In re Richter

• Decision Date: 04 April 1932
• Docket Number: No. 219.,219.
• Citation: 57 F.2d 159
• Parties: In re RICHTER et al.
• Court: U.S. Court of Appeals — Second Circuit

57 F.2d 159 (1932)

In re RICHTER et al.

No. 219.

Circuit Court of Appeals, Second Circuit.

April 4, 1932.

H. & J. J. Lesser, of New York City (Jacob J. Lesser, of New York City, of counsel), for appellants.

Morris E. Packer, of Brooklyn, N. Y., for appellee trustee.

Before MANTON, AUGUSTUS N. HAND, and CHASE, Circuit Judges.

AUGUSTUS N. HAND, Circuit Judge.

The proceeding in the District Court was by Abraham Richter and David Richter for a discharge in bankruptcy. The first specification of objection to their discharge was filed by the trustee in bankruptcy. This specification was sustained by the referee, whose report was confirmed by the court, and the discharge of each bankrupt was denied.

The first specification alleged that within the twelve months preceding the filing of the petition in bankruptcy the bankrupts transferred or concealed moneys with intent to hinder, delay, or defraud their creditors as follows: (a) The bankrupt David Richter on or about the 10th day of April, 1929, drew a check in the sum of $3,000 upon a bank account belonging to the bankrupts, cashed the same, and appropriated the proceeds to his own use; (b) that on or about the 25th day of March, 1929, the bankrupt Abraham Richter drew two checks of $2,500 each upon the bank account of the bankrupts, cashed the same, and appropriated the proceeds to his own use.

The withdrawals from the firm assets were made at the times alleged in the specification; each withdrawal being within twelve months prior to the filing of an involuntary petition in bankruptcy on July 26, 1929.

There can be no doubt that at the time of the withdrawals of the $3,000 and $5,000 above mentioned, the bankrupts were insolvent. They had been forced to pledge their accounts as early as February, 1929, and, according to their schedules, borrowed altogether $39,000 from the Finance Company of Baltimore, to which the accounts were assigned. On April 23, 1929, they withdrew $10,800 in cash from their banks because they became panicky and were afraid their creditors might in some way tie up these funds. While they were required by their attorney to replace this sum of money, and did replace it, the action indicated their desperate condition. On April 26th they executed a trust deed for the benefit of their creditors. The petition in bankruptcy followed three months later because the business was found to be too moribund to justify continuance.

The proceeds of the $3,000 check withdrawn by David Richter were given to his wife, who used the proceeds to the extent of $1,000 to pay for a trip to Europe for her mother and the remainder for the living expenses of the family. It is not contended that the wife of David Richter had any claim against either of the partners or against the firm. There can be no doubt, therefore, that the finding of the referee that the $3,000 was turned over by David Richter without any pretence of a consideration for the transfer, was justified, and that it was essentially a transfer with intent to hinder, delay, and defraud creditors.

The withdrawal of $5,000 by Abraham Richter was somewhat different. In June, 1928, J. Pollack, the father of his wife, Fannie Richter, whom he married in September, 1928, had given a present to the young engaged couple of $10,000. This was evidenced by a check in that amount dated June 16, 1928, drawn to the order of Fannie Pollack and Abraham Richter on the Public National Bank & Trust Company of New York, bearing the indorsement of Fannie...