In re Royal

• Decision Date: 02 December 1901
• Citation: 112 F. 135
• Parties: In re ROYAL.
• Court: U.S. Court of Appeals — Fourth Circuit

112 F. 135

In re ROYAL.

United States District Court, E.D. North Carolina.

December 2, 1901

W. R Allen, for petitioner.

H. L Stevens, for creditors.

PURNELL District Judge.

The referee after hearing, on September 10, 1901, the petition for discharge, under district rule 8, upon objection to such discharge, certified the record to the judge, and the cause was heard at Wilmington, October 4, 1901. The following facts appear: Jacob H. Royal was duly adjudged a bankrupt on his own petition, filed April 29, 1901. At the time the petition was filed and adjudication made the bankrupt had to his credit in the bank of Clinton $109.38, which amount was not included in the schedules filed, or afterwards accounted for or surrendered to the trustee in bankruptcy. The referee in his report says:

'The evidence in the case does not satisfy the reference that the failure to include this item was with fraudulent intent because if it had been included in the schedules there would not have been sufficient property to make up the personal property exemption to which the bankrupt is entitled under the constitution. The referee is of the opinion that the omission to schedule this $109.38 was by inadvertence, and that, under the circumstances, is not sufficient to bar the discharge. He therefore recommends that the discharge be granted.'

The referee states other objections to discharge were abandoned and in the argument counsel insisted, on the first and second objections-- First, that the bankrupt had made a false oath, in that he failed to include in his schedules the $109.38 balance to his credit in the bank; secondly, that he has fraudulently and knowingly concealed from the trustee the said amount which was omitted from his schedules of assets, and which appears to have been to his credit in bank at the time he filed his petition in bankruptcy. There is no evidence or suggestion that since the matter has been called to his attention the bankrupt has paid, or offered to pay, to the trustee the amount omitted from the schedules. The objections filed are in compliance with general order 32 of the supreme court. 18 Sup.Ct. xxxii.

The statute (Bankr. Act 1898, Sec. 14b) provides that upon the hearing the discharge shall be granted, unless he (the bankrupt) has (1) committed an offense punishable by imprisonment, as herein provided, or (2) with fraudulent intent to conceal his true financial condition, and in contemplation of bankruptcy, destroyed, concealed, or failed to keep books of account or records from which his true condition might be ascertained. Objections to discharge under the second clause in the foregoing section were filed, but not pressed on the argument, and are presumed to be abandoned.

The offenses by a bankrupt punishable under the bankruptcy act are (1) knowingly and fraudulently concealing while a bankrupt, or after his discharge, from his trustee, any of the property belonging to his estate in bankruptcy; or (2) making a false oath or account in, or in relation to, any proceeding in bankruptcy (Bankr. Act, Sec. 29b, cls. 1, 2), and a contempt of court (section 41,Id.).

The filing of a petition in bankruptcy is, as a rule, a deliberate act. Under some circumstances, when pressed to the wall,-- which does not seem to have been the case in the present instance,-- haste is necessary and errors occur in making up schedules. When attention is called to such errors, leave to amend and correct is always granted. Ordinarily, at least in voluntary proceedings, the party seeking the benefit of the act-- a discharge from his debts-- makes up a balance sheet,-- schedules his assets and liabilities. One is as necessary as...