In re Agnew

225 F. 650 | N.D.N.Y. | 1915

RAY, District Judge

(after stating the facts as above). The specifications of objection filed to the discharge of John Agnew challenge the validity of the order of the judge permitting the filing of an application for a discharge after one year and within the 18 months succeeding the adjudication, and also the right of the administratrix of a deceased bankrupt, duly adjudicated in his lifetime, to file or present a petition for his discharge, and also deny that Amy C. Agnew, who filed the application for discharge, is administratrix. These specifications of objection also present the following grounds for refusing a discharge, but whether sufficiently or not is the question, viz.:

That said John Agnew, while a bankrupt and unable to pay his debts, committed offenses punishable by imprisonment, as specified in section 29b of the Bankruptcy Act, in that he knowingly and fraudulently concealed and withheld from his trustee certain books, property, etc., and that said John Agnew made a false oath in relation to this bankruptcy proceeding, and on matters material therein, know» ingly and intentionally, and then sets out details thereof; also that John Agnew, with intent to conceal his financial condition and the condition of the firm, destroyed, concealed, or permitted to be destroyed or concealed, records, vouchers, books, and papers of his said firm, and failed to keep or cause to be kept books of accounts and records from which the true financial condition of himself and_ his firm might be ascertained, etc.; also that said John Agnew obtained money, credit, and property upon materially false statements in writing made by him to various persons, firms, and corporations, for the purpose of obtaining money, credit, and property, etc.; also that at a lime subsequent to the first day of the four months immediately preceding the filing of the petition in bankruptcy said John Agnew transferred, removed, destroyed, or concealed, or attempted to' do so, his property, etc., with intent to hinder, delay, and defraud their creditors.

The grounds for refusing a discharge, so far as involved here, may be summarized thus:

Offenses Punishable by Imprisonment. (See section 29.) The bankrupt:

(A) Must have knowingly and fraudulently concealed, while a bankrupt, from his trustee, property belonging to his estate in bankruptcy.

(B) Must have made a false oath or account in, or in relation to, some (any) proceedings in bankruptcy. (This bankruptcy proceeding.)

Other Grounds. (See section 14.) The bankrupt:

(C) Must have, with intent to conceal his financial condition, destroyed, concealed, or failed to keep books of account or records from which such financial condition might be ascertained.

(D) Must have obtained money or property on credit upon a materially false statement in uriting made by him to any person or representative for the purpose of obtaining credit from such person.

(F) Must have, at some time subsequent to the first day of the four months immediately preceding the filing of the petition, transferred, removed, destroyed, or concealed, or permitted this to be done, some of his property, with intent to hinder, delay, or defraud his creditors.

[ 1 -3 ] Bankruptcy proceedings, once commenced, do not abate on the death of the alleged bankrupt, whether the proceeding be voluntary or involuntary, and whether adjudication has been had, or not, at the time of such death. Bankr. Act, § 8. “The death or insanity of a bankrupt shall not abate the proceedings, but the same shall be conducted and concluded in the same manner, so far as possible, as though lie had not died or become insane.” In re Hicks (D. C.) 6 Am. Bankr. Rep. 182, 107 Fed. 910; Shute v. Patterson (C. C. A., 8th Circuit) 17 Am. Bankr. Rep. 99, 147 Fed. 509, 78 C. C. A. 75; In re Parker, 1 Am. Bankr. Rep. 615; In re Miller (D. C.) 13 Am. Bankr. Rep. 345, 133 Fed. 1017; Collier on Bankruptcy (10th Ed.) 249, 250. Therefore the administratrix, if there be one, properly filed the application for a discharge, and the judge had the right, on cause shown, to extend the time in which to file same, but not exceeding 18 months from the adjudication. If it be shown that no letters of administration issued to the person who, as administratrix, filed the application for a discharge, the proceedings for a discharge will fall; of course; but such appointment, as to its regularity, etc., cannot be attacked in this proceeding. The production of the letters will be sufficient, and establish the fact, unless it be shown they have been revoked. If it be shown that no reason whatever was presented to the judge for extending beyond one year the time for, filing the application for a discharge, the order might be void, and vacated on motion. The objecting creditor and trustee have the right to present these questions, however; but the order granting the extension cannot be attacked in this proceeding before the special master or judge, nor can the regularity or validity of the letters of administration. If, as alleged, Amy C. Agnew, who applied for the extension, was not a person entitled to apply for such an order, it can be vacated on motion, but cannot be attacked collaterally; the order having been made and acted upon. It will be incumbent on her to produce and put in evidence the letters of administration. As to the other specifications of objections they must point out and allege facts, not mere conclusions.

