tention of the Court was chiefly directed to the issue whether as a fact the delay was due to the design of the owner of the invention or to circumstances over which it had no control, including the rules of the Patent Office, the delays of the examiners, and the peculiar situation as to applications for patents in that active field of invention. The Court found this issue against the Government and in favor of the patentee, whose patent the Government was attempting to cancel for this fraud and could only cancel by clear and convincing proof. In the case at bar, the design of the inventor is disclosed by his own avowal, and his plan of non-action was not in accord with the rules of procedure in the Patent Office but was in plain violation of the statutory law.

The conclusion that Woodbridge forfeited his right to a patent by his delay in taking it from 1852 to 1862 makes it unnecessary for us to consider whether he abandoned it by his wholly unexplained delay of nine more years in prosecuting his appeal from the decision of the Board of Examiners, in July, 1862, to the Commissioner of Patents, until January, 1871. It also relieves us from going into the question whether the Government's use of subsequent patents for improvements in adjusting projectiles for firing from cannon embraced the invention of Woodbridge as contained in his specifications and claims allowed in 1852.

The judgment of the Court of Claims dismissing the petition is

Affirmed.

263 U.S.

Argument for Respondent.

MYERS ET AL., COPARTNERS AS S. A. & H. MYERS, v. INTERNATIONAL TRUST COMPANY.

CERTIORARI TO THE SUPERIOR COURT, COUNTY OF SUFFOLK, COMMONWEALTH OF MASSACHUSETTS.

No. 89. Argued October 18, 1923.-Decided November 12, 1923. A judgment in bankruptcy confirming a composition over a creditor's objection based on the allegation that the bankrupts had obtained credit by a false statement of their financial condition, is not res judicata as to the creditor's cause of action against the bankrupts for the same alleged deceit; but estops the creditor as to the issue of falsity where this was not only raised, but actually decided against him, in the bankruptcy proceedings. Cromwell v. Sac County, 94 U. S. 351; Friend v. Talcott, 228 U. S. 27. P. 70. 241 Mass. 509, reversed.

CERTIORARI to a judgment of the Superior Court of Massachusetts, entered on a rescript from the Supreme Judicial Court, and enforcing a verdict, recovered by the present respondent, in a suit against the petitioners for damages for deceit.

Mr. Edward F. McClennen for petitioners.

Mr. John R. Lazenby for respondent.

I. The right of the bank to maintain an action for deceit and misrepresentation was not a provable claim in bankruptcy and hence was not discharged by the confirmation of the composition.

When the International Trust Company made the advances, it had two separate and distinct causes of action: (a) an action of contract founded upon the contractual obligations created by the notes, and (b) an action of tort founded upon the deceit of the Myers in inducing the bank to pay money upon misrepresentations intentionally made..

64

Argument for Respondent.

The Bankruptcy Act recognizes these two distinct causes of action and discharges the debtor from his liability on the contract and denies him the discharge from liability for deceit.

Section 14c provides that the confirmation of a composition discharges debts other than those not affected by a discharge.

Section 14b requires the discharge of the debtor unless he has " (3) obtained property on credit from any person upon a materially false statement in writing made to such person for the purpose of obtaining such property on credit."

Section 17, as amended by Act February 5, 1903, c. 487, § 5, and Act March 2, 1917, c. 153, provides that a discharge releases a bankrupt from his provable debts except such as (2) are liabilities for obtaining property by false pretenses or false representations Section 63 defines "provable debts," and the definition does not include actions of tort for false representations. The meaning of the word "false" as used in these sections of the Bankruptcy Act is that the statement must be not only untrue, but also untrue with an intention to deceive.

No question is raised as to the instruction to the jury by the trial court defining the word " false."

The Bank proved its claim on the notes in the bankruptcy proceedings. It did not prove its right to recover in tort for deceit and misrepresentation. Such a claim is not provable. Schall v. Camors, 251 U. S. 239; Talcott v. Friend, 179 Fed. 676; 228 U. S. 27.

The fact that the Trust Company proved its claim on the contracts, the notes, does not affect this right to maintain this action of fraud. Standard Sewing Machine Co. v. Kattell, 132 App. Div. 539; In re Menzin, 238 Fed. 773; Zimmern v. Blount, 238 Fed. 740; In re Groodzinsky,

Argument for Respondent.

263 U.S.

248 Fed. 753; Forsyth v. Vehmeyer, 177 U. S. 177; Crawford v. Burke, 195 U. S. 176; Frey v. Torrey, 70 App. Div. 166; 175 N. Y. 501.

The debt is expressly excepted from the operation of the discharge by § 17 (2).

The present case is not one where the plaintiff may treat his cause of action as one in assumpsit, electing whether he will treat the fraud as a quasi-contract and waive the fraud, but it is one where there are two separate and distinct rights which give rise to separate and distinct causes of action. Crawford v. Burke, 195 U. S. 176; Tindle v. Birkett, 205 U. S. 183. Kreitlein v. Ferger, 238 U. S. 21, distinguished.

II. The decision of the United States District Court in bankruptcy confirming the composition was not res judicata upon the question of fraud.

Section 12d of the Bankruptcy Act requires the confirmation of a composition, provided the alleged bankrupt has not been guilty of any acts which will bar a discharge, and § 14b (3) refuses the discharge if the bankrupt has obtained money or property on credit upon a materially false statement in writing made to "any person" for the purpose of obtaining credit.

Any creditor may object to the confirmation of the composition irrespective of whether the false statement was made to him or to another creditor. In re Miller, 192 Fed. 730; Talcott v. Friend, 179 Fed. 676; In re Kretz, 212 Fed. 784.

The jury has found that the statement was intentionally false within the definition of the federal cases construing the Bankruptcy Act.

The petitioners have argued that the Bank had the option of remaining silent in the bankruptcy court as to the fraud and later avoiding the effect of the discharge by showing that the petitioners' liability was for obtaining property by false representations, or of trying out

64

Argument for Respondent.

the issue of fraud in objecting to the discharge in the bankruptcy court.

This argument is clearly unsound and results from confusing the nature of the Bank's rights. It assumes that the Bank had only one claim and that the assertion of that claim in the bankruptcy court eliminated the right to maintain an action for fraud after the granting of the discharge. Further, it assumes that the Bank had the right to avoid the discharge in a subsequent suit on the notes, on the ground that it was a provable debt and a liability for obtaining property by false pretenses under § 17 (2). The Bank, as stated before, had two rightscontract on the notes and tort for fraud. The first was provable. The second was not. If the Bank had merely the one right which allowed it to go into the bankruptcy court, it had a provable claim which was followed by the discharge, but under the statute the bankruptcy court never had and could not have before it the claim founded on the tort.

Further, the damages in the tort action could not be determined until the loss suffered by reason of the tort was fixed by the dividend received in the bankruptcy proceedings.

There was no such election and waiver as the petitioners argue. Friend v. Talcott, 228 U. S. 27, 37, 38. Neither is it a case of one wrong with an election of remedies. United States v. Oregon Lumber Co., 260 U. S. 290.

In the present case the proving of the notes was the affirmation of the contract and the bringing of suit in tort was a second affirmation and seeking damages for the injury caused by reason of the fraud. The right to object to the discharge arose out of the right to prove the notes and was entirely incidental thereto.

Nor can the doctrine of estoppel have any application. The parties in the bankruptcy proceedings are not the same as the parties in this suit. It was the bankrupt