUDGMENT, THE. SUPREME COURT MANDATE AND THE SUPREME. COURT OPINION ON WHICH THE SAID JUDGMENT WAS. BASED, AND THE RECORD RRQPER, — ‘CLEARLY SHOW: THAT THE JUDGMENT: WAS -- - | NOT BASED_ON FALSE "PRETENSES OR FALSE REPRESENTATIONS FRAUDULENTLY MADE.” - The trial court rev iewed the record and the transcript, ‘of the testimony -taken ‘at. the trial of the casé and found ‘that the appellants;. Pitchfords, were realtor& and only pur- . Chased the héme of the appellees for the purpose of im- ‘ ‘mediate resale but, in order to induce Mrs. Kuzemchak to. rd sell it, had falsely ‘and ‘fraudulently. represented that they . wanted it for their personal use and occupancy and’ would’ - assume the mortgage and pr otect the Kuzemchaks for any liability under it. The court further found that the ap; péllees, in reliance solely upon these false representations, . sold their home to appellants expecting them to make the payments on the mortgage, which they did not’do. In- stead, appellants immediately resold the house and did not f° ow siya dat A4- protect appellees in ‘their Shilpntion under the mortgage. The court concluded, that the judgment entered herein was — thus “based upon-an indebtedness which was incurred as: a result of false pretenses and false representations fraudu- * lently made by appellants to appellees” (emphasis ours). It was upon this conclusion that the trial court: held the ‘debt was not discharged ba bankruptcy and permitted the garnishment to pr oceed. | Isa judgment chased upon an indebtedness which was | - incurred as a result of false pretenses” a “liability for ob-.. tainifg money: or. property by false pretenses” as is re- | quired if it is to be exempted from discharge by bank- . ruptcy?~ We believe the answer is yes. The court will examine the underlying cause of action “in determining the question of dischargeability of a judg- ment. 1 Colier | sic] Bankruptcy Manual, Sec. 17. 00 at 205 . (2nd ed. 1969). Prior to the act of February 5, 1903. (32 Stat.,at L. 797, ch. 487), Sec. 17 (a) (2) of the Bank- ruptcy Act, supra, used the word “judgments” instead. of “liabilities.” This, the cases hold, indicates that Congress intended: to use as a. basis for withholding the discharge the’ nature of the obligation. rather than the form of judgment. 7.Remington on ics ties tal Sec: 3538 ( 5th fa. . The question ‘upon which the courts are divided, how- ever, is: May the- judgment creditor go behind his judg- ment, and.if so, how far, when: the issue as to its dis- ‘Gaeanatdliey is raised? The authorities are divided. Mil- - ler v. Rush; 155 Colo.'178, 393 P.2d 565 (1964). Three con-. clusions have, been ‘reached including: “1. That the judgment is conclusive and the court will: not go behind the record preper to determine the facts. AS Consolidated Plan of\ Connecticut v, Bonitatibus, 130. Conn. 199, 33 A.2d 140 (1943); National Finance Co. of Provo v. Daley, 14 Utah 2d 263, 382 P.2d 405 (1963); Peerson..v. Mitchell, 205 Okl. 530, 239 P.2d 1028, = A.L.R. 2d 1362 (1950), cert. denied 342 US. 866, S.Ct. 106, 96 L.ed. 652 (1951); In re Fuller (Md. Pe, 1937), 18 F. Supp. 394; Harrison v. Donnelly, 153 Fad -_ . 588 (8th oat 1946) -- | 2. That a review of the whole record including tes- timony is permitted to determine the nature of the claim. - Allen’ v. Lindeman, 164 N.W.2d 346 (fowS b69); Wegiel'v. Hogan, 28 N.J. Super. 144; 100 A.2d 349 (1953.) ; In ré Dutkiewic7, 27 F.2d 334.(W.D. N.Y. 1928) ; In re Kubiniec, 2 F. Supp. 632 “(W.D. N.Y. 1932); 1 Col- f . lier: waiauie ans Manual, Sec. 17.00. (2nd ed. 1969). .~ ‘3. That review of the entire record and transcript of the original proceedings. together with ied extrinsic evi- ° dence is permitted. Fidelity & C. Co..w. Golombosky;, 133: Conn. 317, 50 -A.2d 817, 170 A.L.R. 361 (1946). It appears that number 3 above is authorized ‘by only - a minority of the courts. Anno. 170 A. L.R. 368; Miller v. Rush, supra. There are, however, well- reasoned opinions — supporting ‘it, including: . United States Credit Bureau ve Manning, 147 Cal. App.2d 558, 305 R:2d 970 (1957); Levi in v. Singer, 227 Md. 47, 175 A.2d 423 (1961); Greenfield: v. Tuccillo, 129 F.2d 854- (2nd Cir. 1942). See also Welsh v. Old Dominion ‘Bank, 229 A.2d 455 (D.C. CR." 1967). _ The question is one of first impression im New Mexico. Appellants” relying upon the reasoning in Consolidated Plan of Connecticut Vv. Bonitatibus, supra, would have us follow conclusion number 1 above. Appellees contending for the reasoning in Fidelity & C. Co.