250 F. 993 | 2d Cir. | 1918
Lead Opinion
It appears that the alleged bankrupt made application for the confirmation of a composition offered by him, and, objection having been made by a creditor, confirmation has been denied' by the District Judge, who has confirmed the report of the special master, recommending that the creditor’s objections be sustained.
The alleged bankrupt was in the cloak and suit business, and was asked by the objecting creditor for a financial statement, which was furnished in January, 1917, and was made as of November 30, 1916. The statement omitted from the assets spring merchandise to the amount of $6,000, and from the liabilities $6,000, being the amount owing for the aforesaid merchandise. The amount of the'omitted assets and the amount of the omitted liabilities thus equaled each other; and the alleged bankrupt offered to prove at the hearing, but on objection was not permitted by the special master to do so, that it was the custom in the cloak and suit business not to include in a statement any merchandise which had been received for the following season. The special master in his report, in alluding to this, says:
“Evidence to this effect was excluded, because it seems to me that, if a financial statement, with such omissions, is unlawful, as I hold it to he, it makes no difference whether there is, or is not, such a custom in the cloak and suit trade as that alleged.”
Bankruptcy Act July 1, 1898, c. 541, § 14b, 30 Stat. 550, provides for a discharge of the applicant unless he has, among other things, “obtained property on credit from any person upon a materially false statement in writing made to such person for the purpose of obtaining such property on credit.” The above provision was not in the statute as originally enacted, but was added in part by an amendment made in 1903 (Act Feb. 5, 1903, c. 487, § 4, 32 Stat. 797), and in part by an amendment made in 1910 (Act June 25, 1910, c. 412, § 6, 36 Stat.-839 [Comp. St. 1916, § 9598]). The words “a materially false
But the language of the act is that the statement must have been “materially” false. Jt must not only be intentionally untrue, if it is to deprive the bankrupt of his discharge, but it must be untrue as respects a material matter. And by that we understand is meant matter which, if disclosed, would have caused the party who was to act upon the statement to withhold the credit which he extended. There is nothing in the record which shows that, if the omission which is complained of had been set forth in the “statement” submitted to the objecting creditor, the credit would not have been given. The only testimony we have from the objecting creditor comes from a witness who had charge of its credit department. He passed on the credit of the alleged bankrupt, and testified that credit was extended ttpon the truth of the financial statement which had been furnished. He was not asked, and did not state, that the omission was regarded as material, and would ha we led him to withhold credit, had he known that the assets exceeded by $6,000, and the liabilities exceeded by the same amount, the disclosures made in the financial statement upon which he acted. This court cannot say as a matter of law that such an omission is material.
“Jb tlie preparation of briefs any citations made from Federal Oases must be accompanied by the c-iiation of tbe original report of the case, and, whore a citation is made from the American Bankruptcy Reports, the citation in the Federal Reporter or United States Supreme Court Reports must also be ¡riven. If the case is not reported elsewhere than in Federal Cases or American Bankruptcy Reports, the fact must be so stated.”
It is a serious inconvenience to the judges to have cases cited simply by the volume and page of the Bankruptcy Reports. If counsel wish cases which they refer to examined, their citations should conform to the rule which the court has prescribed.
•The order of the District Court, denying the composition, is reversed.
Dissenting Opinion
dissents, on the ground that the financial statement in question was “materially false”; i. e., substantially untrue, and made so writh intent to deceive.