[4-6] To constitute the punishable offense of having knowingly and fraudulently concealed while a bankrupt from- his trustee property belonging to his estate in bankruptcy, such concealment must have been by the bankrupt after the filing of a petition against him, while a bankrupt, or after his discharge, and the property must have been concealed from the trustee, and such property must have belonged to the estate in bankruptcy. The concealment must be knowingly and fraudulently done. The evidence must be clear. It is evident that the specifications' of objection should point out or specify what property was concealed, and when, with some reasonable degree of certainty. In re Meyers (D. C.) 5 Am. Bankr. Rep. 4, 105 Fed. 353; In re Hyman (D. C.) 3 Am. Bankr. Rep. 169, 97 Fed. 195; In re Webb (D. C.) 3 Am. Bankr. Rep. 386, 98 Fed. 404. If a person, before a petition in bankruptcy is filed by him or against him, in contemplation thereof, puts property out of his -hands, intending to put it beyond the reach of his creditors and retain title, so that at some future time he may obtain it or reclaim it, and he commences such concealment prior to the filing of a petition, and continues it thereafter and during the pendency of such bankruptcy proceedings, failing to disclose the truth to his trustee, and then aids in its concealment by transfer to or through others, I am of opinion he has knowingly and fraudulently concealed, while a bankrupt, from his trustee, property belonging to his estate in bankruptcy. These specifications, in substance and somewhat in detail, charge this, and I think them sufficient in these regards. In re Quackenbush (D. C.) 102 Fed. 282; In re Bemis (D. C.) 104 Fed. 672; U. S. v. Cohen (C. C.) 142 Fed. 983; In re Jacobs et al. (D. C.) 147 Fed. 797; In re James (D. C.) 175 Fed. 894; James v. Stone, 181 Fed. 476, 104 C. C. A. 224. It cannot be material that the property really owned by the -bankrupt was transferred in fraud of creditors for the benefit of the bankrupt himself prior to the institution of the proceedings. The trustee may reclaim such property, even if the bankrupt himself could not have done so-.

[7] The proof may fail to establish the charge; but, if all the facts'’ and acts alleged are proved, the conclusion will inevitably follow. It is expressly alleged that the acts specified were done by John Agnew himself, and that they were fraudulently done. Coming to the specifications of objection that the bankrupt John Agnew made false oaths in relation to some proceeding in bankruptcy, the facts alleged are that, in his schedules filed of the assets and liabilities of the firm of .Agnew & Co., he listed as worth $5,000 a note dated June 15,-1908, made by one William Marshall, for $5,000, payable to the order of one Yemngton; that such note had not been protested, or protest waived; that the indorser was not liable thereon, and the maker of such note had been dead several years, and was and had been insolvent for some years prior to his death, and left no estate sufficient te pay such note; that such note was worthless, and known so to he for years by Agnew; that .Agnew & Co. held same as collateral security to a note given Agnew & Co. by Yemngton and unpaid; also that said Agnew included in said schedules, verified by said John Agnew, as worth $9,000, a note dated September 15, 1909, due on demand, made by one Yerrington for 89,000, payable to the order of Agnew & Co., on which $750 had been paid; that when such schedules were made said note was worthless, or believed so to be by said John Agnew and his said firm; also that iu the schedules was included the warehouse of Agnew ft Co., valued at $6,000, and that said warehouse was not worth that sum when the schedules were sworn to, and that “John Agnew well knew it was not, and that he was giving it a false and fictitious valuation; that said warehouse was not at that time worth one-half the valuation placed thereon in said schedules.”

The sum and substance of these specifications of objection, charging the making of a false oath, is that Agnew “knowingly and intentionally” included in the schedules of assets of the firm a worthless note for $5,000 held as collateral only, knowing it to be worthless; that lie also included another note of $9,000, on which $750 had been” paid, as worth $9,000, when same “was worthless, or believed so to be by said John Agnew and his said firm,” and that he also stated in such schedules the value of the warehouse of the firm to be $6,000, when in fact worth only half that sum, and known to said Agnew to be worth only half the sum of 86,000. The requirement of the statul e (section 29b) is that the bankrupt must have “knowingly and fraudulently'1 made “a false oath or account in, or in relation to, any proceeding iu bankruptcy.” This, of course, refers to the pending proceeding, and not some other bankruptcy proceeding. The specifications of objection must state that the oath was “knowingly and fraudulently” made. In re Mayer (D. C.) 195 Fed. 571, 28 Am. Bankr. Rep. 342; In re Bryant (D. C.) 104 Fed. 789, 5 Am. Bankr. Rep. 114; In re Salsbury (D. C.) 113 Fed. 833, 7 Am. Bankr. Rep. 771; In re Cohen (D. C.) 149 Fed. 908, 18 Am. Bankr. Rep. 84; In re Beebe (D. C.) 116 Fed. 48, 8 Am. Bankr. Rep. 597. This must be the charge in the specifications, and the oath made must be as to a material matter, which must appear from the specifications of objection. Says Collier (10th Ed., page 343):

“Tlie analogy of this objection to a crime usually compels strict pleading and even stricter proof.”

The requirement that the false oath must have been, not only knowingly made, but “fraudulently” made, is of the very essence of the objection.. “Intentionally” is not the same as “fraudulently.” The meaning of the two words is not the same. The one word is not a synonym of the other. ■ See Soule’s Revised Dictionary of Synonyms, “Fraudulent” and “Intentional.”

Says Remington on Bankruptcy, vol. 3, 2d Ed., p. 2405, § 2596, discussing opposition to discharge:

“When the act alleged is the commission of one of th,e offenses prohibited by. the Bankrupt Act, it must be alleged to have been done knowingly and fraudulently.”

Many cases are cited. In short, there must have been an intent or purpose to mislead, deceive, and defraud the creditors or some of them. See, also, In re Patterson (D. C.) 121 Fed. 921, 10 Am. Bankr. Rep. 371; In re Pierce (D. C.) 103 Fed. 64, 4 Am. Bankr. Rep. 554; In re Kaiser (D. C.) 99 Fed. 689. Errors or mistakes in making up schedules are not infrequent, and so errors in estimating values are of frequent occurrence.

I think the specifications of objection, so far as they charge or attempt to charge the taking of a false oath, are clearly insufficient, and the objections to the sufficiency thereof are sustained. The other specifications of objection are held sufficient and same will be referred to a special master under the rule.

So ordered.