(plaintiff was trustee of trust established for himself and his siblings by his father which contained father's life insurance policy; plaintiff borrowed from trust on three occasions (as authorized by trust terms) and repaid loans with interest; plaintiff's siblings later sued for breach of fiduciary duty based on self-dealing and obtained judgment with court imposing constructive trust on plaintiff's interest in trust with defendant serving as trustee; after inability to obtain funds to pay court-ordered payment, plaintiff filed bankruptcy and sought discharge of state-court imposed debts to trust; defendant opposed discharge and prevailed at bankruptcy court on basis that debts were within 11 U.S.C. Sec. 523(a)(4) exception to discharge for debts that are a "defalcation" while acting in a fiduciary capacity; appellate court (7th Cir.) affirmed; issue presented was whether "defalcation" requires finding of ill intent or scienter and, if so, what kind of scienter required; Court holds that "defalcation" requires positive fraud, or fraud in fact, involving moral turpitude or intentional wrong or conscious disregard to substantial and unjustifiable risk to known fiduciary duty; appellate court applied standard of "objective recklessness"; appellate court opinion vacated and case remanded).