96 F. 594 | N.D. Iowa | 1899
The petition upon which the adjudication of bankruptcy was entered in this case was voluntarily filed by John A. Carmichael, and in form is his individual petition, no reference being made therein to any partnership relation having existed between the petitioner and any third party, and the adjudication was entered against Carmichael only. In the progress of the case before the referee, it was developed that some 15 years ago the bankrupt was a member of a firm composed of Robert Jones, George W. Schee, and the bankrupt, and the bulk, if not all, of the indebtedness set forth in the schedules attached to the petition was created for goods purchased by the firm, which failed and went out of business some 15 years ago, but it does not appear that any formal settlement of the partnership affairs has ever been had. At the first meeting of the creditors, George W. Schee appeared as a creditor, setting up the fact that he had bought the judgments entered against the firm in favor of the creditors thereof; and, upon a hearing subsequently had, the referee found and adjudged that he was a creditor of the bankrupt in the sum of §1,282.67, as evidenced by judgments against the partners, but assigned to Schee. Upon the filing of the petition for discharge, Schee filed objections thereto, and the case is now before the court upon the question whether the bankrupt is entitled to a discharge. Under the form of the petition and the adjudication, the bankrupt is only entitled to ask a discharge against his individual creditors, as there has been no foundation laid in the proceedings for a discharge against the partnership creditors, if any such now exist. So far, however, as 1he opposing creditor is concerned, he is but a creditor individually of the bankrupt. By the purchases made by him of the judgments entered against the firm of which he was a member, he discharged the liability of the firm to the judgment creditors, but became a creditor of his co-partners for their respective shares of the money by him advanced in the purchase and discharge of these judgments, and the mere fact that he procured assignments in writing to himself of the judgments in question does not change his position with respect to his co-partners. It was therefore open to Schee to appear as a creditor of Carmichael, his former partner, and to prove up his claim against him as an individual; but, having done so, he occupies merely the position of an individual creditor, against whom a discharge, if granted, will be effectual, the same as though he had never been a partner with the bankrupt.
Thus we are brought to a consideration of the grounds relied upon to defeat the granting the discharge prayed for, the first of which is that the bankrupt, jjrior io his failure, with fraudulent intent, and in contemplation of insolvency and bankruptcy, failed to keep proper books of account, from which his true condition might be ascertained. The only evidence offered in support of this specification is the testimony of the bankrupt with respect to the books of account kept by the firm prior to its failure, some 15 years ago. Under the present act, to defeat the right to a discharge it must be shown that the failure to keep proper books of account was with the fraudulent intent on part of the bankrupt to conceal his true financial condition, and in contemplation of bankruptcy. The evidence fails to show that the
The next specification relied upon as a ground for defeating the granting a discharge is that the creditor, Schee, has a judgment against the bankrupt for willful and malicious injury to the property of said Schee, but the difficulty is that the evidence wholly fails to show that Schee holds a judgment of this character. The evidence does show that, when the property of the firm was disposed of, Carmichael consented to a sale of property inventoried at $600 for the sum of $200, in consideration of receiving a year’s board from the purchaser. It is doubtless true that Schee, as a partner of Carmichael, could have had this sale set aside, as in fraud of his rights, had he moved to that end in proper time, or possibly he might have obtained a judgment for damages against his partner, based upon a charge of fraud in this sale of the firm property; but he did not do so, and therefore he cannot claim that he has a judgment in any form against the bankrupt, based upon this transaction, and, if he had, it would not in fact be based upon a willful and malicious injury to his property committed by the bankrupt, and, furthermore, if he had a judgment against the bankrupt for willful and malicious injury to his property, that fact would not defeat the granting the discharge, but would only except the judgment from the effect of the discharge under the provision of section 17 of the act.
This latter fact is also applicable to the remaining ground of objection to the discharge, to wit, that Schee has a claim for fraud and misappropriation of the firm property by the bankrupt, in that he connived at a sale thereof for much less than its value, he holding it in a fiduciary capacity. If the creditor has such a claim, he has never proved it as a debt in these proceedings, nor has he established it by judgment; but, if he had, it would not be a bar to the granting the- discharge, but would only constitute a claim which would be excepted out from the effect of the discharge when granted.