In re Schroeder

• Decision Date: 20 April 1920
• Citation: 264 F. 862
• Parties: In re SCHROEDER.
• Court: U.S. District Court — Eastern District of New York

264 F. 862

In re SCHROEDER.

United States District Court, E.D. New York.

April 20, 1920

Herman S. Fried, of New York City, for trustee and opposing creditor.

Otto J Kalt, of New York City, for bankrupt.

GARVIN District Judge.

The trustee in bankruptcy and a creditor object to the discharge and have filed specifications claiming that the bankrupt has--

I. Fraudulently transferred property.

II. Failed to schedule assets.

III. Made a false oath to the schedules.

IV. Concealed property with intent to hinder, delay, and defraud his creditors.

V. Failed to keep books of account.

VI. and VII. Willfully testified falsely with regard to material facts upon his examination before the referee in bankruptcy.

All parties have stipulated that the application for a discharge be heard and determined by the court upon the record, without a reference to a special commissioner, as is customary in this district. The testimony of the bankrupt and his wife was given before the referee at the first meeting of creditors and it is upon this testimony, taken in connection with the schedules verified by the bankrupt, that the trustee and objecting creditor rely in support of their specifications. There was practically no argument; it now appears from the briefs that the only ground of objection pressed is the failure of the bankrupt to include in his schedules his equitable interest in property conveyed to his wife.

The bankrupt conducted a tea and coffee business at 655 Manhattan avenue, Brooklyn, from September 8, 1917, under the name and style of 'Java Tea & Coffee Company, Frank F Schroeder,' until May 5, 1918, when he gave a bill of sale thereof to his wife, as both he and she state, in anticipation of being drafted, and so that, according to her testimony, in the event he was drafted, she would have the business under her own control. He was never drafted. His wife continued business under the same name, but never filed a certificate in the office of the clerk of the county of Kings until after October 3, 1919, when the petition in bankruptcy was filed.

The entire record indicates clearly that there was no real transfer by the bankrupt to his wife of all his rights in the business. He did have the name on the store window changed to 'Frank Schroeder, Manager'; but this, as he explains, was to prevent disputes. He testified:

'If anybody came in and asked for the proprietor, they would see my name on there as manager.'

No inventory was made, and an alleged consideration, if given at all, was very much less than the interest of the bankrupt in the business. Except for the change on the window, there seems to have been literally nothing visible to indicate that it was claimed that a new owner had taken over the business. After the alleged transfer, there was no change in the books and he continued his bank account, exactly as before, in his own name, paid therefrom for the goods used in the business and the overhead charges, gas, garage bills, electricity, and even for the rent of his home. In the brief submitted in behalf of the bankrupt it is explained that when the transfer was...