In re Carrier

• Decision Date: 01 January 1891
• Citation: 47 F. 438
• Parties: In re CARRIER et al.
• Court: U.S. Court of Appeals — Third Circuit

47 F. 438

In re CARRIER et al.

United States District Court, W.D. Pennsylvania.

January 1, 1891

J. M Garrison, for the motion.

L. B D. Reese, opposed.

REED J.

The first specification filed in opposition to the discharge of A. F. Baum avers that, after he was adjudged a bankrupt, and assignees of his estate were duly chose, he refused to surrender to the assignees the papers relating to his estate and concealed from said assignees 'certain papers' relating to judgments obtained against him prior to his adjudication, 'the papers' so concealed being a receipt of one Alexander Smith for the notes upon which the judgments were recovered. The bankrupt has moved to strike off this specification, for the reason that it is defective because it does not appear that the receipt therein referred to was of any value to the bankrupt's estate, nor how the same was concealed by Baum from the assignees, nor that his refusal to surrender the same was willful. Section 5110, Rev. St., provides that no discharge shall be granted if the bankrupt has concealed any part of his estate or effects, or any books or writings relating thereto, or has been guilty of any fraud or negligence in the care or custody or delivery to the assignees of the property belonging to him at the time of the presentation of his petition and inventory. In the Case of Rathbone, 1 N.B.R. 294, it was held that the specifications of the ground of opposition to a discharge must, under section 5110 and General Order No. 24, be as specific as the specifications of the grounds for avoiding a discharge after it is granted, required by section 5120; and the allegations must be allegations of fact, and must be distinct, precise, and specific, and must not be allegations merely in the language of section 5110, or allegations so general as really not to advise the bankrupt what facts he must be prepared to meet and resist.

The specification contains two charges, the first of which is that he refused to surrender to the assignees the papers relating to his estate. This, in my judgment, is an insufficient statement. The mere refusal to surrender papers is not a ground for withholding a discharge, and, if papers can be considered as property belonging to the bankrupt within the terms of the statute, there is no allegation that he has been guilty of any fraud or negligence in failing or refusing to surrender the papers.

Nor does it appear by the specification what the papers were, or that they were of any value to the estate. In re Pierson, 10 N.B.R. 107. The second charge in the specification is that, after he was adjudged a bankrupt, and his assignees were chosen, the said Baum concealed from said assignees 'certain papers,' namely, a receipts. 'A mere failure on the part of the bankrupt to render in property possessed by him on his schedules is not made a ground by the act for refusing his discharge. The act does make the concealment of the same a ground for such action, but then it must be averred and proved that it was willful. ' In re Eidom, 3 N.B.R. 106. 'There is one objection to this specification which I think well taken. The defendant is charged in general terms, without stating how or in what manner the concealment was effected, or when or in what stage of the proceedings it occurred. * * * The specification may mean that the defendant concealed the property by omitting to mention it in his inventory, or that he concealed it in his subsequent examination before the court or commissioner. It may also mean that the concealment was by secreting the property, so that the assignee in bankruptcy could not find it. The plaintiff must be more particular in his allegations, and tell us what he means by concealment; otherwise we cannot say that the replication contains a good answer to the plea, nor will the defendant have reasonable notice of what may be urged on the trial. ' Brereton v. Hull, 1 Denio, 75. 'In Brereton v. Hull, a discharge in bankruptcy was pleaded. To this plea there was a replication, generally alleging that the defendant was guilty of fraud, and of willful concealment of his property, and purporting to set forth three specifications. * * * The third specification alleged that the defendant had concealed property of considerable value. This was held bad, because it did not describe the property as to kind or quantity, and did not state how or in what manner the concealment was effected, or when or in what stage of the proceedings it occurred. The same doctrine, substantially, was held in Chadwick v. Starrett, 27 Me. 142, and is approved by this court. ' In re Rathbone, 1 N.B.R. 294. In the Case of Dreyer, 2 N.B.R. 212, a specification that the bankrupt had concealed part of his estate and effects was held vague and insufficient; as was also, in the Case of Tyrrel, Id. 200, the specification that the bankrupt had neglected to produce before the register or deliver to the assignee his books, papers, and writings relating to his estate, in willful violation and fraud of the bankrupt law. In the Case of Butterfield, 5 Biss. 120, the court say: 'The courts have decided again and again that these specifications must be as exact as the specifications in an indictment. ' In accordance with the rules established by the cases cited, I think this portion of the first specification is insufficient. Even reading the two clauses of the specification together, as referring to one matter and intended to charge one offense, the specification is vague, uncertain, and insufficient, and must be stricken off.

The second specification filed by the objecting creditors is 'The said A. F. Baum, after he was adjudicated a bankrupt, was guilty of fraud and negligence in the care and custody of the property belonging to him at the time of the presentation of the petition against him, and has caused and permitted waste and destruction thereof;' and two matters are detailed under this specification which will be referred to later more fully. The bankrupt has moved to strike off this specification, first for reasons applicable to the whole specification, and afterwards for reasons referring to the acts detailed under the specification. His general reasons are: First, that he, being an involuntary bankrupt, is not subject to the provisions of the second clause of section 5110, Rev. St.; and, second, the acts detailed being in reference to land, the specification is defective, because fraud and negligence in the care and custody of land are not made, by the bankrupt act, grounds for withholding a bankrupt's discharge. Counsel for the bankrupt has argued that the second clause of section 5110 cannot apply to an involuntary bankrupt, because it refers to the property belonging to the bankrupt 'at the time of the presentation of his petition and inventory,' and therefore this clause can only apply to a voluntary bankrupt, for he alone presents a petition; and that an involuntary bankrupt is under no obligation as to care and custody of his property prior to adjudication, because the proceedings in his case are hostile, and presumably contested with no certainty of a decision against him, and until adjudication he is free from responsibility for the care of his property, and not answerable for fraud or negligence therein; that section 5110 recognizes the distinction between the duties in this respect of a voluntary and an involuntary bankrupt by the use of the words quoted, and that it was not the intention of the act that the neglect of a duty not imposed should be visited upon the latter by refusing his discharge. I do not think this position sound. There is undoubtedly a difference, before adjudication, in the status of a debtor who has filed a voluntary petition in bankruptcy, and one against whom a petition has been filed by creditors. In the one case, seeking the benefits of the act, he should suspend business, and faithfully preserve his estate in its condition at the time he filed the petition until an assignee is appointed to take charge of the assets. In the other, he is permitted to continue business, and deal with his property as his own until adjudication. M. & M. Nat. Bank v. Brady's Bend Iron Co., 5 N.B.R. 491. But good faith is required of him as well as of the voluntary bankrupt. He cannot give away his estate, or waste it, or prefer . creditors. The assets may be followed into the hands of third parties if transferred after petition filed; and an injunction may be granted to restrain such action on his part, or a warrant may issue for his arrest. Section 5024, Rev. St. For certain offenses enumerated in section 5132 the act provided that he as well as a voluntary bankrupt might be punished criminally by imprisonment. He may be required to submit to examination before the register, even before adjudication. In re Bromley, 3 N.B.R. 686; In re Salkey, 5 Biss. 486. After adjudication the proceedings in both voluntary and involuntary proceedings are to be conducted in the same manner. Section 5029, Rev. St. It is made his duty by section 5030 to make and deliver a schedule of his creditors, and an inventory and valuation of his estate, in the manner required of a petitioning debtor. Section 5110 throughout makes no distinction between an...