133 F. 823 | W.D.N.Y. | 1904
Specifications filed on behalf of the trustee in opposition to the discharge of the bankrupts herein were referred to a special master, who found that the discharge of Howard A. Hamilton, one of the firm of the Hamilton Door Manufacturing Company, should be denied on account of the bankrupts’ failure to keep the books of account required by the bankruptcy act. This motion is for confirmation of such decision. The discharge is opposed on the ground that false books of account were kept by crediting an unsecured creditor with having paid freight, amounting to $787.22 on a consignment of lumber, when in fact the freight was paid by the bankrupts; also with having made a false oath, prohibited by sections 14b and 29b, Bankr. Act July 1, 1898, c. 541, 30 Stat. 550, 554 [U. S. Comp. St. 1901, pp. 3427, 3433].
The questions presented are: (1) Whether the bankrupt Hamilton, with fraudulent intent to conceal the financial condition of the copartnership, of which he was a member, and in contemplation of bankruptcy, failed to keep books of account from which its true financial condition might be ascertained; and (2) whether the bankrupts made false oaths in the bankruptcy proceeding, in that they willfully and fraudulently omitted from the partnership “Schedule B” certain material assets, namely, a contingent remainder in six cars of lumber transferred to one A. J. De Laplante, and in one car of lumber transferred to A. J. Walsh, in trust to pay certain indebtedness of the said bankrupts. The value of the asserted contingent interest is stated to be $386.08. It is conceded that at the time the certain entries here involved were made on the books of the firm the bankrupts were unquestionably insolvent, and that such entries were preferential in their character. This concession necessitates a brief statement of the facts. On April 17, 1901, Hamilton entered into an arrangement with A. J. De Laplante, representing the firm of R. Laidlaw Lumber Company, creditor in the amount of $807.46, by which such creditor was to advance $1,600 to the bankrupts, ancl take six cars of lumber consigned to the bankrupts at Middleport, N. Y., upon which the freight was unpaid, and which the railroad company refused to deliver before payment. It was arranged that upon the sale thereof De Laplante was to apply the proceeds thereof to the freight advanced and to the unsecured debt of his firm. The books of the bankrupts show that De Laplante paid the sum of $2,387.22, receiving a credit on the books of $1,600 cash and $787.22 for freight paid. The account, therefore, is untrue, in that it credits the transferees of the lumber with having actually paid a greater sum than was received. The bankrupt’s right to a discharge prior to the amendatory act of 1903 must depend upon the question whether there was an intent to conceal the true financial condition of the firm of which he was a member, and if such concealment was in contemplation of bankruptcy. The offense, it will be seen, combines two essential elements. The proofs show that the true condition of the bankrupts was ascertainable from an examination of the books; that the entries therein fully disclosed the transaction between the bankrupts and the Laidlaw Lumber Company, including the pay
The objection charging the bankrupt with having made a false oath is not sufficiently sustained by the evidence. The record does not, as claimed by the opposing creditors, establish that the arrangement between the Laidlaw Lumber Company and Hamilton consisted of a secret trust for the benefit of the bankrupt, or a
“Q. There is nothing to show on the books, Mr. Hamilton, that there was to be any accounting made by these people? A. No, and it wasn’t-understood only between ourselves that there was to be any accounting. * * * Q. You didn’t include in your schedules any of this money that was coming from any of these parties? A. We didn’t anticipate that there would be any money coming. In fact, we were morally certain there would not I don’t believe that McLeod, or MeBierney, or Laidlaw will come out anywheres near what they have got to pay for us. Q. Notwithstanding the fact that it was billed to them at such a low price? A. No, sir; that is my opinion.”
The testimony taken on examination of the bankrupts before the referee, considered in its entirety, leaves the question of remaining equities in the lumber transferred indefinite and uncertain. The evidence of Hamilton on that subject may have been evasive and disingenuous, but it has been held that testimony of that character is not a ground for denying a discharge. In re Gaylord, 112 Fed. 668, 50 C. C. A. 415; In re Leslie (D. C.) 119 Fed. 406. The authorities uniformly hold that the objection of making a false oath in bankruptcy proceedings must be established by clear and convincing evidence. In re Gaylord, supra; In re Ferris (D. C.) 105 Fed. 356; In re Fitchard (D. C.) 103 Fed. 742. This, as has been stated, the opposing creditors have failed to do, and therefore it is thought that the bankrupt Hamilton is entitled to a discharge.