Brown v. Felsen case brief

Brown v. Felsen case brief summary
442 U.S. 127 (1979)

CASE SYNOPSIS

Petitioner guarantor appealed a judgment of the United States Court of Appeals for the Tenth Circuit that a bankruptcy court could not consider evidence extrinsic to the judgment and record of a prior state statute when determining whether a debt previously reduced to judgment was dischargeable under § 17 of the Bankruptcy Act, 11 U.S.C.S. § 35.

CASE FACTS
Respondent debtor filed a petition for voluntary bankruptcy and sought to have his debt to petitioner guarantor discharged. Petitioner alleged that the debt was not dischargeable because it was the product of respondent's fraud, deceit, and malicious conversion and came within § 17a(2), (4) of the Bankruptcy Act. Respondent contended that the prior state-court proceeding that resulted in the debt to petitioner had not resulted in a finding of fraud, and, therefore, res judicata barred relitigation of the nature of the debt. The district court limited its review to the record and judgment in the prior state-court proceedings, and the court of appeals found that this was proper. Petitioner appealed.

DISCUSSION

• The Court found that refusing to apply res judicata would have permitted the bankruptcy court to make an accurate determination of whether respondent committed the deceit, fraud, and malicious conversion that petitioner alleged. 
• The Court held that res judicata did not apply and that the bankruptcy court was not confined to a review of the judgment and record in the prior state-court proceedings when considering the dischargeability of respondent's debt.

CONCLUSION
The Court reversed the judgment of the court of appeals.

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