The plaintiff in error, Spencer S. Bullis, having been discharged in bankruptcy on September 19, 1899, which discharge covered provable debts existing on November 14, 1898, made application under the New York Code, § 1268, for the cancelation and discharge of certain judgments rendered against him in the supreme court of New York. The defendants in error, judgment creditors of said Bullis, opposed the granting of the order upon the ground that the judgments against Bullis were in an action for fraud, and therefore not discharged under the terms of the bankrupt law. The supreme court of New York denied the application. Upon appeal to the appellate division, fourth department, this judgment was affirmed. 68 App. Div. 508, 73 N. Y. Supp. 1047. Bullis then appealed to the court of appeals of New York, which affirmed the judgment of the court below without opinion. 171 N. Y. 689, 64 N. E. 1119.
The facts necessary to be noticed in this case are in substance: James R. O'Beirne, in behalf of himself and other bondholders, filed a complaint, setting forth, among other things that, on September 8, 1899, Bullis and one Barse owned the capital stock of three railroads,-two organized under the laws of Pennsylvania and one under the laws of the state of New York, which railroads were constructed for the purpose of reaching timber on large tracts of land. At that time length of the railroads was about 16 miles, but an extension of the lines was contemplated so as to cover about 30 miles. Certain agreements are alleged between said Bullis and Barse and a firm of bankers, Newcombe & Company, of New York,-by the terms of which Bullis and Barse were to execute a mortgage to the Central Trust Company of New York, to secure $250,000 of first-mortgage bonds, running thirty years, which mortgage was to cover the railroad properties and 30,000 acres of timber lands in McKean county, Pennsylvania. The property was to be under the management of a new corporation to be organized with a capital stock of $250,000. Various agreements were made as to the organization and management of said corporation. Another agreement was entered into between the parties, providing for the merger and consolidation of the railroads into a new company, with a capital stock of $500,000, and for a mortgage to the Central Trust Company, as trustee, to secure $500,000 of first-mortgage bonds. The railroad lines were to be extended to 70 miles, and 16,000 acres of timber lands to be included, making 46,000 acres to be owned by the new company. $300,000 of the bonds were to be put upon the market, to represent 46 miles of the railroad. Newcombe & Company were to dispose at par of $260,000 of these bonds, in accordance with the terms of the agreement. Bullis and Barse were to enter into an agreement for consolidating the said railroads into one system, by agreement with the International Interior Construction & Improvement Company. On September 10, 1899, the construction company made a contract with the Allegheny & Kinzua Railroad Company, owned by Bullis and Barse, and one with Bullis and Barse, providing for the construction and consolidation of the railroads and for the distribution of the proceeds of the bonds, a considerable portion of which were to be given to Bullis and Barse.