In re Solari Furs
| Decision Date | 27 January 1967 |
| Docket Number | No. 62B 444(3).,62B 444(3). |
| Parties | In the Matter of SOLARI FURS, a copartnership of which Theodore Rosenberg and Robert Rosenberg are the partners, and Theodore Rosenberg and Robert Rosenberg as individuals, Bankrupts. |
| Court | U.S. District Court — Eastern District of Missouri |
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Gleick, Strauss & Friedman, St. Louis, Mo., for petitioning creditors.
Warren S. Earhart, Kansas City, Mo., for bankrupts.
Robert C. Dodson, Receiver and Trustee, Festus, Mo., Harry S. Gleick, St. Louis, Mo., for trustee.
For consideration are the separate petitions of Robert Rosenberg and Theodore Rosenberg for review of the orders of Referee in Bankruptcy William O'Herin sustaining certain specifications of objections to their discharge filed by the trustee in bankruptcy and denying their discharge.
Theodore and Robert Rosenberg, father and son, were engaged in the fur business in the City of St. Louis as partners under the firm name of Solari Furs. Theodore also operated a fur business in Kansas City. Robert managed Solari Furs. As the Referee states in his memorandum opinion, "the life of the business was short and disastrous for creditors", starting February 1, 1960 and ending when the partnership and the individual partners were adjudicated bankrupt following the filing, on March 23, 1962, of an involuntary petition in bankruptcy.
The Referee sustained specifications 7, 8 and 9 of the objections to Robert Rosenberg's discharge, and specifications 1, 2 and 3 of the objections to Theodore Rosenberg's discharge. The objections were tried together, the Referee filing a single memorandum opinion covering the objections in both individual estates. The petitions for review were briefed and argued together in this Court, and are so disposed of in this opinion.
Specification 7 of the objections to Robert Rosenberg's discharge, and Specification 1 of the objections to Theodore Rosenberg's discharge each alleges that in the operation of the partnership said bankrupt "has failed to keep or preserve books of accounts or records from which its financial condition and business transactions might be ascertained," and sets forth various specific allegations of fact in support of the general charge.
Specification 8 of the objections to Robert Rosenberg's discharge and Specification 2 of the objections to Theodore Rosenberg's discharge each sets forth, with factual amplification, that said bankrupt "has failed to explain satisfactorily the loss of assets of the bankrupt partnership or the deficiency of assets to meet the liabilities of said partnership."
Specification 9 of the objections to Robert Rosenberg's discharge and Specification 3 of the objections to Theodore Rosenberg's discharge each alleges that said bankrupt obtained property or credit for the partnership "by making or publishing or causing to be made or published a statement in writing respecting the financial condition of said partnership that was materially false, the statement in question being a certain balance sheet purporting to be as of December 31, 1960, which was circulated by delivery to the creditors, to mercantile credit agencies, to Associated Fur Manufacturers, Inc., being an organization of fur merchants furnishing credit information and which the bankrupt knew furnished credit information to those suppliers of merchandise with which the bankrupt did business", and then, after setting forth a number of respects in which the financial statement was allegedly materially false, each specification further sets forth that "said financial statement was widely circulated in the trade, and among those firms with which the bankrupt intended to obtain credit and from which the bankrupt did obtain credit, and were circulated for the purpose of obtaining credit, and that said statement was circulated by the bankrupt for the specific purpose of obtaining such credit, and the creditors of the bankrupt relying upon said statement and figures contained therein did extend credit, and that such creditors relying thereon and extending credit have not been paid but are now creditors of the bankrupt partnership."
As originally filed, each of the foregoing specifications was prefaced with the allegation that the bankrupt "has committed an offense punishable by imprisonment as provided under Title 18, United States Code, Section 152, in that said bankrupt * * *." On ex parte motion of the trustee, after the expiration of the time for filing objections, the specifications were amended by striking the foregoing prefatory allegation.
Bankrupts have preserved their objections to the amendments, contending that the amendments constitute the assertion of "new, different and additional grounds of objection." We do not agree. The Referee was clearly correct in overruling the amended motions to dismiss and in admitting evidence in support of the specifications of objections as amended. As the Referee pointed out in his memorandum, the stricken portion in each instance
If authority is deemed necessary to support our holding, see In re Schmerel, D.C.N.J., 120 F.Supp. 899, 900; In re Taub, 2 Cir., 98 F.2d 81, 82; In re Zaidins, D.C.Wis., 182 F.Supp. 543; and Burchett v. Myers, 9 Cir., 202 F.2d 920.
Bankrupts also argue that the specifications relating to the financial statement are defective as a matter of law in that they do not set forth the names of the creditors who extended credit nor what credit was obtained. The cases cited in support of this contention do not involve comparable situations. In those cases the allegations, at best, contained nothing more than the language of the statute, and some did not even contain that.
In the instant case, the specifications in question state at length what was done in language which is sufficiently clear and explicit to apprise bankrupts of the basis of this objection. Bankrupts do not contend, nor could they reasonably do so, that they were surprised or otherwise prejudiced in defending against this specification, and that is the test which should be applied. Kaganowitz v. Manufacturers Trust Co., 2 Cir., 145 F.2d 754. Although it is true that the names of the creditors are not set forth specifically, sufficient is alleged to inform bankrupts of their identity. Moreover, bankrupts' counsel participated without objection in the taking of depositions in New York City of certain creditors and of representatives of the credit agencies. Thus, prior to the time of the hearing before the Referee, bankrupts were fully aware which specific creditors were claimed by trustee to have extended credit on the faith of the false financial statement.
We also deem it of importance that although bankrupts filed motions to dismiss at the commencement of the hearing and also objected to the introduction of evidence, these motions were in general language only and merely stated that the specifications in question (as well as others therein listed) "do not state facts sufficient to constitute grounds for an objection to the discharge." This allegation does not contain even a hint that bankrupts were basing their motions on the ground now argued. The specific objection was first disclosed in an oral motion to dismiss made on behalf of Theodore Rosenberg at the conclusion of the hearing before the Referee. It was not, however, referred to in the petitions for review. No prejudice having been shown, we hold that Referee was correct in overruling the motions to dismiss and the similar objections to the introduction of evidence.
On the merits, we consider the specifications which were sustained by the Referee in the order in which he discusses them in his memorandum.
The Referee found that bankrupts had obtained property on credit by causing to be published a materially false statement in writing respecting the financial condition of the partnership. We are in accord with this finding. Evidentiary facts supporting this specification of objections as to each bankrupt are set forth in some detail in the Referee's memorandum opinion. We briefly summarize some of these and other facts of record.
The policy of fur manufacturers in New York was to extend little, if any, credit, particularly to a new firm, without a financial statement, and bankrupts were so informed. It was for the very purpose of obtaining credit that the bankrupts caused the financial statement of the partnership to be prepared as of December 31, 1960. This statement, admittedly signed by both partners, consists of two sheets, the first page being a balance sheet, and the second page a profit and loss statement. The statement was submitted by petitioners' New York resident buyer, at their instance, to Associated Fur Manufacturers, Inc., (Association), and to Cohen-Manheimer Credit Bureau, Inc.
The Association is a credit rating agency for fur manufacturers in New York, with a membership of about 700 in New York City. As the Referee states in his opinion, ...
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In re Kim
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Rosenberg v. Commissioner
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In re Nazarian
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In re Bui, Bankruptcy No. 94-52866-ASW. Adv. No. 94-5383.
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