In re Turner
| Decision Date | 11 August 1960 |
| Docket Number | No. 29-59.,29-59. |
| Citation | 185 F. Supp. 790 |
| Court | U.S. District Court — Middle District of North Carolina |
| Parties | In the Matter of Gilbert R. TURNER, T/A Turner Brothers Sign Company, Bankrupt. |
Lacy L. Lucas, Jr., Greensboro, N. C., for respondent.
This matter is before the court on the petition of Gilbert R. Turner, T/A Turner Brothers Sign Company, the bankrupt, for review of an order of the Referee in Bankruptcy, dated February 11, 1960, which denied the discharge of the bankrupt.
The bankrupt filed a voluntary petition for bankruptcy on July 14, 1959, and was adjudged a bankrupt on the same date.
On November 11, 1959, the Trustee in Bankruptcy timely filed objections to the discharge of the bankrupt. The Referee, after hearing, made certain findings of fact and conclusions of law, which are contained in the order now before the court for review. In his order, the Referee found and concluded that the evidence was not sufficient to support the denial of the discharge upon Specifications 1, 2, 4, 5 and 7, but was sufficient to deny the discharge upon Specifications 3 and 6. Since the Trustee has not asked for review of the order dismissing Specifications 1, 2, 4, 5 and 7, it is only necessary to discuss those specifications upon which the discharge was denied.
The third specification objected to the discharge under Section 14, c(1) of the Bankruptcy Act, 11 U.S.C.A. § 32, sub. c(1), for that the bankrupt had committed an offense punishable by imprisonment as provided under 18 U.S.C. § 152, by knowingly and fraudulently making a false oath and not listing a share of stock in Atlantic Signs, Inc., and the sixth specification objected to the discharge under section 14, c(4) of the Bankruptcy Act, 11 U.S.C.A. § 32, sub. c(4), for that within the twelve month period immediately preceding the filing of the petition, the bankrupt transferred, removed and concealed certain items of personal property with intent to hinder, delay and defraud his creditors.
In 1954, the bankrupt and his brother, Edward V. Turner, Jr., organized a partnership under the style and trade name of Turner Brothers Sign Company. The partnership was dissolved in August, 1957, after which the bankrupt became the sole owner of said business.
Shortly after the dissolution of the partnership, the proprietorship began experiencing financial difficulties. The bankrupt's grandmother, Mrs. A. C. Turner, held a chattel mortgage in the amount of $6,000 on certain vehicles owned by the bankrupt, and his wife, Elizabeth Turner, held a chattel mortgage in the amount of $15,000 on all the equipment used in the bankrupt's business.
In May, 1959, the bankrupt employed counsel to organize a new corporation under the name of Atlantic Signs, Inc. The corporation issued three shares of stock, one share to the bankrupt, one share to the bankrupt's wife, and one share to Harold B. Elliott, a cousin of the bankrupt and a salesman for the corporation. The sum of $100 was paid for each share of stock, and the corporation commenced business with a paid-in capital of $300. The stock was issued on April 28, 1959, and the corporation commenced business on June 4, 1959. The bankrupt was president and general manager of the new corporation.
In June, 1959, the mortgages held by the bankrupt's wife and grandmother were foreclosed. The foreclosure sales were held at the same time, and Atlantic Signs, Inc., purchased all the assets, except two or three of the vehicles, and paid the bid price by the execution of new mortgages on the same equipment to the wife and grandmother of the bankrupt.
The bankrupt did not list in his schedule the assets described in the mortgages and transferred to Atlantic Signs, Inc., at the time of the purported foreclosure sales. Neither did he list in his schedule the share of stock he owned in Atlantic Signs, Inc.
The Referee, without finding that either the chattel mortgages or the foreclosure sales were invalid, found and concluded that the assets covered by the chattel mortgages were conveyed by the bankrupt to Atlantic Signs, Inc., with intent to hinder, delay and defraud his creditors.
The court is of the opinion that a finding of invalidity with respect to the purported mortgages and foreclosure sales was necessary to support the conclusions reached by the Referee with reference to the sixth specification, and concludes that the record does not support a denial of the discharge on this specification. In other words, if the mortgages and foreclosure sales were valid, the transfer of the assets to the corporation, which was the high bidder at the foreclosure sale, would not constitute a transfer with intent to hinder, delay and defraud creditors of the bankrupt.
But a more serious problem is presented with reference to the third specification. The share of stock owned by the bankrupt represented a one-third ownership of the corporation. The sum of $100 had been paid for the share of the stock. The bankrupt was president and general manager of the corporation, and the other two shares of stock were owned by his wife and cousin. The fact that the bankrupt owned the share of stock, and did not list same in his schedule of assets, stands unchallenged. The only question for determination is whether the failure to list the share of stock constituted an offense punishable by imprisonment, as provided under 18 U.S.C.A. § 152.1
At the first meeting of the creditors held on August 5, 1959, the bankrupt testified with respect to the share of stock as follows:
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...the fact of the situs of the alleged damage in this case having been in Arkansas, while in McAvoy he concluded otherwise as he said 185 F.Supp. 790: "* * * had the explosion of the pipeline occurred here, the Court might be able to say, as a matter of Arkansas Law, that jurisdiction with re......
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In re Irving, Bankruptcy No. 181-10902-A256
...In re Greer, 248 F. 131 (D.C.Ky.1918); In re Cohen, supra. A concealment of assets may also be a bar to discharge. Matter of Turner, 185 F.Supp. 790 (M.D.N.C.1960); Matter of Ramos, 8 B.R. 490, 7 B.C.D. 458 (Bkrtcy.W. D.Wis.1981). Under § 727(a)(2)(A), the objecting creditor must establish ......
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Matter of Ramos
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