In re Breitling

• Decision Date: 04 October 1904
• Docket Number: 1,043.
• Citation: 133 F. 146
• Parties: In re BREITLING.
• Court: U.S. Court of Appeals — Seventh Circuit

133 F. 146

In re BREITLING.

No. 1,043.

United States Court of Appeals, Seventh Circuit.

October 4, 1904

This is an appeal from a decree discharging the bankrupt from his debts. A voluntary and duly verified petition in bankruptcy was filed August 8, 1902, an adjudication in bankruptcy forthwith following. The schedules attached to the petition and which are material to be considered, exhibit as follows Personal property, Schedule B(2). A. Cash on hand, $100. C. Stock in trade, none. D. Household goods, etc. (specifying them), $300. Schedule B(3). Debts due petitioner on open account, Harry Van Kuran, $13.75. D. Unliquidated claims none. Schedule B(4). Sum paid to counsel for services in bankruptcy, $50. Schedule B(5). Property claimed to be exempt by the law of Illinois (Rev. St. C. 52, Sec. 13); specifies the property stated in Schedule B(2)D, valued at $300, and in Schedule B(2)K, machinery, fixtures, etc., used in business valued at $800, and places the valuation of the entire property claimed as exempt at $400.

On August 26, 1902, the bankrupt filed amended schedules which, so far as material, are as follows: Schedule B(3). A. Debts due petitioner on open account. Six additional accounts are inserted, namely, Kopprelmeier & Mohr, $86.85; F. M. Ellis, $9.20; D. L. Hahn, $70.30; E. H. Hann, $66.76; James Madison, $37.94; H. A. Colton, $18.26. Schedule B(5). Property claimed to be exempt by state law; omits six articles of household furniture stated in the original schedule, and includes one lamp, one bicycle, and one ice box, not mentioned in the original schedule, and places the valuation of the property claimed as exempt at $400.

On November 20, 1902, the bankrupt petitioned for a discharge from his debts, which was opposed by one Palmer, a creditor, who, on December 18, 1902, filed specifications of objections to the discharge, that the bankrupt had knowingly and fraudulently made a false oath, and had concealed from his trustee in bankruptcy a quantity of lumber and a certain debt due on his open account from the Waldheim Cemetery Company, and also a half interest in a certain claim and action for $5,000 damages for trespass, then pending in a state court. The answer of the bankrupt denied that he is any wise had made any false or untrue statements, but alleged that the schedules truthfully set forth the condition of his estate. He alleged that the small stock in trade possessed by him had, prior to filing his petition in bankruptcy, been sold, and the proceeds, when received by him, were applied to the cost of the count of the Waldheim Cemetery Company, with others, was, by agreement between the bankrupt and his solicitors, to apply upon their fees and the costs of the bankruptcy proceedings; and that at the time of making oath to the schedules he did not understand that the lumber or the account due charged with respect to the action of damages, but refuses to plead thereto, and excepts to the allegation in that behalf.

The matter was referred to a referee, whose report, filed April 24, 1903, was to the effect, first, that the omission to schedule the half interest in the suit for damages for an illegal levy under a chattel mortgage upon property claimed to be exempt was because the bankrupt had been advised by his counsel that it was not an asset and should not be scheduled. With respect to the claim against the Waldheim Cemetery Company, the referee reported as follows: 'It appears from the evidence that the bankrupt had an order from the Waldheim Cemetery Company for some $40 worth of lumber shortly before his bankruptcy. At the time he filed his petition he was ignorant of company or not. It is true, in my opinion, that he should have scheduled either the lumber or the claim against the said company. It appears, however, that he conferred with his counsel, Messrs. Guthrie & Palmer, concerning the said matter, and, as he was ignorant of the fact that the lumber was still in his possession, acting under their advice, he did not schedule. Although it appears that the said lumber was in his possession, and was taken away by the Waldheim Cemetery Company some two days after he filed the petition in bankruptcy, and the amount thereof was collected by him and turned over to his lawyers to apply on costs and attorney's fees, I consider the papers in accordance with their views as to what should be properly scheduled, relieved the bankrupt of the fraudulent intent which would be necessary to substantiate the objection to his discharge on that ground.'

On June 5, 1903, amended objections to the discharge of the bankrupt were filed by leave of court, and on the 30th of June the court ordered 'that leave be, and it hereby is, given to amend said specifications on their face,' but not otherwise specifying wherein they were to be amended. The matter would seem to have been re-referred, although no formal order for such reference appears by the record; but the referee, on September 8, 1903, made further report, in which he states that subsequently to his report application was made by the objector for permission to file amended specifications for the discharge, and that thereupon the court made an order as follows: 'Ordered, that leave be, and it hereby is, given said objecting creditor to amend his specification by amplifying and enlarging the same, but no new matter to be introduced, without prejudice to the reference herein;' and that thereupon the objector filed a new and amended set of specifications. The referee reports that the amended specifications are 16 in number; that specifications 2, 4, 8, 10, 12, 13, 14, 15, and 16 set up new matter not embraced in the original specifications, and that the other specifications, while not new, are substantially covered by the original specifications; and that his report should stand. Upon exceptions to the report the matter was heard by the court, the exceptions overruled, and the bankrupt discharged from his debts on October 6, 1903; from which decree this appeal is taken.

The case presented at the bar is based solely upon the omission of the account of the Waldheim Cemetery Company. The only evidence taken before the referee was that of the bankrupt himself, who testified that while he was engaged with his lawyers preparing the bankruptcy proceedings he arranged with the Waldheim Cemetery Company to sell to that company the lumber remaining in his yard. That at the time he verified his petition he did not know whether the company had obtained the lumber or not. He learned of it one or two days afterward, and within a week after filing the petition he obtained from the Waldheim Cemetery Company the money for the lumber. That in the original schedules he neither...