In re Marx

• Decision Date: 23 June 1900
• Citation: 102 F. 676
• Parties: In re MARX et al.
• Court: U.S. District Court — District of Kentucky

102 F. 676

In re MARX et al.

United States District Court, D. Kentucky.

June 23, 1900

Kohn Baird & Spindle, for bankrupts.

D. I Heyman, for objecting creditors.

EVANS District Judge.

Upon the petition of certain of their creditors, this firm and its members were adjudged to be bankrupts. Afterwards, at the meetings of their creditors, they submitted to examination pursuant to section 7 of the bankrupt act. Their petitions for discharge were afterwards met with objections from the creditors, who specified reasons for opposing that relief. Those reasons, for the purposes of this case, may be said to embrace two general grounds of objection, namely: First under section 14, that the bankrupts, with fraudulent intent to conceal their true financial condition, and in contemplation of bankruptcy, failed to keep books of account or records from which their true condition might be ascertained; and, second, under section 14, coupled with section 29, that the bankrupts had committed offenses punishable under the act, by knowingly and fraudulently making certain false oaths in the examinations referred to. Relative to each of these grounds of objection, it may be stated that no testimony was offered by either party after the specifications were filed on February 26, 1900, when the case was referred to the referee to ascertain and report the facts. The only evidence offered or considered by the referee on the reference, or by the court on this hearing, was what was contained in the examinations of the bankrupts themselves, and those of Moses F. Marks, John J. Saunders and Thomas E. Turner, all of which were had, for some purpose, before the specifications of objections to the discharge were filed. It is contended by the bankrupts that this previously taken evidence is not competent to be considered upon the issues raised by the petitions for discharge, and the specified objections thereto. This might possibly raise a serious and doubtful question, but, in the view the court takes of the case, it is not necessary to pass on it, although it may be that what we shall say upon section 7 of the act may be decisive of the question, as to parts of that testimony.

Section 14 of the act provides that the discharge shall be granted unless, among other things, the bankrupt, 'with fraudulent intent to conceal his true financial condition and in contemplation of bankruptcy, destroyed, concealed or failed to keep books of account or records from which his true condition might be ascertained. ' It appears to be essential that the failure to keep books by the bankrupt shall not only be with the fraudulent intent to conceal his true financial condition, but also that it shall be done 'in contemplation of bankruptcy.' There was a phrase similar to the last one in a former bankrupt law, and the supreme court, in Buckingham v. McLean, 13 How. 167 14 L.Ed. 190, held that it did not mean insolvency, merely, but that it meant bankruptcy itself. Keeping this decision in view, it is impossible, upon the evidence in this case, to hold that the first ground of objection to the discharge of these bankrupts is sustained. Whatever the intent, if any, in badly keeping their books, it does not appear to have been in contemplation of any bankruptcy, or act of bankruptcy, upon their part. Indeed, most of it was done before the bankrupt law was enacted. Books were in fact kept, but by an inexperienced person in their employ, and...