In re Bowman Hardware & Electric Co., 4961.

• Decision Date: 15 January 1934
• Docket Number: No. 4961.,4961.
• Citation: 67 F.2d 792
• Parties: In re BOWMAN HARDWARE & ELECTRIC CO. MILLER v. BORTON.
• Court: U.S. Court of Appeals — Seventh Circuit

67 F.2d 792 (1933)

In re BOWMAN HARDWARE & ELECTRIC CO.

MILLER v. BORTON.

No. 4961.

Circuit Court of Appeals, Seventh Circuit.

November 29, 1933.

Rehearing Denied January 15, 1934.

W. A. Doss and C. E. Corbett, both of Monticello, Ill., for appellant.

Carl S. Reed and E. J. Hawbaker, both of Monticello, Ill., and Frank King, of Indianapolis, Ind., for appellees.

Before ALSCHULER, EVANS, and SPARKS, Circuit Judges.

EVANS, Circuit Judge (after stating the facts as above).

There is but one question presented by this appeal. Was appellant's conduct such as to justify the court in postponing his participation in the assets of the bankrupt estate until all other creditors were paid?

On oral argument the contention was made that the proof failed to show the exact amount of appellant's claim and that it included usurious and other illegal charges. The record does not support the argument.

In its objections to appellant's claim, the objector stated:

"That at the time the bankrupt commenced their business they became indebted to one A. C. Miller of the City of Monticello, * * * and that said indebtedness existed * * * at all times thereafter * * * but in increasingly large amounts, the greater portion, if not all of which, became evidenced by judgment notes upon which a judgment or judgments were confessed * * * on * * * March 1st, 1932, in the name of T. W. Doss * * * and the real interest therein and in said note or notes in truth and in fact belonging to the said A. C. Miller, as the real party in interest."

In the face of this admission, which the objecting creditor made for itself and all other creditors, it cannot now well challenge the validity of appellant's claim. The evidence of both Miller and Bowman thoroughly confirmed this admission.

We are therefore confined to the study of the question, Was appellant estopped to assert his claim on a parity with other creditors?

The fact basis for an affirmative answer to this question is limited to Miller's alleged request, and bankrupt's acquiescence in the request, that the loan by him to bankrupt be kept a secret. The evidence abundantly establishes the making of the request of the bankrupt and that it was respected by Bowman. The bankrupt's books did not reveal any indebtedness to appellant, nor did Bowman ever reveal Miller as a creditor or the debt due Miller as bankrupt's liability.

It also appeared that bankrupt made no financial statements to any of its creditors, and of course no creditor relied on any such statement. Nor does it appear that any creditor, save only one — Van Camp Company, was induced to extend credit because bankrupt's obligations did not include a debt to Miller.

This creditor, through its credit manager, testified that it had no knowledge of the indebtedness to appellant; that at one time it examined the books of the bankrupt; that Bowman denied to it the existence of any other indebtedness; that had it known of the indebtedness it would not have extended credit to the bankrupt.

This examination was made in the fore-part of August, 1931. At that time bankrupt was indebted to Van Camp Company to the extent of $300, which was shortly paid. At the time of the adjudication the indebtedness was about $800.

Later, a collector for this company called on bankrupt and presented the creditor's bill. Bowman refused to tell him anything about the sums bankrupt owed. The collector then went to the bank, which in turn called Bowman over and asked him to give a statement to the creditor as to what bankrupt owed. Bowman refused, saying, "I don't have to get merchandise from them, I will pay them." Subsequently, $400 was paid on the account.

It is shown that Bowman never gave any statement of bankrupt's financial condition to any one, and the books of account which it kept included only transactions with its customers and the wholesale merchants and did not include the company's personal loans. No other creditor either asked it for a statement or examined bankrupt's books.

Upon this record we are satisfied that no creditor, save Van Camp Company, can validly object to appellant's claim or assert a right to preferential payment over it.

Before a general creditor's claim against the bankrupt may be disallowed or its status lowered, it must appear that said creditor has been guilty of some act involving moral turpitude or some breach of duty or some misrepresentation whereby other creditors were deceived to their damage. In the instant case the absence of any evidence showing that other creditors...