102 F. 282 | N.D.N.Y. | 1900
Lead Opinion
(after stating the facts as aboye). The careful examination bestowed upon this case by the referee, evidenced by an elaborate and painstaking report upon all the issues of law and fact, renders it unnecessary at this time to do more than indicate the conclusion of the court upon the fundamental question of law involved. Broadly stated the referee has found that the proceedings by which, years prior to the present law, the bankrupt’s property, real and personal, was transferred to his confidential adviser and to his wife, were instituted for the purpose of defrauding his creditors and putting his property beyond their reach. The referee finds that the transfers, though cunningly and ingeniously devised, were in fact without consideration and were null and void as to creditors. He finds further that though the legal title is in the wife the property is actually owned and controlled by the bankrupt himself, lie having exercised the same dominion over it since the transfers as before. The conclusion follows that, upon his qualification, the property vested in the trustee by virtue of section 70, par. a, subd. 4, of the act, or that it belonged to the bankrupt under a secret trust for his benefit. The principal facts found by the referee are unquestioned and it is enough to say that his findings are supported by the evidence. There is no reason why they should not be accepted by the court.
The pivotal question of law arising upon these facts may be stated
It is argued that there is no concealment because the facts regarding transfers to Waterman and to the bankrupt’s present wife were made known to the creditors. It is thought that this is too technical
Leaving the real estate out of consideration, if the referee’s facts and conclusions be correct, the bankrupt to-day has in his possession and under his control at least $5,000 which belongs to the trustee. This property was transferred to the bankrupt’s confidential friend by a mere legal shuffle for the purpose of keeping it from his creditors. The transferee parted with no consideration and understood the transaction as undertaken for the benefit of the bankrupt and to baffle his creditors. The court inclines to the opinion that the referee’s findings of fact and conclusions of law are correct. It is this feature of continuous concealment, extending beyond the date of bankruptcy, which distinguishes this case from most of the cases cited under the present act. The question is a novel one, so far as the law of 1898 is concerned, and the argument has been presented with great learning and ability on both sides. The decisions arising under the
The court cannot resist the conclusion that some part, at least, of the property in question belongs equitably to the trustee. The bankrupt, if not the actual owner, is the beneficial owner thereof and by reaffirming the fraudulent transfers, though made prior to the act, as a cloak to hide and cloud the title, is guilty of the concealment contemplated by the law. It is true that he has admitted some facts, but he has neither restored the property nor confessed the fraud. The result is that he is to-day enjoying property which should be divided among his creditors. It cannot be that congress intended to sanction and reward such conduct. It is not the intention of the law to release a dishonest debtor. Unless a bankrupt deals fairly with his creditors he cannot expect the court to give him a receipt in full of their debts. Discharge refused.
Rehearing
On Petition for Rehearing.
(July 10, 1900.)
The court has examined with care the arguments advanced in the petition and is clearly of the opinion that a case for a rehearing has not been made out. No new fact is presented, no new proposition of law is argued. Indeed, it is hardly possible to assume, in view of the elaborate oral argument, the exhaustive briefs and the unquestioned ability of counsel, that anything was omitted which could strengthen the bankrupt’s position. The court did not discuss every proposition argued, but it considered them all. It was thought unnecessary, after reaching the general conclusion that concealment was shown, to enter into an analysis of all the subsidiary questions debated in the briefs. To have done SO' would have extended the opinion beyond reasonable length and was particularly unnecessary in this case because of full report of the referee. The court intended to make clear,the central proposition that the record disclosed a case of concealment which compelled a refusal of the discharge.
It was shown that the bankrupt is enjoying property which equitably belongs to his creditors and would to-day be in the hands of his trustee if he performed his obvious duty regarding it. It can hardly be imagined that the nominal title in his wife would offer any obstacle if the bankrupt honestly desired that the property should be divided among his creditors, but even should she prove recalcitrant a disclosure of the whole truth by the bankrupt would compel a recovery by the trustee. In short, to' state the case bluntly, the bankrupt’s property is now in his possession or under his control. This property belongs to his creditors and would be in the hands of his trustee but for his fraud which fraud is persisted in and used as a cloak to cover the property and keep it in his possession. This conduct upon his part amounts to concealment and prevents a discharge.
The motion for rehearing is denied.