William Field and Norinne Field v. Philip W. Mans (516 U.S. 59)
U.S. Supreme Court · decided November 28, 1995 · Supreme Court Database (Spaeth)
- Citation
- 516 U.S. 59 · 116 S. Ct. 437
- Decided
- November 28, 1995
- Term
- October Term 1995
- Vote
- 7–2
- Majority author
- Justice Souter
- Issue area
- Economic Activity
- Disposition
- Vacated and remanded
- Outcome
- Petitioning party won
- Ideological direction
- Conservative
Opinion excerpt
Justice Souter delivered the opinion of the Court. The Bankruptcy Code’s provisions for discharge stop short of certain debts resulting from “false pretenses, a false representation, or actual fraud.” 11 U. S. C. § 523(a)(2)(A). In this case we consider the level of a creditor’s reliance on a fraudulent misrepresentation necessary to place a debt thus beyond release. While the Court of Appeals followed a rule requiring reasonable reliance on the statement, we hold the standard to be the less demanding one of justifiable reliance and accordingly vacate and remand. I In June 1987, petitioners William and Norinne Field sold real estate for $462,500 to a corporation controlled by respondent Philip W. Mans, who supplied $275,000 toward the purchase price and personally guaranteed a promissory note for $187,500 secured by a second mortgage on the property. The mortgage deed had a clause calling for the Fields’ consent to any conveyance of the encumbered real estate during the term of the secured indebtedness, failing which the entire unpaid balance on the note would become payable upon a sale unauthorized. On October 8, 1987, Mans’s corporation triggered application of the clause by conveying the property to a newly formed partnership without the Fields’ knowledge or consent. The next day, Mans wrote to the Fields asking them not for consent to the conveyance but for a waiver of…
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