-v. Golombosky, supra, would have us follow conclusion number 3 above. Both of = As these opinions are by .the Connecticut Supreme Court of - Errors.. The personnel of that court remanded the same _in each case, although Judge Dickenson, who wrote the first opinion, did dissent in the second opinion, written by Judge Maltbie. We must admit that our attempt to balance the basic reasons for ,the different rules against foreseeable applications of them has been as disturbing to us as it ap- parently was to the Connecticut court. A review of the-record before us on the issue of dis- chargeability does’ not indicate that any extrinsic evidence was: offered or received, but that the trial judge simply . reviewed the entire.record and the transcript of the pro- ceedings which had been prepared for the first appeal to this court. There is no indication that any party attempted to offer additional seiaghen or that, if offered, it would not’ have been reviewed. For the purpose of this case, ¥ therefore, we need only decide whether the court was lim- ited to a review of the record proper or could also review all prior proceedings and. testimony in the case to deter- “mine the dischargeability of the judgment. In National Finance Co. of -Provo v. Daley,,supra, a suit was brought on a prior judgment rendered ona promis- — Sory note. There, the court held that a judgment based ‘solely on the note obligation, where there were no issues or mention of fraud in the case, was conclusive as to its nondischargeabilitv. The Utah court said:. “In our judgment it better comports with the orderly processes of justice to require the plaintiff to bear the responsibility of pleading, proving and claiming the . full benefit of whatever character of-cause of action he possesses in the original action and of being bound - thereby, than to allow another trial upon the same cause of action raising issues which could have been dealt with in the original action. This rule also serves ‘the purpose of the bankruptcy act and at the same time - AT , “4, i leaves the: way open to guard’ against the discharge of debts of the character excepted from discharge if the facts so justify.” : We are not.so sure that it comports to the’ obabety process of justice to require the plaintiff to plead and prove fraud at.a time when bankruptcy is not within the con- templation of the parties and when he can obtain the judg- ment he then requires without going into the fraud aspect | which then appears entirely unnecessary: ‘Perhaps some , clemency on. the part of the creditor in ‘the original action is conducive to the orderly process of justice. Perhaps he - should net be forced, in order to protect himself-against thé unexpected bankruptcy, of the debtor, to press upon the court unnecessarily this usually vigorously contested issue. ‘Granted, the so-called minority. rule -may ‘occasion two hearings when one might do. Yet. if the’ creditor can safely take the note or obtain the uncontested judgment, the first hearing is eliminated or minimized; ‘and, of course, the possibility of the second hearing is usually remoie. , { Neither are we sure that the purpose of the bankr ‘uptey: act is best served by thus limiting the investigation into the fraud or barring the issue Ww hén the occasion for its de- termination arises. Gehlen v. Patterson, 83 N.H. 328, 141 ~ A. 914~(1928). The cbvious purpose of the act is to grant ‘a discharge of honest debts to honest debtors. Williams. v. U.S. Fidelity Co., 236 U.S. 949, 35 5. Ct. 289, 59 L. Ed. 713 (1915 ) The act clearly did not extend its remedial --plirposes to those who have obtained property by false pretenses any more than to those who dishonestly mis- appropriated funds, as was thé case in Levin vy. Singer, supra. | us ; “* In the case before us the - findings of the trial court are supported by the evidence at the trial as: ‘shown by the ee. oats transcript.’ These findings support its conclusion that the indebtedness was incurred as a_ result of -false pretenses. We believe that both justice and the purpose of the bank- ruptcy act are better served by permitting the trial coyrt” to,review the entire record, ee the- transcript of the —- the wen proper. “See Allen v..Lindeman, supra, and cases under conclusion 2 above. ane | Finding no error in the trial court’s order of December 18, 1968, vacating the order stayi ing the garnishment, the same isaffirmed. | ITIS SO ORDERED. /s/ John T. Watson . Justice WE CONCUR: /s/ J. C. Compton, J. ' - /s/ Caswell S. Neal, J. Dist. = i Te we .* ” “Ag (2) © sha IN THE SUPREME COURT-OF THE STATE OF - NEW MEXICO: © Monday, May 4; 1970 | NO. 8823 PETER KUZEMCHAK and LOIS KUZEMCHAK, Plaintiffs- -Appeéllees, - VS. ' Bernalillo County C! R. PITCHFORD and JEAN PITCHFORD, “" - Defendants-Appellants, | , ee and FRANK BROWN and BENNIE BROWN, and FRANK » BROWN and BENNIE BROWN, d/b/a BROWN _-REALTY and BROWN TITLE COMPANY, LOS LUNAS, NEW MEXICO, * “+, Garnishees. a This matter coming on for consideration by the Court upon motion of Appellants for a rehearing, and the Court - having considered said motion and being sufficiently ad- vised in the premises, IT IS ORDERED that motion of Appellants for rehear- jing be and the same is hereby-denied. ATTEST: A True Copy - /s/ Rose Marie Alderete Clerk of the Supreme Court of the State of New Mexico ¥ = A10 * (3) 28 U:S.C. 1257 (3) Final judgments or decrees ‘rendered by the highest court of a State in which a decision could be . -had, may be rev fiewed by the Supreme Court as fol- - . lows: (3) By writ of ita: where the validity of a « treaty or statute of the United States is drawn in question or where the validity. of a State statute is — drawn in question on the ground of its being repugnant to the Constitution, treaties or laws of the United States, or where any title, right, privilege or immunity — is specially set up or claimed under the Constitution, | treaties or statutes of, or commission held or authority _ exercised under, the United States. June 25, 1948, c. . 646, 62 Stat. 929. ak * * * (4). (Caption omitted.) Filed Dec. 9, 1968. — ae DEFENDANTS’ REQUESTED FINDINGS OF FACT AND’ CONCLUSIONS OF LAW - : Defendants respectfully request the Court make and enter the following Findings of. Fact. and Conclusions of Law:. . . Findings of Fact LR Plaintiffs’ cause of action throughout has been based upon amounts allegedly due them arising out of a deficiency under a G. I.’ mortgage, and the original Com- ‘plaint filed herein is based. upon a: binder agreement, a copy of which was attached to plaintiffs’ Complaint. 2.* The judgment entered herein on February 23, 1966, was based upon Findings: of. Fact and Conclusions of Law . which referred to the said bindeg and in no way was the All , : said judgment based upon tah pretenses or false repre- sentations. _3. The plaintiffs’ requested Findings of Fact and Con- ‘clusions of Law were not based upon fales [sic] _— j “. or false representations. 4. There were .no_ material false representations or . false pretenses relied upon by plaintiffs | 5. The opinion of the Supreme Court of the State of | New Mexico upon the appeal of the Judgment was not based upon either false pretenses or false representations. 6. The judgment entered upon’ the mandate of the Supreme Court. was not based upon false —" or false representations. Land 7. The debt due to plaintiffs is s discharagable [sic] in bankruptcy. 8. All further proceedings herein should be stayed, and the Writ of Garnishment should be quashed, nullified, and* set _aside. ' ‘Conclusions of Law 1. The Court has jurisdiction ‘of the parties and the subject matter. . ? 2" At no time herein have the plaintiffs proceeded on the basis of false pretenses or false representations: as _ their theory of this action. re 3. There has been no due and convineihg — of false representations or false pretenses relied upon by the plaintiffs. Tae 4. This Court may not go behind the judgment en- tered herein pursuant to the mandate of the Supreme Court oft Te an =. ae and the opinion of the said Court, in determining whether the debt was incurred as a_result of false pretenses’ and false - representations. | - 5. The indebtédness due to shaintitts from. defend- - ants is discharagable,[sic] in bankruptcy by reason of the | _ provision of 11 USC 35 (a) 2. _-* 6. “All further. ‘proceedings herein should be perma- . - nently stayed {nd the Writ of an quashed, nulli- fied, and set aside. : Menig nina Sager. By-/s* Edward T. Curran