The opinion of the court was delivered by: MOSCOWITZ
MOSCOWITZ, District Judge.
These are two motions, one for an order confirming the report and supplementary report of the referee recommending that the bankrupt be discharged, and the other motion by the objecting creditor that the supplementary report of the referee be rejected and that the bankrupt be denied his discharge.
On July 12, 1937, the referee made a report herein recommending that the specifications of objections to the discharge of the bankrupt be dismissed and that the discharge of the bankrupt be granted.
A motion was made to confirm this report and an order was made by Judge Inch on August 6, 1937, referring the proceeding back to the referee solely for the purpose of taking the testimony of one Sam Katz and Fanny Stall.
The referee has made a supplemental report dated January 18, 1938, after hearing the testimony of Sam Katz and Fanny Stall, in which he recommends that the discharge of the bankrupt be granted.
The specifications of objections are as follows:
"First: That the Bankrupt herein with the express purpose of concealing from his creditors and depriving his creditors of their legal rights to an apportionment of all his property and with intent to hinder, delay and defraud his creditors, knowingly and fraudulently omitted to specify and set forth in his Schedules of Bankruptcy as an asset a certain fruit and vegetable business located at 1314 39th Street in the Borough of Brooklyn, City and State of New York.
"The said Bankrupt attempted to accomplish the concealment of this asset by testifying that his mother-in-law Fannie Stark is the owner of the said business. That his wife Stella Katz carried the moneys deposited in her check account for the purposes of this business. That the name on the window of the said business was 'Katz' and that merchandise was delivered and billed to 'S. Katz'. The Bankrupt attempted to indicate that 'S. Katz' stood in some instances for Stella Katz, his wife and for Sam Katz, his brother, although in an examination in Supplementary Proceedings he testified that he was known as Sol Katz or Sam Katz.
"Second: That the Bankrupt herein, with intent to hinder, delay and defraud his creditors, knowingly, fraudulently, wilfully and maliciously swore falsely to material facts at his examination at the first meeting of creditors. That the said false swearing related to the ownership of the fruit and vegetable store located at 1314 39th Street in the Borough of Brooklyn, City of New York.
"That the said false swearing likewise related to his lack of knowledge of the value of the said business."
The court, ordinarily, will not disturb the finding of a referee upon the facts where the credibility of witnesses is involved. In this case the bankrupt has not evidenced candor and truthfulness, and has not met the burden imposed upon him by the Bankruptcy Act, title 11 U.S.C.A. § 32(b) (7), which is as follows:
"Provided, That if, upon the hearing of an objection to a discharge, the objector shall show to the satisfaction of the court that there are reasonable grounds for believing that the bankrupt has committed any of the acts which, under this paragraph (b), would prevent his discharge in bankruptcy, then the burden of proving that he has not committed any of such acts shall be upon the bankrupt."
The bankrupt failed to disclose the fact that he was the owner of the fruit and vegetable business located at 1314 39th street, Brooklyn, N.Y. He has concealed this asset from his creditors. His claim that his mother-in-law, Fanny Stall, purchased this fruit and vegetable business in 1933 has not been borne out by the facts. His testimony that he is not the owner of the business cannot be true in light of the following facts pointed out in the memorandum of law submitted by the attorney for the objecting creditor:
"1. The fact that the bankrupt Sol Katz is now employed by the alleged owner Fannie Stall at the ...