27 F. Supp. 54 | S.D.N.Y. | 1939
The referee has reported that the bankrupt should, be denied discharge. The bankrupt filed a voluntary petition on July 6, 1932, showing no assets and $16,-000 in liabilities. He later made application for discharge. Specifications in opposition were filed in behalf of a number of creditors, including one Margison. The specifications were later withdrawn, - and discharge was granted on June 7, 1933. On motion by Margison the discharge was revoked by order of July 15, 1935, for fraud of the bankrupt in obtaining it and the case was sent to the referee for further proceedings relative to the bankrupt’s right to a discharge. After further proceedings the referee was directed, by order of March 22,. 1938, to hear testimony and report on the original specifications interposed in 1932. Those specifications charged the bankrupt with destruction or concealment of books of account or records, with transfer and concealment of personal property and real- estate in fraud of creditors, with failure to explain loss of assets or deficiency of assets to meet, liabilities, and with failure to list assets in schedules. The referee,- having taken testimony, has reported that the first specification has been' established by the proof and that the other specifications have not been established.
The referee was right in concluding that the first specification had been proved. For some years' prior tó bankruptcy the bankrupt operated a house for summer boaders and roomers in' Sullivan County, and also carried' on a plumbing business. He owed nearly $9,000 to unsecured creditors, most of it for goods sold and delivered. He kept books and records, but destroyed them shortly before bankruptcy or after bankruptcy. No books or records were produced. Without them it was not possible to discover the bankrupt’s financial condition. The case is a plain one of unwarranted destruction or concealment of books, requiring denial of discharge. Karger v. Sandler, 2 Cir., 62 F.2d 80.
As to the second specification, transfer and concealment of property in fraud of creditors, the referee was of opinion that while the case was suspicious the specification had not been proved. I cannot escape the conclusion that the charge of concealment of property in fraud of creditors is amply borne out by the proof. The bankrupt in July 1930 conveyed to a daughter his real estate .of 50 acres, on which he conducted his summer boarder business. The property also contained a
The transaction, viewed as a transfer in fraud of creditors, occurred more than one year before bankruptcy and so is not a bar to discharge under section 14b, Bankr.Act, 11 U.S.C.A. § 32(c). But the inference is unavoidable that there was also a secret trust for the bankrupt’s benefit. This was a concealment of his property in fraud of creditors, a trick to keep his property clear of creditors, and the concealment continued down to bankruptcy and after bankruptcy. James v. Stone & Co., 4 Cir., 181 F. 1021; In re Ulrich, D.C.N.Y., 18 F.Supp. 919. The second specification was sustained by the evidence.
The-first and second .specifications were proved. The objecting creditor will submit an ordér- denying discharge. The referee will be awarded the sum of $50, to be paid by the bankrupt.