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IN RE HEFNER

May 26, 1938

In re HEFNER


The opinion of the court was delivered by: BYERS

BYERS, District Judge.

The Court is required to decide upon these cross motions, whether the referee is correct in recommending that a discharge be granted.

The bankrupt is an unmarried woman, who represented herself to be the wife of one James Wilson with whom she apparently was living at the time that he procured a loan from the objecting creditor.

 It is clear that she knew the representation to be false, and that she executed an application for the loan and the note as co-maker.

 The question is important because of the reliance of the lender upon the earnings of both Wilson and the bankrupt in deciding to extend the credit, upon the theory that their salaries constituted a joint fund out of which the loan would be paid, and that, as this sum amounted to $125.00 per week, it was adequate to enable Wilson to pay $65.00 per month rent, and his other expenses, and still have enough money to liquidate the loan. The testimony will be quoted.

 The first specification is that the bankrupt "made to the said objecting creditor a materially false statement in writing respecting her financial condition by means of which money was obtained on credit or an extension or renewal of credit was obtained".

 This is substantially in the form of the statute. Bankr.Act § 14, subd. (b), 11 U.S.C.A. § 32(b).

 The filing of an exception to the foregoing resulted in the making of an order sustaining the specification as to form, but that ruling of course did not touch the question of sufficiency under the proofs.

 The referee is of the opinion that the misrepresentation was not with respect to her "financial condition" but as to her marital status, and that it therefore did not affect her right to a discharge.

 The testimony of the lending agent is as follows:

 "The Referee: We have a right to ask him what he relied upon. I will take it.

 "Mr. Weinstein: Exception.

 "The Witness: Considering this application for a loan, if I had this applicant, James Wilson, come to the bank for a loan of $984 and he indicated to us that his salary was $65 a week, as he does on here, and that he is married, that he pays a rental of $65 a month, my credit opinion would be that a loan of $984 would be too burdensome for him to handle on an income of $65 a week. If he had applied for a smaller amount or an amount I thought was in proportion to that income perhaps I would have ...


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