Civil Procedure Keyed to Babcock
Brown v. Felsen
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G. Garvin Brown III (Brown) was the guarantor on a bank loan for Mark Felsen (Felsen) and his car dealership, Le Mans Motors, Inc. (Le Mans). The bank filed suit against Brown, Felsen, and Le Mans to collect moneys owed to the bank; Brown filed a crossclaim against Felsen and Le Mans claiming that he was induced to become guarantor on the loan based on fraud. Brown, Felsen, and Le Mans made a settlement where all three parties were responsible for the debt owed to the bank, and Felsen and Le Mans would be liable to Brown for his portion of the judgment. Felsen then filed bankruptcy and tried to discharge his debt to Brown. Brown claimed that under §17a of the Bankruptcy Act, Felsen could not discharge the debt because the debt was obtained through fraud. The bankruptcy court allowed Felsen to discharge the debt; the district court and the court of appeals affirmed.
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