The opinion of the court was delivered by: BYERS
Hearing on petition for review of order of referee granting discharge.
The matter for determination is whether the bankrupt has forfeited his right to a discharge because he "obtained money or property on credit, or obtained an extension or renewal of credit, by making or publishing or causing to be made or published in any manner whatsoever, a materially false statement in writing respecting his financial condition * * *" within the provisions of section 14, paragraph c, subdivision 3, of the Bankruptcy Act, 11 U.S.C.A. § 32, sub. c(3).
Decision turns upon a narrow question of construction of the terms of his application for a loan from the Manufacturers Trust Company, dated March 19, 1940. The application is in evidence, and discloses that, as of that date, the bankrupt was 41 years of age and was the Assistant Manager of the Securities Department of a named banking house, of 120 Broadway, New York City. From this it follows that he was a person of education and sufficient insight into financial matters to understand the questions contained in the said application, their purpose, and the necessity for making correct answers.
On page 2, ample space is provided for a statement of the applicant's assets and liabilities in itemized form, and no figures appear in that space. Below that, the following occurs: "Are you making any installment payments to banks, loan companies, installment or finance companies, or others? No."
That was literally true, but within 30 days such an installment would become payable on another loan.
On the third page appears the following:
"To Manufacturers Trust Company
"Knowing that you will rely upon the representations made by me in this application, and in order to induce you to grant this loan, I represent that I have no outstanding obligations due any bank, loan company, corporation or any individual, nor any suits, judgments or legal claims of any kind whatsoever now pending against me except as shown herein.
"(Signed) Fred A. Walther"
There are two specifications of objection, the first of which seems not to have been the subject of testimony, and therefore is not presently considered.
The second is directed to the above application for a loan, which resulted in his obtaining the same on or about March 22, 1940, in the sum of $375, and the application is alleged to have been false with respect to the statement that he was not making any installment payments, as above quoted, and that he had no outstanding obligations due any bank or loan company, which statements are said to have been false, to the knowledge of the bankrupt, in that at the time he made the statement he was indebted to Morris Plan Industrial Bank in the amount of $1275 on a loan in that amount which he procured on March 11, 1940; and which false statement was relied upon by the Manufacturers Trust Company in extending the credit and granting the loan.
It is undisputed, that at the time of procuring the said loan the bankrupt was indebted to the Morris Plan Industrial Bank according to the recital of the second specification, but the first installment upon that ...