23 F.2d 350 | E.D. Va. | 1927
I have carefully examined the evidence taken on the specifications of opposition to.the discharge of the bankrupt, and I have also considered carefully the report of the referee, and as a result I find myself unable to concur with the views of the referee that the bankrupt ought to be denied a discharge.
I have always felt, of course, that á discharge ought not to be granted in bankruptcy if there was any valid legal reason shown to the contrary, and therefore in this ease, as in
In this case the principal objections to the discharge were not available to the protesting creditors on the return day of the order to show cause why the discharge should not be granted for the reason that the protestants desired to have the advantage of certain clauses of the Amendment of May 27, 1926 (44 Stat. 662), effective August 27, 1926, and since the effective date of the amendment had not been reached when the specifications should have been filed, it was only by allowing them to be filed subsequently that their applicability could bo determined. I have very serious doubts whether the specifications based upon the amendatory act may be considered, since, as I have said, their provisions were not effective until after the time allowed by the act for filing objections had then expired, but I have resolved this question otherwise, and have considered the grounds of opposition to the discharge as though the same had been filed in accordance with the precise terms of the act, but even under these circumstances I have reached the conclusion that the particular amendment urged against the granting of the discharge is not applicable in the circumstances as they exist here. The amendment (44 Stat. 663, § 6 [11 USCA 32]) strikes from the former act (36 Stat. 839, § 6 [11USCA 32]) a provision in subdivision 2 of section 14(b) by the elimination of the requirement that the destruction of, concealment of, or failure to keep books shall be a bar to discharge only where such destruction or concealment or failure is “with intent to conceal Ms financial condition,” and the substitution in place thereof of a provision whereby a mere destruction, mutilation, falsification, concealment, or failure shall be sufficient, “unless the court deem such failure or acts to have been justified, under all the circumstances of the ease,” and section 18 of the amendatory act provides that the amendatory act shall govern “so far as practicable and applicable,” but, where not practicable or applicable, the proceeding shall be “conformably to the provisions” of the act before the amendment.
The conclusion I have reached, as I have already indicated, is that this amendment to the act may not be applied to- cases then pending when it took effect. The decisions which I have examined aro by no means uniform, but the weight of authority seems to me to be in favor of the view I have taken, and the very decided weight of reason is in favor of it. When the bankrupt’s application for discharge was filed, he was entitled to his discharge so far as this provision of the act is concerned, unless he had destroyed his books with intent to conceal his financial condition, which is a very different ease from the mere destruction of records without such intent. The statute ought not to have a retroactive operation unless by its terms this is clearly imperative. The language used in section 18 is, in my opinion, by no means compelling. See Collier on Bankruptcy (1927 Ed.) p. 334; Black on Bankruptcy, 668; In re Hammerstein (C. C. A.) 189 F. 37, and eases cited.
Considering the case, therefore, as under the provisions of the act prior to the amendment, I have not been able to find in the evidence anything whieh would justify me in saying that the destruction by the bankrupt of his canceled checks and his failure to keep regular books of account was with intent to conceal his financial condition. While I think it is correct to say that the amendment to section 14, shifting the burden of proof to the bankrupt, is valid and applicable thereafter in all eases whether begun before or after its passage, still, when considered from this aspect, I think the bankrupt’s explanations are consistent with honest dealing. He was the high constable of Richmond, and had been for many years, and received from the fees of that office a very considerable income, but he was also a politician, subject apparently to the usual demands on one holding political office, and it is not therefore unbelievable that he should have consumed his income in personal living expenses and the payment of what in common knowledge may be said to be his political obligations, unfortunate as this may be. In addition, he unquestionably lost a considerable sum of money in a furniture business and contributed a considerable sum of money to the maintenance of an unsuccessful son. I think it is also likely that his statement that he lost money by defaulting deputies is true, but I do not think it necessarily follows that, because he handled large sums of money whieh he is unable to explain the use of in detail, he has concealed or illegally transferred part of same in fraud of his creditors. I think it not unreasonable to accept his explanation of his failure to keep books of account as to these transactions because they were all personal in their nature.
For these reasons I am disposed not to follow the referee’s recommendation that a
The referee is of opinion that the evidence as a whole does not definitely show a failure of the bankrupt to account for his assets, and I concur with Mm in this respect. It is true there' are many suspicious circumstances wMeh demanded investigation, but there has been a most painstaking investigation conducted by the very able counsel. No evidence of any value has been offered to contradict anything said by the bankrupt, and it must be wholly out of Ms own mouth that his conviction is had, if it is had. That it is shown that he is a man of no very Mgh etMeal standards is not enough.
There must be evidence that he has concealed or is concealing Ms assets from his creditors, and tMs, after having read the evidence, I am not able to say is true; hence I must grant him Ms discharge.