Farmers Co-op. Ass'n of Talmage, Kan. v. Strunk

• Decision Date: 18 February 1982
• Docket Number: No. 81-1344,CO-OPERATIVE,81-1344
• Citation: 671 F.2d 391
• Parties: 10 Fed. R. Evid. Serv. 389 FARMERSASSOCIATION OF TALMAGE, KANSAS, Plaintiff/Appellee, v. Tim Aaron STRUNK, Defendant/Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 391

671 F.2d 391

10 Fed. R. Evid. Serv. 389

FARMERS CO-OPERATIVE ASSOCIATION OF TALMAGE, KANSAS Plaintiff/Appellee, v. Tim Aaron STRUNK, Defendant/Appellant.

No. 81-1344.

United States Court of Appeals Tenth Circuit.

Feb. 18, 1982.

Max M. Hinkle of Lehman, Guilfoyle & Hinkle, Abilene, Kan., for plaintiff/appellee.

Richard V. Foote of Matlack, Foote, Scott, Joseph & Wilkinson, P. A., Wichita, Kan., for defendant/appellant.

Before McWILLIAMS, McKAY and SEYMOUR, Circuit Judges.

McWILLIAMS, Circuit Judge.

This is an appeal in a bankruptcy proceeding in which the bankruptcy judge denied discharge on the ground that the debtor had knowingly and fraudulently concealed some $3,000 in assets from the trustee and his creditors. In addition, the bankruptcy judge also found that the debtor had made a false oath in relation to the proceeding. The order of the bankruptcy judge denying discharge was affirmed by the United States District Court for the District of Kansas. The bankrupt now asks that we reverse that judgment.

Tim Aaron Strunk, a farmer, filed a petition for voluntary bankruptcy on August 15, 1977, in the United States Bankruptcy Court for the District of Kansas. In his Statement of Affairs attached to the petition, Strunk indicated that he had maintained a checking account at the Farmers National Bank in Abilene, Kansas, within two years prior to the filing date. In a schedule also filed with the petition, Strunk stated that as of August 15, 1977, he had no monies on deposit with any banking institution. On the date Strunk filed the petition, however, the balance in his account in the Farmers National Bank was in fact $3,268.98. The petition, the statement, and the schedule were signed by Strunk and were sworn to contain truthful statements to the best of his knowledge, information, and belief.

On September 7, 1977, at the first meeting of creditors, Strunk again affirmed under oath the statements previously made by him in his petition and accompanying attachments. As of that date, Strunk had the sum of $1,976.30 on deposit in the Farmers National Bank.

In April of 1978, the trustee requested copies of bank statements Strunk had received from the Farmers National Bank for the months of August, September, and October of 1977. Copies of his cancelled checks were also delivered to the trustee on or about June 1, 1978. On November 28, 1978, prior to final accounting, Strunk delivered to his attorney, to be forwarded to the trustee, $3,277 for the balance shown on the records of the Farmers National Bank as of August 15, 1977.

The Farmers Co-operative Association of Talmage, Kansas, a judgment creditor of Strunk, filed an objection to discharge on August 3, 1978, alleging that Strunk had made false statements under oath in his bankruptcy petition and had knowingly and fraudulently concealed assets from his estate. The matter was heard by the bankruptcy judge on July 11, 1979, who thereafter on March 27, 1980, entered an order denying discharge.

At the hearing on the Farmers Co-op's objection to discharge, numerous bank statements were received in evidence, including the bank statements which were received by Strunk for the months of August and September of 1977. The statement for August, 1977, is dated August 31, 1977. The statement for September, 1977, is dated September 30, 1977. The August statement reflects a beginning balance of $3,897.75, 26 entries, 25 of which were checks totaling $1,886.44, no deposits, and an ending balance of $2,011.31. ¹ Of the 25 checks on the August statement, 11 were written prior to August 15, 1977, and 14 were written subsequent to that date. The September statement reflects a beginning balance of $2,011.31, 23 entries, all of which were checks totaling $1,789.20, no deposits, and an ending balance of $222.11.

In addition to bank records, the parties stipulated to several matters, including a stipulation that "(A)s of August 15, 1977 (the date when the petition in bankruptcy was filed) the defendant (Strunk) had drawn and delivered checks on the Farmers National Bank which, if honored, would have overdrawn his account." In this regard, bank records indicated that during the eight-month period immediately preceding the filing date of Strunk's petition, Strunk had written 14 not sufficient funds checks totaling $10,048.91 which were returned unpaid by the bank.

Strunk did not testify at the hearing on the Farmers Co-op's objection to discharge. Instead, he relied almost entirely on the stipulation set forth above, and contended that at the time he executed the petition, he was under the impression that there was no money in the account since he had drawn checks against the account, which, if honored, would have overdrawn the account. To support this contention, Strunk called as his only witness at the hearing the vice-president and cashier of the Farmers National Bank who testified that it was not uncommon for checks which were returned unpaid as overdrafts on an account to be resubmitted two or three times. It was undisputed that the last not sufficient funds check written by Strunk was returned early in July, 1977. At that time, Strunk received an overdraft notice from the bank dated July 1, 1977, advising him that a check in the amount of $5,887.05 was not paid, and that his balance subsequent to the debit for the overdraft charge was $4,826.43. The bankruptcy judge found that none of Strunk's not sufficient funds checks was represented to the bank during the months of August or September, 1977.

Section 14(c) of the old Bankruptcy Act, 11 U.S.C. § 32(c) (repealed 1978), ² requires a court to grant the discharge of a debtor unless the court is satisfied that the debtor has committed an offense punishable by imprisonment under 18 U.S.C. § 152. That statute provides, in part:

Whoever knowingly and fraudulently conceals from the ... trustee, ... or from creditors in any bankruptcy proceeding, any property belonging to the estate of a bankrupt; or

Whoever knowingly and fraudulently makes a false oath or account in relation to any bankruptcy proceeding; .... Shall be fined not more than $5,000, or imprisoned not more than five years, or both.

Under the Bankruptcy Act, a...