Kansas Federal Credit Union v. Niemeier

• Decision Date: 12 November 1955
• Docket Number: No. 5139.,5139.
• Citation: 227 F.2d 287
• Parties: KANSAS FEDERAL CREDIT UNION, Appellant, v. Lauren L. NIEMEIER, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

227 F.2d 287 (1955)

KANSAS FEDERAL CREDIT UNION, Appellant, v. Lauren L. NIEMEIER, Appellee.

No. 5139.

United States Court of Appeals Tenth Circuit.

October 14, 1955.

Rehearing Denied November 12, 1955.

Laurence S. Holmes, Lawrence, Kan., and T. L. O'Hara, Wichita, Kan., for appellant.

Don W. Noah and Ralph H. Noah, Beloit, Kan. (Wilmer Goering, Hillsboro, Kan., was with them on the brief), for appellee.

Before PHILLIPS, Chief Judge, HUXMAN, Circuit Judge, and SAVAGE, District Judge.

HUXMAN, Circuit Judge.

Appellee, Lauren L. Niemeier, filed a voluntary petition in bankruptcy. Thereafter, in due course he was adjudged a bankrupt and his estate was regularly administered in the bankruptcy court. The Kansas Federal Credit Union, appellant, herein, filed a claim against his estate in the amount of $3,970 and interest. At the appropriate time, it filed an objection to the bankrupt's discharge. A hearing was had by the referee at which testimony was heard on the objection to the discharge. In due course the referee discharged the bankrupt. On petition for review, the District Court for the District of Kansas affirmed the referee. This appeal followed.

Four assignments of error are urged for reversal. They are: (1) The bankrupt did not keep adequate records and what records were kept were not turned over to the trustee; (2) the bankrupt did not disclose the extent of his property but rather concealed it with intent to defraud his creditors; (3) the bankrupt failed to disclose the full legal relationship between him and his father; and (4) the bankrupt caused to be made a materially false financial statement upon which the appellant extended the credit.

While it is urged that the bankrupt did not keep adequate records, the emphasis is on his alleged failure to turn his books and records over to the trustee. Without going into detail, we are satisfied from the record that the bankrupt kept records sufficient to support the referee's conclusions.¹

Appellant's claim that the bankrupt refused or failed to deliver his books to the trustee finds no factual support in the record. The burden rested on the objecting creditor to establish by competent evidence at the time of the hearing on its objection that this charge was true. Appellant relied upon two letters to support this assignment. One is a copy of a letter written by Attorney O'Hara, under date of March 24, 1954, addressed to Harold A. Sigle, the Trustee, inquiring if the bankrupt had turned over his books to the trustee, and the other a copy of a reply thereto by the trustee under date of April 1, 1954, stating that the trustee had not received the books, although he had submitted several requests for the same. But these letters were not introduced in evidence before the referee. In fact, they could not have been introduced because neither was in existence at the date of the hearing. The hearing before the referee was held on January 6, 1954, and the letter by O'Hara to the trustee was not written until March 24, 1954, and the reply thereto until April 1, 1954. There is no evidence that these letters were ever introduced even before the court on petition for review. All the record shows is that they appear in the file, but they were not officially marked as exhibits, and how they got there is unexplained. Under these circumstances they do not constitute evidence. Furthermore and in any event, the testimony of the bankrupt was that when he first contemplated bankruptcy he consulted an attorney and turned all his books and papers over to his attorney and did not see them thereafter. This explanation was sufficient to support the referee's conclusion that the failure to get the books into the trustee's hands was not sufficient to compel him to refuse a discharge from the debt. Under the Act, the trustee is vested with a considerable discretion in determining whether a failure to literally comply with the statutory requirement that books be turned over under the circumstances of the case be such as to deny a bankrupt a discharge.²

Neither is the charge sustained that the bankrupt failed to disclose all his property in an attempt to defraud creditors. The facts are that the bankrupt was a tenant farmer, farming 720 acres of land owned by his father. He and his father were in partnership with respect to a herd of cows belonging to his father. In addition to this herd, the bankrupt also had a dairy herd. Under the partnership arrangement, the bankrupt shared with his father in the increase of the cow herd, but the father did not share in the dairy herd. There was a discrepancy between the number of cattle and calves listed by the bankrupt and the number found by the trustee when he checked the herd. It is without dispute that the bankrupt drove a long distance from Pratt, Kansas, where he was then working, to his father's farm to meet the trustee to help him to list the cattle belonging to him. The record is without dispute that he cooperated fully in attempting to procure a correct list of the cattle in which he had an interest. The tally made by the trustee showed fewer calves than were listed by the bankrupt, and it is also asserted that the trustee found more cows than were listed by the bankrupt. But the evidence establishes that calves were considered as cows by the bankrupt after they had reached a certain age. The evidence further supports the conclusion that a number of the calves listed by the bankrupt had graduated into the cow class between the filing of the petition in bankruptcy and the date when the trustee and the bankrupt met at the farm.

Neither is the assertion that the bankrupt failed to reveal the full relationship existing between him and his father supported by such convincing evidence as to warrant us in overturning the considered judgment of the referee, after a hearing in which the witnesses...