Keeble v. Sulmeyer

• Decision Date: 26 April 1961
• Docket Number: No. 17060.,17060.
• Parties: Allen Russell KEEBLE, dba A. R. Keeble Glass Co., Appellant, v. Irving SULMEYER, Trustee in Bankruptcy, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

290 F.2d 127 (1961)

Allen Russell KEEBLE, dba A. R. Keeble Glass Co., Appellant, v. Irving SULMEYER, Trustee in Bankruptcy, Appellee.

No. 17060.

United States Court of Appeals Ninth Circuit.

April 26, 1961.

Haskell J. Shapiro and Robert W. Zakon, Los Angeles, Cal., for appellant.

Quittner, Stutman & Treister, by George M. Treister and Herbert Wolas, Los Angeles, Cal., for appellee.

Before BARNES, JERTBERG and MERRILL, Circuit Judges.

JERTBERG, Circuit Judge.

This is an appeal from an order of the district court affirming the revocation of discharge in bankruptcy by the referee in bankruptcy, pursuant to Section 15 of the Bankruptcy Act, 11 U.S.C.A. § 33.¹

Jurisdiction of this Court to review the order is based upon Section 24, sub. a of the Bankruptcy Act, 11 U.S.C.A. § 47, sub. a.

Appellant filed his voluntary petition in bankruptcy on June 11, 1959, and by order of the referee was granted his discharge in bankruptcy on August 20, 1959.

In schedule B-1 of the petition in bankruptcy, appearing under real estate, appellant listed a summer cottage located at 712 Wendy Avenue, Big Bear City, California, subject to a mortgage encumbrance in the amount of $1,807.39 incurred November 10, 1956 and a mortgage encumbrance of $2,000 incurred January 20, 1957, and estimated his interest therein to be $700. On schedule A-2 of the petition, under the heading "Creditors Holding Securities", appellant listed Fredrick Keeble as the holder of a second mortgage on the property above described, giving the date as 1/20/57, and the value of the security was listed as $2,000, and the amount due or claimed was listed in the same amount. In the "Statement of Affairs" filed with the petition the appellant stated that during the year immediately preceding the filing of the petition the appellant had not transferred or disposed of, other than in the ordinary course of business, any assets or properties. The appellant under oath stated that the statements contained in the petition in bankruptcy and in the "Statement of Affairs" were true to the best of his knowledge, information and belief.

At the first meeting of creditors held on July 8, 1959 the appellant testified under oath that his brother, Fredrick Keeble held a second mortgage on the Big Bear City property in the amount of $2,000; that said amount was loaned to appellant by his brother approximately two years before; that the loan was made by check, and that appellant gave his brother the second mortgage at the time the said sum was loaned to appellant. Questioned in more detail concerning the transaction at a hearing held on December 1, 1959, under Section 21, sub. a of the Bankruptcy Act, 11 U.S.C.A. § 44, sub. a, appellant testified under oath that he and his wife in May of 1957 signed and delivered to his brother a promissory note in the amount of $2,000, made payable to his brother; that the deed of trust was prepared at the same time and retained in appellant's possession until May of 1959, when it was signed and notarized by appellant and his wife and recorded.

On January 7, 1960 the trustee filed with the referee a petition to revoke appellant's discharge in bankruptcy. The referee issued an order to show cause directed to appellant, and a hearing was held. At this hearing it was stipulated that the particular bank forms upon which the note and second trust deed were prepared were printed for the first time in August 1958. At this hearing appellant testified that these documents were actually executed and delivered shortly before bankruptcy in May, 1959; that another note and trust deed had been made in 1957 but had been lost and that the note and deed of trust prepared in 1959 were intended as substitutes for the lost instruments.

The referee found in his findings of fact that although the note and second deed of trust bear the date May 7, 1957, they were actually prepared and executed by the bankrupt and delivered to his brother in May 1959, within one month preceding the filing of the bankruptcy petition; that the bankrupt represented under oath that the note and deed of trust were either prepared by him, or executed by him, during the year 1957, whereas the said documents were prepared for the first time in May 1959; that the false representations were made in the schedules, particularly in schedule A-2 therein, and in item 11 of the "Statement of Affairs"; that the bankrupt testified falsely as to the date of preparation of the documents at the first meeting of creditors held on July 8, 1959, and at the time of his examination under Section 21, sub. a of the Bankruptcy Act on December 1, 1959; that until after his examination under Section 21, sub. a on December 1, 1959 the bankrupt did not disclose to his attorneys the true date upon which said note and deed of trust were prepared and executed; and that the trustee did not have knowledge pertaining to the date of preparation and execution of the note and deed of trust until after the entry of the order granting the bankrupt's discharge. As conclusions of law the court found that the oaths made by appellant in his schedule and statement of affairs, in his testimony at the first meeting of creditors, and in his testimony at the hearing under Section 21, sub. a of the Bankruptcy Act were false within the meaning of Title 18 U.S.C.A. § 152;² that the false statements pertained to matters material in the bankruptcy proceeding; that the false oaths constituted grounds for objection to the bankrupt's discharge under Section 14, sub. c(1) of the Bankruptcy Act, 11 U.S.C.A. § 32 sub. c(1);³ that by misrepresenting and concealing facts pertaining to the date of the preparation and execution of the note and deed of trust the bankrupt obtained his discharge through fraud; that the trustee was denied the opportunity to object to the bankrupt's discharge upon said ground because of bankrupt's fraud in concealing the true facts; and that the discharge of the bankrupt should be revoked under Section 15 of the Bankruptcy Act, 11 U.S.C.A. § 33. The order of the referee revoking appellant's discharge was affirmed by the district court on petition for review of the referee's order.

Appellant's basic contention on this appeal is that the evidence was insufficient upon which to base the order of revocation of appellant's discharge in bankruptcy because of the claimed absence of any intent on the part of appellant to defraud the bankruptcy court, and that the false oaths made by appellant did not relate to a material matter in the bankruptcy proceedings.

We are of the view that any fraud on the part of appellant which would have prevented a discharge in bankruptcy under Section 14, sub. c(1), 11 U.S.C.A. § 32, sub. c(1), is sufficient to revoke a discharge under Section 15 of the Bankruptcy Act, 11 U.S.C.A. § 33, provided that the party seeking the revocation has not been guilty of undue laches; filed his application to revoke the discharge within one year after the same shall have been granted; and knowledge of the fraud was acquired subsequent to the discharge. See In Re Hannan, 7 Cir., 1942, 127 F.2d 894. On this appeal appellant makes no contention that the appellee was guilty of undue laches, or that the application to revoke was not filed within one year after the discharge was granted. There is sufficient evidence to establish that knowledge of the false oaths made by appellant was acquired after appellant's discharge in bankruptcy.

The real question, therefore, on this appeal is whether or not appellee could have successfully prevented the granting of the discharge in bankruptcy if appellee had acquired knowledge of the false oaths prior to the granting of the same. Appellant concedes that the oaths made by him to the statements appearing in the schedules, in the "Statement of Affairs", and to the testimony at the first meeting of creditors and at the Section 21, sub. a hearing were false. His contention is that such oaths were not fraudulently made and that the evidence is insufficient to support an inference that such false oaths were made with intent to defraud. It is clear to us that an examination of the schedules and the "Statement of Affairs" would reasonably lead the trustee to believe that the note and deed of trust were completely executed and delivered in 1957, some two...