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In re Nordheim

April 8, 1935

IN RE NORDHEIM; IN RE MILSTEIN


Appeal from the District Court of the United States for the Southern District of New York.

Author: Hand

Before L. HAND, SWAN, and AUGUSTUS N. HAND, Circuit Judges.

AUGUSTUS N. HAND, Circuit Judge.

The question before us is whether the bankrupt, Henry Nordheim, should be denied a discharge because he "concealed, or failed to keep books of account, or records, from which his financial condition and business transactions might be ascertained." Such conduct, when proved, is a bar to a discharge "unless the court deem such failure or acts to have been justified, under all the circumstances of the case." Bankruptcy Act, § 14, as amended by Act May 27, 1926, § 6 (11 USCA § 32).

We have recently held that the statute does not require an intent on the part of a bankrupt to conceal his financial condition from his creditors in order to preclude his discharge for failure to keep records. Karger v. Sandler (C.C.A.) 62 F(.2d) 80.But he must have intended to keep his records from his creditors or trustee in order that his acts should amount to concealment. We are not persuaded that he intended to keep the records from his creditors and, therefore, hold that the objection to his discharge that he concealed "records from which his financial condition and business might be ascertained" was not established.

At the first meeting of creditors the bankrupt was asked whether he ever kept any books and replied in the negative. When asked whether he ever kept "any records" of what his "income was as an architect," he answered "not collectively." The evidence taken at the hearings as to his discharge shows that by "not collectively" he meant that certain cards on which he had entered his receipts and sheets of paper on which he entered his expenses in his business as an architect were not kept together, but each card or expense sheet was placed with the order and drawings of the particular job to which it related. In other words, the records in connection with the various orders were not assembled but filed separately. At the first meeting he had said that he could not remember the amount of his earnings as an architect during the three years prior to his bankruptcy.

After the objection was made to his discharge that he had concealed "records from which his financial condition and business might be ascertained," he produced at the examination before the special master the cards and expense sheets which he had assembled and tabulated. They showed receipts as architect of $4,040 for the three years, and expenditures of $3,996.21 for the same period, leaving a net balance of only $43.79. He testified that during the three years he had received an aggregate salary of $6,050 as president of Grabert Realty Corporation, of which he repaid to the corporation, owing to its financial necessities, $550 so that his net receipts from it were $5,500. He expended $3,560.70 itemized as follows:

Support of father, 3 years $1,502.00

Medical services 1931, occasioned

by an accident and hospitaliza-

tion 275.00

Legal expenses, litigation with

one of his physicians ...


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