In re Davis

• Decision Date: 31 October 1928
• Docket Number: No. 38060.,38060.
• Citation: 28 F.2d 883
• Parties: In re DAVIS.
• Court: U.S. District Court — District of Massachusetts

28 F.2d 883 (1928)

In re DAVIS.

No. 38060.

District Court, D. Massachusetts.

October 31, 1928.

Hermanson & Silverman, of Boston, Mass., for bankrupt.

Jacobs & Jacobs, of Boston, Mass., for creditor.

MORTON, District Judge.

The bankrupt was the wife of Nathan Davis. She did business in her own name under a married woman's certificate. Two grounds of objection to her discharge have been sustained by the referee's report on the facts. The first relates to an assignment by her to one Forman of accounts receivable. The referee finds it to have been made with intent to hinder, delay, and defraud her creditors. Litigation over this assignment is pending between Forman and the trustee. By a decision of the Circuit Court of Appeals, handed down on June 13, 1928 Forman v. Jacobs, 26 F.(2d) 764, the Forman claim was sent back for further hearing in the District Court. While that matter is still unsettled, this ground of objection cannot well be passed upon.

The second ground of objection relates to the concealment of substantial sums of money on or about February 9, 1927, with intent to hinder, delay, and defraud her creditors. The evidence not being reported, the facts must be taken as stated by the referee. From his report it appears that, some years before bankruptcy, Nathan Davis assigned to his wife three policies of insurance on his life. Both he and she filed voluntary petitions in bankruptcy at about the same time, hers being filed on March 12, 1927. Shortly before this was done she indorsed and delivered to her husband the insurance policies just referred to in order to enable him to secure the cash surrender value thereof, which he did. None of this money reached her trustee. The policies were not mentioned in the schedule of either Mary I. Davis or her husband. "The fact of their surrender and the receipt of the money in settlement of this surrender were not disclosed to the trustee until investigation was well under way." Report, page 3. The referee's finding that there was a willful and fraudulent concealment of assets is clearly not unreasonable.

The only real question on this objection is how far Mary I. Davis, the present bankrupt, was affected by the frudulent intent of her husband, Nathan. The referee reports that she was "a respectable appearing woman, who has been too much occupied with housewifely duties to know anything about her husband's affairs or to exercise any control thereof. * * * She has had no control over the events I have recited. I am not even sure that she is conscious of what has happened." Report, p. 3. Elsewhere in the report the referee finds, in substance, that Mrs. Davis left to her husband the entire management of the business, which was carried on in her name, herself knowing little or nothing about it.

It is argued for the wife that the fraudulent intent which is necessary to bar a discharge upon the ground alleged must be the conscious fraudulent intent of the bankrupt. In Coder v. Arts, 213 U. S. 223, 29 S. Ct. 436, 53 L. Ed. 772, 16 Ann. Cas. 1008, 22 A. B. R. 1, and Dean v. Davis, 242 U. S. 438, 37 S. Ct. 130, 61 L. Ed. 419, 38 A. B. R. 664, it was held that fraud of the sort here involved is "actual fraud." Such fraud on the part of the husband as manager of her business has been clearly shown. The present question is whether it is attributable to the wife. No decision in bankruptcy which throws much light upon the point has come to my attention. In so far as property rights and civil liability were concerned, Mrs. Davis was clearly bound by her husband's actions. It...