In re Wix

| W.D.S.C. | Jul 3, 1916

JOHNSON, District Judge.

This cause came on to be heard upon exceptions to the report of the special master, C. W. F. Spencer, Esq., recommending that the bankrupt be not allowed his discharge. This is a very interesting case, and I should like to go into it at length, but the pressure of work makes that impossible. An expert accountant testified that he could not ascertain the bankrupt’s financial condition from an examination of his books. The specia.1 master, in a very able and interesting report, concluded that a man was presumed to intend the natural consequences of his act, and that, inasmuch as the bankrupt had not kept such books as would enable an accountant to ascertain his real financial condition, he must be presumed to have intended the natural consequences of his act, to wit, to deceive his creditors as to his financial condition.

[1-3] Ordinarily the special master, having had the witnesses before him, has a very great advantage in determining facts. In this case, however, I do not think there is any dispute about the facts, and the only question is, What is the proper inference to be drawn from undisputed facts? I think that the fact that Wix had been in business for about ten years, and that during all of that time he had the same method or lade of method of keeping books, refutes the presumption that he adopted that method for the purpose of deceiving his creditors as to his real financial condition. I cannot believe that when he first went into business and during all the years of his prosperity he had any purpose in his mind to deceive and conceal his true financial condition. If that purpose and intent did not exist when he adopted that method of keeping books ten years ago, there is nothing in the record to show that he subsequently formed that intent.

The discharge is a very great privilege and right. The theory of the bankruptcy law is that a citizen who has become overburdened shall not try to go through life bearing burdens that will crush him, but he may come into the bankruptcy court and surrender all, and when that all is distributed among the creditors, he is free, the slate -is wiped out, and he can start life over again. Tike the Hebrews of old, it is to him a day and a year of Jubilee.

I think, therefore, that the burden rests upon the creditor objecting to his discharge to show that he is not entitled to it; and, as I have already said, I do not think the evidence in this case justifies the conviction that during his entire business career John W. Wix intended to conceal hi's true financial condition. The inference I draw from the evidence is that he was careless; he had a very poor method of keeping books. The bankruptcy law does not require any particular method of bookkeeping; in fact, it does not require a man to keep books at all. The only provision of the law is that he must not adopt a method of keeping books for the purpose of concealing his true financial condition. No matter how irregularly or poorly kept his books may be, if the evidence does not show that his intent was to conceal his true financial condition, he is entitled to his discharge.

I feel constrained to overrule the report of the special master; and it is so ordered. Let the clerk of this court issue to the bankrupt, John W. Wix, his discharge in bankruptcy.