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Engler v. Van Steinburg

United States Court of Appeals, Fourth Circuit
Oct 1, 1984
744 F.2d 1060 (4th Cir. 1984)

Summary

holding that a false oral statement that collateral being offered as security was unencumbered was a statement concerning the debtor's financial condition and was therefore not a basis for holding the debt nondischargeable because it was not in writing as required by § 523(B)

Summary of this case from In re Matera

Opinion

No. 84-1189.

Argued August 29, 1984.

Decided October 1, 1984.

James W. Stone, Hagerstown, Md. (Miller, Oliver Beachley, Hagerstown, Md., on brief), for appellant.

Charles A. Castle, Frederick, Md., on brief), for appellee.

Appeal from the United States Bankruptcy Court for the District of Maryland.

Before WINTER, Chief Judge, SPROUSE, Circuit Judge, and BUTZNER, Senior Circuit Judge.


Robert Engler appeals an order in bankruptcy discharging a debt owed to him by Louis Van Steinburg, a bankrupt. By consent of the parties, the case was appealed directly to this court. We affirm.

Engler loaned Van Steinburg $5,500, taking a security interest in livestock and farm implements. Van Steinburg assured Engler orally throughout the loan negotiations that Engler would have a first priority security interest in the property, even though Van Steinburg knew that other creditors had superior liens. All statements in the mortgages securing Engler were accurate.

The Bankruptcy Act provides that a debtor may not discharge debts for money obtained by false pretenses, false representations, or fraud, except that false statements "respecting the debtor's . . . financial condition" must be in writing in order for the debt to be nondischargeable. 11 U.S.C. §§ 523(a)(2)(A), 523(a)(2)(B).

The bankruptcy court held that the debtor's oral misrepresentations that he owned the property free and unencumbered related to his financial condition. We find no error in the court's application of the statute to the facts in this case.

Engler relies on In re Pollina, 31 B.R. 975 (D.C.D.N.J. 1983), which held that a debtor's false representations that he owned certain collateral free and clear of all liens barred discharge of the debt pursuant to 11 U.S.C. § 523(a)(2)(A). The representations were in writing, and according to our interpretation of the statute they would bar discharge under 11 U.S.C. § 523(a)(2)(B), so we do not differ from the result reached by the Pollina court. Pollina, however, went on to say that a statement respecting the debtor's financial condition means a formal financial statement, such as a typical balance sheet or a profit and loss statement, and not a statement that specific collateral is owned free of other encumbrances. We cannot accept this aspect of Pollina.

Concededly, a statement that one's assets are not encumbered is not a formal financial statement in the ordinary usage of that phrase. But Congress did not speak in terms of financial statements. Instead it referred to a much broader class of statements — those "respecting the debtor's . . . financial condition." A debtor's assertion that he owns certain property free and clear of other liens is a statement respecting his financial condition. Indeed, whether his assets are encumbered may be the most significant information about his financial condition. Consequently, the statement must be in writing to bar the debtor's discharge. Blackwell v. Dabney, 702 F.2d 490 (4th Cir. 1983).

AFFIRMED.


Summaries of

Engler v. Van Steinburg

United States Court of Appeals, Fourth Circuit
Oct 1, 1984
744 F.2d 1060 (4th Cir. 1984)

holding that a false oral statement that collateral being offered as security was unencumbered was a statement concerning the debtor's financial condition and was therefore not a basis for holding the debt nondischargeable because it was not in writing as required by § 523(B)

Summary of this case from In re Matera

holding that a false oral statement that collateral being offered as security was unencumbered was a statement concerning the debtor's financial condition

Summary of this case from In re Ridge

holding that false oral statement that collateral being offered as security was unencumbered was a statement concerning the debtor's financial condition and was therefore not a basis for holding the debt nondischargeable because it was not in writing

Summary of this case from In re Manegan

holding that a debtor's assertion that he owned property free and clear of liens is a statement respecting his financial condition

Summary of this case from In re Hambley

holding an equipment list which the debtor submitted to secure a loan to be a statement in writing respecting his financial condition sufficient to satisfy § 523(B)

Summary of this case from In re McCleary

holding that " debtor's assertion that he owns certain property free and clear of other liens is a statement respecting his financial condition"

Summary of this case from In re Tallant

holding an equipment list which the debtor submitted to secure a loan to be a statement in writing respecting his financial condition sufficient to satisfy § 523(B)

Summary of this case from In re Kerbaugh

concluding that "Congress did not speak in terms of financial statements. Instead it referred to a much broader class of statements ...."

Summary of this case from Fulton, N.A. v. Robbins (In re Robbins)

employing broad approach

Summary of this case from Privitera v. Curran (In re Curran)

In Engler, the debtor, during loan negotiations with the creditor, had falsely stated that the property he offered as security for the loan was completely unencumbered.

Summary of this case from In re Sharp

noting that "Congress did not speak in terms of financial statements. Instead it referred to a much broader class of statements—those 'respecting the debtor's . . . financial condition'"

Summary of this case from Yankah v. Mack

opting for a "broad" interpretation of the phrase

Summary of this case from Lujan v. Davide (In re Davide)

explaining that statements regarding financial conditions are not limited to formal financial statements, and holding that a false oral statement that collateral being offered as security was unencumbered was a statement concerning the debtor's financial condition

Summary of this case from In re Ridge

In Engler v. Van Steinburg, 744 F.2d 1060 (4th Cir. 1984), the Fourth Circuit held that a debtor's misrepresentations that he owned property free and clear related to his financial condition and that this statement must be in writing to bar the debtor's discharge.

Summary of this case from In re Kitzmiller
Case details for

Engler v. Van Steinburg

Case Details

Full title:ROBERT ENGLER, APPELLANT v. LOUIS EDWARD VAN STEINBURG, APPELLEE. IN RE…

Court:United States Court of Appeals, Fourth Circuit

Date published: Oct 1, 1984

Citations

744 F.2d 1060 (4th Cir. 1984)

Citing Cases

In re Quillen

Johnson, 702 F.2d at 492. The next year, in Engler v. Van Steinburg, (In re Van Steinburg) 744 F.2d 1060,…

In re Olinger, (Bankr.S.D.Ind. 1993)

Based on his knowledge that at least an additional $20,000 would be necessary to bring the Bank current,…