Becker v. Shields

• Court: U.S. Court of Appeals — Eighth Circuit
• Writing for the Court: SANBORN, JOHNSEN and WHITTAKER, Circuit
• Citation: Becker v. Shields, 237 F.2d 622 (8th Cir. 1956)
• Decision Date: 26 October 1956
• Docket Number: No. 15526.,15526.
• Parties: Joseph Edward BECKER, Bankrupt, Appellant, v. Audrey D. SHIELDS, Objecting Creditor, Appellee.

237 F.2d 622 (1956)

Joseph Edward BECKER, Bankrupt, Appellant, v. Audrey D. SHIELDS, Objecting Creditor, Appellee.

No. 15526.

United States Court of Appeals Eighth Circuit.

October 26, 1956.

Richard A. Erickson, Kansas City, Mo., for appellant.

Rodger J. Walsh, Kansas City, Mo. (Davis, Thomson, Van Dyke & Fairchild, Kansas City, Mo., were with him on the brief), for appellee.

Before SANBORN, JOHNSEN and WHITTAKER, Circuit Judges.

SANBORN, Circuit Judge.

Audrey D. Shields, a creditor of the appellant, bankrupt, on May 24, 1955, filed objections to his discharge, on the grounds: (1) that he had obtained money or property on credit by making a materially false statement in writing on or about November 11, 1952, in an application for credit to the Westport Bank, of Kansas City, Missouri, in which he stated, "I hereby certify that * * * there is no suit or judgment pending against me," when he knew there was a suit pending against him in the Circuit Court of Jackson County, Missouri, entitled "Audrey D. Shields vs. Joseph E. Becker," filed October 11, 1951; (2) that on or about March 11, 1953, the bankrupt obtained money or property on credit by making a materially false statement in writing to the City National Bank & Trust Company, of Kansas City, Missouri, in an application for credit under the Federal Housing Act, by stating that he had listed all his debts, when he had failed to list his indebtedness to the objector.

The Referee in Bankruptcy, after a hearing, overruled the objections to the discharge, and the objector petitioned for a review of the Referee's order. The District Judge vacated the order.

The bankrupt has appealed in forma pauperis from the order of the Judge on the ground that the findings of the Referee were not clearly erroneous and that his order was not subject to reversal on review.

The record shows that the bankrupt, a general contractor in Kansas City, Missouri, on October 28, 1950, gave his promissory note to John G. Shields, the deceased husband of the objector, for $2,042.95, payable in monthly installments of $50.00 commencing January 1, 1951; and that the objector on October 11, 1951, after the death of her husband, brought suit on the note. The bankrupt filed his answer in the suit on or about November 7, 1951, denying liability. The suit was tried April 29, 1953, and resulted in a judgment against the bankrupt in the amount of $2,117.95.

On November 12, 1952, the bankrupt and his wife executed a note to "Jerry Smith Buick" for $2,625.30, which was secured by a chattel mortgage covering a 1952 Buick automobile purchased from that concern. The note was payable at the rate of $87.51 a month, commencing on December 15, 1952. "Jerry Smith Buick" procured from the bankrupt an "Application for Credit to Westport Bank, Kansas City, Mo." The application was dated November 11, 1952, and was upon a printed form which, above the signature of the bankrupt, contained the printed words, "This statement made for the purpose of obtaining credit and I hereby certify that all of the statements made above are true and complete and there is no suit or judgment pending against me." While the application for credit indicates that the unpaid balance due on the purchase of the Buick car was $2,282.93, and bears no other signature than that of the bankrupt, the note, which apparently evidenced the balance due on the purchase price of the car, was for $2,625.30 and was signed by "Joseph E. Becker" and "Hellen A. Becker." The chattel mortgage recites that Hellen A. Becker is the mortgagor who is indebted to Jerry Smith Buick, although both she and her husband signed the note and the chattel mortgage. The note, with the chattel mortgage attached, was endorsed without recourse to the Westport Bank, and, at the time of the hearing on the objections to the bankrupt's discharge, had been paid in full.

The bankrupt and his wife on March 11, 1953, signed a "FHA Title I Credit Application (Property Improvement Loan)," to obtain from the City National Bank & Trust Company, of Kansas City, Missouri, a loan of $297.00, payable in installments over 36 months. This application was on a printed form which called for a statement of "Debts — List fixed obligations, installment accounts, mortgages, FHA Loans and debts to banks, finance companies and Government agencies." The bankrupt did not list as a debt the note upon which the objector had brought suit, and which, according to the bankrupt's testimony, he did not consider a "fixed obligation." The application for credit was not signed at the Bank, but was procured at the bankrupt's residence by the salesman for the dealer supplying the product (apparently electrical equipment) for the purchase of which credit was being sought. The dealer submitted the application to the Bank. At the time of the hearing on objections to the discharge, the loan which the Bank made upon the application had not been in default, and there was an unpaid balance of $75.77.

There was evidence at the hearing before the Referee to the effect that the banks relied upon the statements in the applications made to them by the bankrupt, and were not advised of the pendency of the suit brought against him by the objector or of the existence of the Shields note upon which the suit was based. There was no unequivocal evidence that the loans made by the banks would not have been made had the bankrupt included in his applications for credit the information the omission of which the objector contends was fatal.

It seems apparent, however, that the objector made a prima facie case in support of her objections under Section 14, sub. c(3) of the Bankruptcy Act, 11 U.S.C.A. § 32, sub. c(3), which, so far as pertinent, provides:

"(c) The court shall grant the discharge unless satisfied that the bankrupt has * * * (3) obtained money or property on 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 * * *: Provided, That if,

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