114 F. 83 | 2d Cir. | 1902
The specifications in opposition to the discharge of the bankrupts were 28 in number, some of them duplicating each other, and several presenting different phases of the same question. Except as to such as deal with an alleged concealment of $100,000, and the taking of a false oath as to the same, the full and careful report of the commissioner, to whom the issues raised by the specifications were referred, sufficiently disposes of these specifications adversely to the objectors. It will be sufficient to discuss the alleged concealment, as to the effect of which the commissioner and the district judge differed.
The firm consisted of three brothers, Tobias, Israel, and Simon, and up to 1896 had been engaged in business in New York City as manufacturers of clothing. On October 2, 1896, the firm failed, confessed judgment in favor of certain creditors, assigned certain book accounts to others, and secured the appointment by the state court of a receiver of the remaining assets. Proceedings were instituted by some of the creditors to set aside the receivership; such application was denied, but the court appointed an additional receiver. Since that time said receivers have been acting as such, and their appointment remains unrevoked and in full force, except that in a judgment creditors’ action brought by one Metcalf and some others a final judg
The referee finds that on January 10, 1896, Tobias Lesser, who had charge of the financial affairs of the firm, made a statement to Dun’s Commercial Agency showing a surplus of $153,858.24 (a similar statement made the year ^before showed a surplus of $145,739.18); that at the time of the- failure, however, in October, 1896, this surplus of $153⅜8.24, which was stated to exist in January, was entirely used up, and in addition an indebtedness for money loaned and merchandise purchased had been incurred, amounting to over $230,000, showing a loss for eight months of $383,000. Testimony was offered by the bankrupts to show in what ways heavy losses had been incurred during that period, but this testimony accounted only for some $285,-000. The commissioner, therefore, reported that in his opinion “there has been a disappearance of assets amounting to at least the sum of $xoo,ooo, which is entirely unexplained, and consequently the bankrupts must be presumed to have the same in their possession or under their control.” The commissioner, however, reached the conclusion that there was no concealment by the bankrupts from their trustee of any of the property belonging to their estate in bankruptcy (section 29b [1]), because the whole title to all the bankrupts’ property owned by them in October, 1896, passed to the receivers in the state court action. He held that:
“The bankrupts at that time parted with the title to all their property, and, so far as they are concerned, they cannot recover it. The receivership still remains, it has never been set aside, and all the property of the bankrupt that existed in October, 1896, whether then or since reduced to possession by the receiver, belongs to the receivers for the purposes for which they were appointed, and, even if property should now be discovered, it would, in my opinion, belong to the receivers. If that be so, there has been no concealment from the trustee in bankruptcy. In the schedules this receivership was fully set forth, and all the necessary information given. There was no concealment of the fact of the receivership, and a general statement was made of the property in their hands. The bankrupts have withheld or concealed nothing from their trustee in bankruptcy for the reason that they had nothing to withhold, the title to all that they had in October, 1896, having passed to the receiver.”
The district judge held that the testimony seemed to justify the finding as to an actual disappearance of $100,000, but further held that the proposition enunciated in the above-quoted paragraph is “a technicality which ought not to shield the bankrupts from the consequences of their fraudulent acts, or to defeat the intention of the bankrupt law”; and that, “after a trustee has been appointed in bankruptcy proceedings, a concealment of assets, which have not been turned over to a previous receiver, is equally a concealment from creditors, the actual beneficiaries, whether through a receiver or through a trustee.”
We incline to the opinion expressed by the commissioner, in view of the plain language of the act defining the offense (section 29b [ 1 ]); but it is not necessary to enter into any discussion of that point, be
A second specification, which was sustained by the district court, that the bankrupts made a false oath in verifying their schedules, depends also for support on the existence of this alleged $100,000, and therefore need not be further considered.
The decree of the district court „is reversed, and discharge ordered.