The opinion of the court was delivered by: GALSTON
These are cross-motions. An objecting creditor seeks to reverse the order of the referee granting a discharge of the bankrupt, and the bankrupt moves to confirm and grant his discharge.
On a voluntary petition, filed August 29, 1940, the bankrupt was adjudicated as such. The first meeting of creditors having been closed, November 8, 1941, was set as the last day for filing objections to the discharge. The petitioner filed objections, and hearings were held on January 8, 1942, June 11, 1942, and July 21, 1942. On September 15, 1943, the referee dismissed the specifications of objection and granted a discharge. From that order the creditor filed a petition for review. Judge Byers, by order dated December 22, 1943, remitted the matter to the referee for a report, "containing a discussion of the evidence and exhibits in connection with each specification, and a brief statement of his reasons for his conclusions in respect to each." Thereafter, and pursuant to such order, the referee filed his supplemental report on March 15, 1944, and an order was entered thereon on April 15, 1944. On April 21, 1944, the creditor filed a petition for review. These motions, for one reason or another, were not argued until July 7, 1944.
There are three specifications of objections to be considered. That marked "2" will be discussed first. In effect it alleges that the bankrupt obtained money on credit by making a materially false statement in writing to the C.I.T. Corporation, the objecting creditor, respecting his financial condition, in that on or about May 29, 1939, he executed a written guarantee of the obligations of the Hale Motors, Inc., representing that on March 31, 1939, said Hale Motors, Inc., and the bankrupt had
(a) Cash on hand and in banks, the sum of $1,993.90
(b) Total assets of $30,461.13
(c) Net worth, $16,575.82 whereas it is alleged that the said Hale Motors, Inc. and the bankrupt had instead
(a) Cash on hand and in banks, $119.79
(b) Total assets, $23,051.63
It is alleged that at the time of the filing of that financial statement the bankrupt and Hale Motors, Inc., were indebted to the C.I.T. Corporation in a substantial amount, not less than $12,000, and that thereafter the C.I.T. Corporation renewed the credit extended to the bankrupt, and in addition the bankrupt and the said Hale Motors, Inc., obtained property on credit consisting of new automobiles, delivered and paid for by C.I.T. Corporation, and received by the Hale Motors, Inc., and the bankrupt herein.
At the hearings upon the specifications of objection, it was stipulated that the bankrupt did business under the name "Hale Motors, Inc.," of which corporation he owned all the capital stock, and that all the liabilities for which he was personally liable in his bankruptcy in this proceeding are items which resulted from the transactions of that corporation. It was stipulated that the credit in each instance was extended on the faith of the financial statements filed.
To prove the falsity of the representations made, the books and other records of the bankrupt and the financial statement of a certified public accountant employed by the bankrupt, reflecting the condition of the bankrupt's affairs as at March 31, ...