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IN RE HALL

DISTRICT COURT, W.D. NEW YORK


September 9, 1935

In re HALL

The opinion of the court was delivered by: KNIGHT

KNIGHT, District Judge.

Objections were filed on the application for discharge. These were referred to the referee in bankruptcy as special master. The special master has filed his opinion recommending the granting of a discharge and has made certain findings of fact and conclusions of law. Exceptions were filed to such findings. The bankrupt now moves to confirm the master's report. I do not see how this report can be sustained.

It seems clear from the evidence that on December 8, 1928, the bankrupt "obtained money, * * * on credit * * * by making or publishing * * * a materially false statement in writing respecting his financial condition." Under such circumstances, his discharge cannot be granted. Section 14b (3), Bankruptcy Act of 1898, as amended by Act May 27, 1926, 11 USCA ยง 32 (b) (3).

 The referee in his opinion states: "The Bankrupt made a financial statement in writing that on its face was and is false to such a degree that if credit was extended to him in any form, in reliance thereon, the discharge applied for should be denied." That the statement made was false cannot successfully be contradicted. The referee states in his opinion with reference to the time when this statement was made: "It is dated December 8, 1928, and it probably was made the day it was dated."

 The weight of the evidence shows that it was dated and given on that day, and there is no denial that the bankrupt did not own the property set forth in the statement. Although the referee states in his opinion that it probably was made on December 8, 1928, and that it was "a financial statement in writing that on its face was and is false," yet he finds (finding 21) that bankrupt did not execute a false statement "on the 8th day of December, 1928, or upon any date in the month of December." This finding, it seems to me, is inconsistent with the opinion and not warranted by the evidence.

 It is not material whether credit was obtained for the bankrupt.Credit was obtained for another by the indorsement of a note by the bankrupt. The statute said nothing about credit to the bankrupt. Its purpose and meaning are met by construing "credit" as referring to credit obtained by the bankrupt for himself or for another. However, the evidence is sufficient to warrant the conclusion that the bankrupt obtained credit for himself. While there is some conflict in the testimony with reference to what was done with the note executed by bankrupt, the note was given by the bankrupt as the maker, made payable to the Sinclairville State Bank, and the records of the bank show that the amount of this note was deposited to the credit of the bankrupt on December 10, 1928. Subsequent to that the proceeds were applied upon indebtedness of third party. Without doubt the note was intended to be given for the benefit of the third party. Its purpose can hardly be denied. The acts done, however, show that bankrupt first obtained credit for the note.

 The court makes its ruling upon the exceptions as follows:

 Ninth. Exception allowed.

 Tenth. Exception overruled.

 Eleventh. Exception overruled.

 Thirteenth. Exception allowed.

 Fourteenth. Exception allowed.

 Fifteenth. Exception overruled.

 Seventeenth. Exception overruled.

 Eighteenth. Exception overruled.

 Nineteenth. Exception allowed.

 Twentieth. Exception allowed.

 Twenty-first. Exception allowed.

 Conclusions of Law

 First. Exception allowed.

 Second. Exception allowed.

 Third. Exception allowed.

19350909

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