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concluding that, where there was evidence that debtor knowingly omitted certain creditors from schedule of debts annexed to his petition in bankruptcy, denial of discharge was required without proof as to any fraudulent purpose
Summary of this case from In re MoreoOpinion
No. 313.
May 19, 1944.
Appeal from the District Court of the United States for the Eastern District of New York.
Proceeding in the matter of Herman Steinberg, bankrupt. The bankrupt filed an application for a discharge in bankruptcy which was opposed by the Morris Plan Industrial Bank of New York, as an objecting creditor. From an order denying bankrupt's application, the bankrupt appeals.
Affirmed.
To the bankrupt's application for discharge, the trustee interposed as a specification of objection that the bankrupt had knowingly and fraudulently made an oath in his petition in bankruptcy that the schedule annexed thereto contained a full and true statement of all his debts and the names of all his creditors, whereas in truth and in fact the bankrupt knowingly and wilfully omitted from the schedules the names and addresses of, and debts owing to, five creditors. Three of those creditors were brothers-in-law of the bankrupt who had made loans to him; a fourth was an insurance agent who had advanced premiums to the bankrupt on his promise to repay them; and a fifth was the State Tax Commission with a judgment for unpaid taxes. After this specification was filed, the referee granted an application by the bankrupt to amend his schedules in order to add the names of, and debts owing to, those creditors, and the schedules were thereupon thus amended. When the specification came on to be heard before the referee, the trustee withdrew it. Subsequently a creditor, Morris Plan Industrial Bank of New York, applied for, and was granted, leave to prosecute the specification. At a subsequent hearing thereon, the bankrupt testified that the brothers-in-law had, before the bankruptcy, released their claims; that he had told his lawyer, who prepared the schedules, of the insurance agent's claim but that the lawyer had inadvertently omitted it; that a title search had failed to reveal the judgment of the Tax Commission, and he had known of no claim by the Commission against him for taxes; that he had relied on his lawyer and had signed the schedules without reading them.
The referee found that the bankrupt did not inadvertently omit the claims of his brothers-in-law but deliberately excluded them from the schedules "for the purpose of preferring them over other creditors"; that there was no evidence other than the bankrupt's testimony to warrant the conclusion that those debts had been cancelled; that the referee did not believe the bankrupt's testimony that they were cancelled; that the omission of the claim of the insurance agent was inexcusable and could not be regarded as inadvertent because the bankrupt signed the schedules without reading them; that the failure to list as a creditor the State Tax Commission was an act of unjustifiable carelessness since the bankrupt knew or should have known of the existence of that claim; and that the bankrupt's amendment of the schedules after the filing of the specification was irrelevant. Accordingly, the referee entered an order denying the discharge. On petition for review of that order, the district court entered an order confirming the referee's decision. From that order the bankrupt appeals.
Section 14, sub. b(1) of the Bankruptcy Act, 11 U.S.C.A. § 32, sub. b(1), provides that a discharge shall be granted unless the court is satisfied that the bankrupt has committed an offense punishable by imprisonment under the Bankruptcy Act. § 29, sub. b, 11 U.S.C.A. § 52, sub. b, provides for punishment by imprisonment upon conviction of the offense of "having knowingly and fraudulently * * * made a false oath or account in, or in relation to, any proceeding in bankruptcy * * *"
Louis Engelberg, of New York City, for bankrupt-appellant.
Henry W. Parker, of New York City (Martin B. Nadle, of New York City, on the brief), for objecting creditor-appellee.
Before L. HAND, CHASE, and FRANK, Circuit Judges.
The referee's finding that the bankrupt "knowingly" made a false oath binds us, for the referee saw and heard the bankrupt testify and we cannot, therefore, go behind his conclusions as to credibility. The only question is whether the oath was "fraudulently made." We would be inclined to say no, if this were a case of first impression; as the bankrupt had no assets, the omission of the claims of his relatives could not have been designed to prefer them, and it is difficult to perceive any fraudulent purpose, either in those omissions or the failure to include the claim for taxes. Perhaps the omission of the insurance agent's claim shows a fraudulent purpose. But we need not consider that question. For we bow to the precedents which, in practical effect, have read the word "fraudulently" out of the statute by the use of the phrase, "an intentional untruth in a matter material to the issue which is itself material." In re Slocum, 2 Cir., 22 F.2d 282, 285; In re Zoffer, 2 Cir., 211 F. 936; In re Marshall, 2 Cir., 47 F.2d 209. Under those authorities it is enough that the false oath here was knowingly made.
Affirmed.