201 F. 577 | N.D.W. Va. | 1913
John A. Howard was adjudicated bankrupt December 13, 1910. On July 27, 1911, discharge was granted him, and these petitions were filed July 25, 1912, seeking the revocation of the same. Demurrers have been entered to each of the petitions, arguments made thereon, briefs filed, and they are now to be determined.
The petitions are substantially alike in their charge based solely “upon information and belief” that said bankrupt, three days before his adjudication in bankruptcy, made a fraudulent agreement with one Eandmesser, a broker, and one Bachman, whereby certain bonds were pretended to be sold to Bachman and paid for by him through Eandmesser, when in fact they were not sold, but Bachman was paid back his money and the bonds were returned to Howard.
Both petitions allege that petitioners therein did not know of the order of discharge until long after it was granted; that they had no knowledge of the transaction set forth between Howard, Eandmesser, and Bachman “until within a few days preceding the filing of this petition.” Several grounds of demurrer are alleged, but I deem consideration of one, common to both petitions, to be sufficient. The fifteenth section of the Bankruptcy Act (Act July 1, 1898, c. 541, 30 Stat. 550 [U. S. Comp. St. 1901, p. 3428]) provides:
The judge may, upon the application of parties in interest who have not been guilty of undue laches, filed at any time within one year after a discharge shall have been granted revoke it upon a trial if it shall be made to appear that it was obtained through the fraud of the bankrupt, and that the knowledge of the fraud has come to the petitioners since the granting of the discharge, and that the actual facts did not warrant the discharge.
Construing this statute in Re Mauzy (D. C.) 163 Fed. 900, I said:
It is to be borne in mind that, under this section, the power of the judge to revoke a discharge is confined and limited. It must be exercised: (a) Upon application of parties in interest; (b) within one year after it has been granted; (c) upon a trial in which it must be shown hy petitioners that they have (d) not been guilty of undue laches; (e) That the discharge was obtained through the fraud of the bankrupt; (f) that the knowledge of said fraud has come to the petitioners since the granting of the discharge; and (g) that the actual facts did not warrant the discharge. In each and every one of these particulars the burden of proof is upon the petitioners, and each requirement of the statute is absolutely essential to be proven.
It will be perceived that to revoke a discharge in bankruptcy involves an exercise of judicial discretion and power far more reaching in effect than the suspension for fraud of a statute of limitation barring the recovery of a debt or single demand of a single creditor; further, that it is in direct opposition to the whole spirit and intent of the bankruptcy act. That purpose and intent clearly is to give the bankrupt’s creditors his property and to him complete relief from further claims upon him so that he may start over again. His failure may have
But aside from all that, considered in the light most favorable to these petitioners, all that they say in effect is that, a few days before the expiration of the year, some one gave them information that the fraudulent transfer had been made. Who gave them this information ? When, how, and under what circumstances? What reason has the court to know that such information came from a credible source, was not mere idle gossip? It would simply be imposition on all parties
Upon these propositions it seems to me that the three decisions of Wood v. Carpenter, 101 U. S. 135, 25 L. Ed. 807, Hardt v. Heidweyer, 152 U. S. 547, 14 Sup. Ct. 671, 38 L. Ed. 548, and In re Oleson (D. C.) 110 Fed. 796, 7 Am. Bankr. R. 22, are absolutely conclusive. The two first, by the Supreme Court, were based upon proceedings to suspend ordinary staté statutes of limitations. In the first (Wood v. Carpenter) the court says:
The discovery of the cause of action, if such it may be termed, is thus set forth: “And the plaintiff further avers that he had no knowledge of the facts so concealed by the defendant until the year A. D. 1872, and a few weeks only before the bringing of this suit.” There is nothing further upon the subject.
In this class of cases the ihaintifif is held to stringent rules of pleading and evidence, “and especially must there be distinct averments as to the time when the fraud, mistake, concealment, or misrepresentation was discovered, and what the discovery is, so that the court may clearly see whether, by ordinary diligence the discovery might not have been before made.” Stearns v. Page, 7 How. 819, 829, 12 L. Ed. 928. “This is necessary to enable the defendant to meet the fraud and the time of its discovery.” Moore v. Greene et al., 19 How. 69, 72, 15 L. Ed. 533. The same rules were again laid down in Beaubien v. Beaubien, 23 How. 190, 16 L. Ed. 484, and in Badger v. Badger, 2 Wall. 95, 17 L. Ed. 836.
A general allegation of ignorance at one time and of knowledge at another are of no effect. If the plaintiff made any particular discovery, it should be stated when it was made, what it was, how it was made, and why it was not made sooner. Carr v. Hilton, 1 Curt. 280, Fed. Cas. No. 2,436.
And again:
There must be reasonable diligence; and the means of knowledge are the same thing in effect as knowledge itself. The circumstances of the discovery must be fully stated and proved, and the delay which has occurred must be shown to be consistent with the requisite diligence.
The second case (Hardt v. Heidweyer) fully affirms this ruling of Wood v. Carpenter, and further holds a bill in equity so defective should be dismissed on demurrer, while In re Oleson directly applies the principles set forth in these two cases to petitions filed to revoke bankruptcy discharges.
It follows that the petitions must be dismissed.