In re Schickerling
204 F. 592
2d Cir.
1913
Check Treatment
WARD,' Circuit Judge.

November 15, 1911, Alfred Schickerling was adjudicated a bankrupt on his own petition, and he applied for a discharge in the following December. In his schedules he included as a creditor in the sum of $45,338.21 one James Talcott, and stated *593that he had no assets whatever. The indebtedness to Talcott arose in this way: In 1901 the bankrupt was a stockholder and treasurer of the corporation known as Schickerling Bros. & Co. In October, 1904, he guaranteed Talcott against loss in making advances to the corporation on its outstanding accounts. In February, 1906, the corporation became bankrupt, owing Talcott for advances. _ Tal-, cott opposes the bankrupt's discharge on the grounds that lie did not keep proper books of account, that he failed to include in his schedules his interest in his father’s estate, and that he fraudulently concealed and transferred certain assets. Both the special master and the District Judge have found against the first two objections, and, as we agree with them, nothing further need be said.

July 20, 1904, the bankrupt did make a bill of sale to his wife of all his property except a 20-year endowment policy of insurance on his life, dated July, 1904, for $25,000. September 12, 1905, he transferred this policy also to her, leaving himself penniless. A month after the bankruptcy of the corporation of Schickerling Bros. & Co.— that is, in March, 1906 — the bankrupt organized a jewelry business, filing a certificate in the county clerk’s office that it was carried on by his wife, Carrie Schickerling, he being her manager. This was in accordance with the requirements of Ben. Code N. Y. § 363b. There is much testimony to show that this business was started with money of Mrs. Schickerling coming in part from the bankrupt at a time when he was not in debt and before he made the guaranty to Talcott. In July, 1906, she did raise upon the surrender of the policy of insurance above mentioned something like $1,000, part of which, at least, went into the business.

The principal contest between the parties is whether the business was the property of the wife or of the bankrupt. If the latter, he was guilty of fraudulently concealing assets, when he did not mention it in his schedules. The referee, sitting as special master, reported that the discharge should be granted; but the District Judge denied it, on the ground that the business was the bankrupt’s, having been started by money borrowed on the insurance policy. lie found it impossible to believe that the transfer of the policy so soon before the failure of Schickerling Bros. & Co., of which the bankrupt was treasurer, with an indebtedness to Talcott guaranteed by him individually in the amount of about $45,000, was not made with fraudulent intent. Conceding that this is so, the transfer was made six years before, and not within four months of the filing of the petition, and so was not in itself a ground for refusing his discharge under section 14 (b) of the Bankruptcy Act (Act July 1, 1898, c. 541, 30 Stat. 550 [U. S. Comp. St. 1901, p. 3427]). The only way the order can be sustained is by holding that the business was started by the insurance money, and so began and was continued as the bankrupt’s property. The testimony is vague and contradictory; but we are not satisfied that the insurance money, though it went into, did start the business.

The order is reversed, with costs.