In re Weintrob

• Decision Date: 29 March 1920
• Citation: In re Weintrob, 263 F. 904 (4th Cir. 1920)
• Parties: In re WEINTROB.
• Court: U.S. Court of Appeals — Fourth Circuit

263 F. 904

In re WEINTROB.

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

March 29, 1920

R. H Sykes, of Durham, N.C., for creditors.

Little & Barnes, of Raleigh, N.C., and D. H. Gladstone, of Washington, D.C., for bankrupt.

CONNOR District Judge.

John B Ellison & Son, of Philadelphia, Pa., on January 17, 1919 filed their petition, praying that the court revoke the discharge granted to the respondent, for that they and other creditors, whose debts were regularly scheduled, proven, and allowed, received no notice of the petition for discharge and of the time and place of hearing same. Notice was issued to the respondent to show cause at Raleigh, N.C., on the 2d day of March, 1920, why the petition should not be granted. Upon the return day counsel for respondent moved the court to dismiss the petition upon the grounds set out in the motion. The facts appearing upon an inspection of the record are:

On December 2, 1916, respondent offered a composition before adjudication, pursuant to the provisions of section 12 of the Bankruptcy Act (Comp. St. Sec. 9596), making an offer of 25 per cent. Notice to the creditors was issued, and, upon the day set for hearing, John B. Ellison & Sons, holding a claim of $1,018.24 against petitioner, filed objections to the confirmation of the composition, alleging that petitioner had been guilty of fraud, in that he had made fraudulent representations in regard to his financial condition, for the purpose of obtaining credit and for other reasons set forth. Upon the hearing the court refused to confirm the composition for the reasons assigned by the creditor, and on March 27, 1917, adjudged the petitioner a bankrupt. In re Weintrob (D.C.) 240 F. 532.

The case took the usual statutory course. On the 29th day of October, 1917, the bankrupt filed his petition for a discharge from his debts, upon which an order was made fixing the hearing at Durham, N.C., December 3, 1917, at 12 o'clock m., and directing notice of said hearing to be published in the Durham Sun, and 'that the clerk send by mail, to all known creditors, copies of said petition and this order, addressed to them at their places of residence as stated.'

On December 4, 1917, Charles Scarlett, the referee before whom the petition for discharge was heard, certified to the court that--

'pursuant to an order of court, notice of the hearing to be had before me was given by Hon. Leo D. Heartt, clerk; that pursuant to such order a hearing on the petition for discharge was had before me at my office in Durham on the 3d day of December, 1917, at 12 m.; that no creditors, or attorneys representing creditors, were present at said hearing; that no special appearance was entered, and no specifications of objections filed, opposing the granting of a discharge to said bankrupt.'

He recommended that the discharge be granted, whereupon the judge directed that the certificate of discharge be issued December 5, 1917. The blank certificate of publication and of mailing notices, printed on the back of the petition for discharge and order thereon, are not filled in or signed by the clerk.

The motion to revoke is based upon the averment, verified by William R. Ellison, a member of the firm of John B. Ellison & Son, that--

'no notice of the application for discharge or the hearing upon the same was ever received by these petitioners.'

Ten other creditors join the motion, all of whom file affidavits that they--

'received no notice of the petition for discharge or the hearing thereon; that if they had received such notice they and each of them say that they would have filed objections, followed by specifications, to granting the discharge; that they learned only a short while before lodging the motion that respondent had received a discharge.' The respondent moved the court to dismiss the petition for that:

'(1) The petition contains no allegation of fraud on the part of the bankrupt.

'(2) The petitioners have been guilty of laches, in that the discharge was issued on the 7th day of December, 1917, and petition was not filed until January 17, 1920.'

The question presented upon the petition and motion to dismiss involves the construction of section 15 of the Bankruptcy Act (Comp. St. Sec. 9599), which provides:

'The judge may, upon the application of parties in interest who have not been guilty of undue laches, filed at any time within one year after a discharge shall have been granted, revoke it upon a trial if it shall be made to appear that it was obtained through fraud of the bankrupt, and that the knowledge of the fraud has come to the

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