In re de Glopper

• Decision Date: 10 February 1956
• Docket Number: No. 12280.,12280.
• Parties: In the Matter of Robert DE GLOPPER, Bankrupt.
• Court: U.S. District Court — Western District of Michigan

138 F. Supp. 928

In the Matter of Robert DE GLOPPER, Bankrupt.

No. 12280.

United States District Court W. D. Michigan, S. D.

February 10, 1956.

Dilley & Dilley and Robert W. Dilley, Grand Rapids, Mich., for bankrupt and appellant.

Rosemary Scott, Grand Rapids, Mich., for objecting creditors and appellees.

STARR, Chief Judge.

On June 21, 1954, Robert DeGlopper filed a voluntary petition in bankruptcy and was adjudged a bankrupt. In schedule A-3 of his petition he listed as unsecured creditors "Orval and Doris Idema, * * * $3,458.75." It appears that the Idemas' claim was based on a judgment which they had obtained against the bankrupt in the circuit court of Kent county, Michigan, on May 21, 1954.

In the course of the administration of the bankrupt's estate, the Idemas, whose judgment claim had been allowed, filed objections to the bankrupt's discharge. The bankrupt then moved to dismiss the objections, and a hearing was had and testimony taken before the referee. In his findings the referee determined that on May 10, 1954, the bankrupt had obtained money on credit and an extension or renewal of credit from the Union Bank of Michigan by making a materially false statement in writing respecting his financial condition.¹ On April 8, 1955, in pursuance of section 14, sub. c (3) of the Bankruptcy Act, 11 U.S.C.A. § 32, sub. c(3), the referee entered an order denying the bankrupt's discharge. Said section 14, sub. c(3) provides:

"The court shall grant the discharge unless satisfied that the bankrupt has * * * (3) obtained money or property on credit, or obtained an extension or renewal of credit, by making or publishing or causing to be made or published in any manner whatsoever, a materially false statement in writing respecting his financial condition: * * * Provided, That if, upon the hearing of an objection to a discharge, the objector shall show to the satisfaction of the court that there are reasonable grounds for believing that the bankrupt has committed any of the acts which, under this subdivision, would prevent his discharge in bankruptcy, then the burden of proving that he has not committed any of such acts shall be upon the bankrupt."

The bankrupt has filed a petition for review of the referee's order, and the precise question before this court is whether the bankrupt obtained money on credit and an extension or renewal of credit, by making or causing to be made a materially false statement in writing to the Union bank respecting his financial condition. In considering this question the court should accept the referee's findings of fact unless clearly erroneous. See General Order 47, 11 U.S.C.A. following section 53; also Kansas Federal Credit Union v. Niemeier, 10 Cir., 227 F.2d 287; Gold v. Gerson, 9 Cir., 225 F. 2d 859, 860; In re Garden City Brewery, Inc., 7 Cir., 208 F.2d 377, 379; In re Skrentny, 7 Cir., 199 F.2d 488, 492.

In support of their objection to the bankrupt's discharge the Idemas contend that his application to the Union bank for a loan on May 10, 1954, was materially false as to his financial condition because (1) he failed to disclose in his application the pendency of a suit the Idemas had instituted against him in the circuit court of Kent county, Michigan, for damages in connection with his construction of their house, and (2) because he failed to disclose in his application information regarding sums of money which his mother in her lifetime had advanced to him in connection with the building of his home.

It appears from the pleadings, exhibits, and the transcript of testimony taken before the referee, that on May 10, 1954, the bankrupt had applied to the Union Bank of Michigan in Grand Rapids for a loan of $726.90; that $259.80 of this amount was the refinancing of an existing loan and that the balance of the loan, aside from interest and service charges, was to be used by the bankrupt in connection with the funeral and burial of his mother and for the payment of his attorney. It appears that on that date, May 10th, the bankrupt and his wife went to the Union bank and were interviewed by Walter Makowski, the bank's loan officer; that the loan officer in his own handwriting filled out the bank's regular blank form of loan application (exhibit D), and that he obtained the information which he inserted in the application by questioning the bankrupt. The loan application was then signed by the bankrupt and his wife. It should be specially noted that the space on the application form following the printed statement, "give full list of present creditors," was left blank by the loan officer. Loan officer Makowski testified regarding the questions he asked the bankrupt as follows:

"Q. From what source did you get the information that you put on that blank? A. Question and answer type in a discussion with Mr. DeGlopper.

