Williamson v. Fireman's Fund Ins. Co.

• Decision Date: 15 September 1987
• Docket Number: No. 87-1509,87-1509
• Citation: 828 F.2d 249
• Parties: Bankr. L. Rep. P 71,991 Chester D. WILLIAMSON, Plaintiff-Appellant, v. FIREMAN'S FUND INSURANCE COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 249

828 F.2d 249

Bankr. L. Rep. P 71,991

Chester D. WILLIAMSON, Plaintiff-Appellant, v. FIREMAN'S FUND INSURANCE COMPANY, Defendant-Appellee.

No. 87-1509.

United States Court of Appeals, Fourth Circuit.

Argued June 30, 1987.

Decided Sept. 15, 1987.

Michael D. Toobin, Alexandria, Va. (Richard J. Stahl, Stahl & Buck, P.A., Annandale, Va., on brief) for appellant.

Edward Graham Gallagher, Washington, D.C., for appellee.

Before PHILLIPS, ERVIN, and WILKINSON, Circuit Judges.

ERVIN, Circuit Judge:

Chester D. Williamson ("Williamson") appeals from the denial of a discharge of his debts under Chapter 7 of the Bankruptcy Code. Because we believe that the bankruptcy court's findings with respect to Williamson's entitlement to a discharge were not clearly erroneous, we affirm the denial of the discharge.

Williamson filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code on May 28, 1985. On October 9, 1985, appellee Fireman's Fund Insurance Company, a creditor of Williamson, filed a complaint objecting to the discharge of Williamson's debts. The complaint alleged that Williamson was not entitled to a discharge because he had (1) transferred property with intent to hinder, delay, or defraud his creditors within the year preceding the filing of his bankruptcy petition, see 11 U.S.C. Sec. 727(a)(2)(A); and (2) knowingly and fraudulently made false statements under oath in connection with his bankruptcy case, see id. Sec. 727(a)(4)(A).

After the trial of the adversary proceeding brought by Fireman's Fund Insurance Company, the bankruptcy court ruled that Williamson was not entitled to a discharge of his debts. The bankruptcy court based its decision on findings that Williamson had made false statements under oath in connection with his bankruptcy case, and had engaged in fraudulent transfers of his property within the year preceding the filing of his bankruptcy petition. ¹ Williamson appealed the bankruptcy court's judgment to the district court, and the district court affirmed on the ground that the bankruptcy court's decision was not clearly erroneous. This appeal followed.

The Bankruptcy Code provides that a debtor under Chapter 7 shall be granted a discharge, unless "the debtor knowingly and fraudulently, in or in connection with the case--(A) made a false oath...." 11 U.S.C. Sec. 727(a)(4) (1982). In order to be denied a discharge under this section, the debtor must have made a statement under oath which he knew to be false, and he must have made the statement willfully, with intent to defraud. See 4 Collier on Bankruptcy p 727.04, at 727-54 to -55 (L. King 15th ed. 1987). The false oath made by the debtor must have related to a material matter. See id. Sec. 727.04, at 727-57. Whether a debtor has made a false oath within the meaning of Sec. 727(a)(4)(A) is a question of fact. The bankruptcy court's findings of fact with respect to this matter may not be set aside unless they are clearly erroneous. See Bankr.R. 8013 ("Findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the bankruptcy court to judge the credibility of the witnesses.").

In this case, the bankruptcy court based its denial of the discharge on three false oaths made by Williamson. Two of the false oaths were made in Williamson's Statement of Financial Affairs. In response to a question asking for disclosure of all bank accounts he had maintained alone or with any other person during the two years preceding the filing of his bankruptcy petition, Williamson listed two bank accounts with a total of $220.37 on deposit. In fact, Williamson had maintained a third bank account with his fiancee, Janet Cardwell, during the relevant time period and had made a number of deposits into that account. In response to a question asking him to identify all gifts he had made during the year preceding the filing of his petition, Williamson stated that he had made no gifts. In fact, Williamson had made at least three gifts of money to Janet Cardwell within the relevant period of time.

The third false oath on which the bankruptcy court based the denial of discharge was made during Williamson's examination pursuant to Bankr.R. 2004. At this examination, Williamson testified under oath that he had withdrawn $15,000 from one of his bank accounts and used the money to repay a loan from his brother. At the trial of the adversary proceeding, Williamson admitted that this testimony was false, and that he knew it to be false when he gave it. ² The $15,000 that Williamson withdrew from his bank account was sent to Janet Cardwell, who used the money to pay her divorce lawyer.

All three of Williamson's false oaths were material misstatements that would support the denial of a discharge under 11 U.S.C. Sec. 727(a)(4)(A). The false statements related to material matters in that they concerned the existence and disposition of Williamson's property. See In re Chalik, 748 F.2d 616, 618 (11th Cir.1984) (per curiam) ("The subject matter of a false oath is 'material,' and thus sufficient to bar discharge, if it bears a relationship to the bankrupt's business transactions or estate, or concerns the discovery of assets, business dealings, or the existence and disposition of his property.").

Williamson's primary contention on appeal is that the bankruptcy court erred in denying him a discharge on the basis of the three false oaths, because he did not make the false oaths "fraudulently" within the meaning of 11 U.S.C. Sec. 727(a)(4)(A). Williamson contends that his false oaths were motivated by a desire to assist and support his fiancee, Janet Cardwell, rather than by a desire to defraud his creditors. As Williamson points out, he and Janet Cardwell were the only witnesses to testify at the trial of the adversary proceeding; not surprisingly, the testimony of both witnesses was to the effect that Williamson did not act with fraudulent intent in transferring funds to Ms....