"Q. Looking at the application blank, did you ask him concerning any obligations that he had? * * A. That I cannot recall at the present time. The purpose of the loan was for funeral expenses, and that is the extent of it.

"Q. From your records, can you tell me if Mr. DeGlopper had a prior obligation that was incorporated in this loan? A. Yes, he had a previous loan that had an unpaid balance at the time that we refinanced the account.

"Q. What was the amount of the unpaid balance at that time? A. $259.80. * * *

"As far as I am concerned, Mr. DeGlopper received the proceeds of this loan in cash in the amount of $375. * * *

"Q. Would it have made any difference in your judgment as to whether the loan should be granted if you had known that part of the money was for attorney's fees and part was for funeral expenses? A. * * * No, it wouldn't have made a great deal of difference because Mr. DeGlopper, financially speaking, was very sound, and he had a very excellent record with us. * * *

"Q. Do you have any recollection at the present time that you asked him about obligations other than time-payment obligations? A. No, I can't recall at the present time. The information that is on the application is about the only thing that I can recall. * * *

"Q. Well, in any event, the only question you asked about obligations was time-payment obligations, is that right? A. To my knowledge, yes.

"Q. Had Mr. DeGlopper met all the payments due on this loan as they came due? A. Very satisfactorily. * * *

"The Referee: What in the bank's terminology does, `Give full list of present creditors' mean? A. Ordinarily it is a duplication of what we have on the reverse side of the application, which takes into consideration the mortgage payments on the home and the monthly instalments that the customer may be making payments on.

"The Referee: Then had you known that there were these other two indebtedness items that Miss Scott (attorney for the Idemas) called attention to, at least one of them was an indebtedness, and one was a potential indebtedness, would they normally have been imbedded in this financial statement? A. They should have been, sir. * * *

"The Referee: Did you ask about anything except the time-payment obligations as you stated to Mr. Dilley? A. Well, as I said before, to qualify my statement I cannot be sure at the present time whether I asked him what his obligations were or what his monthly obligations were. * * *

"The Referee: What would have been the result of your conclusion as to whether or not this loan would have been made had the two items of indebtedness, the one fixed, and the other potential, that we have talked about appeared upon this statement; would it have made any difference in your judgment? A. Yes, it definitely would have. I mean it would have disqualified proceeding with the loan until such time as the situation was straightened out. * *

"Q. * * * Do I understand correctly that you have no recollection of what question you asked DeGlopper about his obligations on this occasion? A. Truthfully, no."

Martin Johnson, an assistant cashier and loan officer of the Union bank, testified as follows:

"Q. Will you describe how you came in contact with Mr. DeGlopper if you recall on or about May 10, 1954? A. Well, the indications are that we received a phone call, one of the secretaries obtained information from our file and from that I made a note which I put in a pending file tentatively approving the loan subject to complete application.

"Q. Did you give that information to the gentleman (Mr. Walter Makowski, loan officer), who has just testified? A. This information was available in the pending file to any loan officer who might have waited on Mr. and Mrs. DeGlopper when they came into the bank."

The bankrupt DeGlopper testified:

"Q. I asked you if you were aware on May 10, 1954, on the date you made this loan from the Union bank that you knew that there was pending a law suit that had been tried in the Kent county circuit court in which damages had been asked by Mr. and Mrs. Orval Idema in the sum minimum of $3,800 to $4,500 that you had been paid? A. Well, that has got to do with the bank. Sure, I was aware of it. If you want your answer there, yes. * * *

"The Referee: The question is, whether or not you knew at the time you gave the note to the bank that there was such a suit pending in the circuit court; did you know it? A. Yes. * * *

"Q. You knew at the time you signed this (application for loan) that you did have present creditors, did you not, yes or no? A. I didn't recall any that I had.

"Q. You have just testified that you knew you owed Mr. Dilley (his attorney)? A. This money was borrowed to pay Mr. Dilley and the funeral expenses. * * *

"Q. You knew when you signed that that didn't contain all of your obligations, didn't you? A. Well, it never entered my mind; it was the present obligations that we were interested in.

"Q. Then you signed this without really thinking about the matter? A. Broadly speaking, I suppose that is correct. * * *

"Q. Were you asked by the bank officials whether or not you had any other obligations? A. I don't recall

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