Koch v. Sidney Blumenthal & Co., 1769.

Citation3 F.2d 395
Decision Date05 December 1924
Docket NumberNo. 1769.,1769.
PartiesKOCH et al. v. SIDNEY BLUMENTHAL & CO., Inc.
CourtUnited States Courts of Appeals. United States Court of Appeals (1st Circuit)

Mark M. Horblit, of Boston, Mass. (Horblit & Wasserman, of Boston, Mass., on the brief), for appellants.

Louis B. King, of Boston, Mass. (Friedman, Atherton, King & Turner, of Boston, Mass., on the brief), for appellee.

Before BINGHAM, JOHNSON, and ANDERSON, Circuit Judges.

BINGHAM, Circuit Judge.

Daniel Koch and Henry A. Koch, having been adjudicated bankrupts, applied, on June 8, 1917, for their discharge. Sidney Blumenthal & Co., Inc., a creditor, appeared in opposition and filed specifications of objection. The specifications were signed by counsel of record in behalf of the objecting creditor and were not verified. April 3, 1918, the bankrupts, by their attorney, moved to dismiss the specifications, on the grounds that they were not signed by the creditor and were not sworn to. This motion was heard on April 8, 1918, and was denied. On July 6, 1918, the petition for discharge and the objections thereto were referred to a referee to ascertain and report the facts. October 3, 1923, the referee filed his report, in which he states that, on July 11, 1923, a long hearing was held before him at which he received the testimony of the objector and of the bankrupts; that after the hearing counsel for the bankrupts presented a long written argument, with the transcript of the testimony taken before him; and that there was testimony that the bankrupts made a false statement in writing for the purpose of obtaining credit. On all the evidence he found that the bankrupts, in a written statement given to the objector for the purpose of obtaining credit, falsely stated their accounts receivable, their accounts payable and their notes payable, and that the creditor to whom the statement was given relied upon it and extended credit in reliance thereon. Having made these findings he recommended that the bankrupts' discharge be withheld, and, at the request of counsel for the bankrupts, transmitted the written record of the testimony taken before him.

The record does not show that the bankrupts requested the referee to report specific findings of fact bearing on the question of discharge, but did request that he transmit the record of the testimony taken, which was transmitted with the report.

October 3, 1923, the bankrupts filed objections and exceptions to the referee's report and moved to recommit. No action appears to have been taken by the court on these objections and motion. On October 24, 1923, the District Court filed an opinion in which it was stated that the application for discharge of the bankrupts had been heard before him on the referee's report, and that the bankrupts objected to the report on the ground that it consisted of conclusions from facts rather than the facts themselves. On this question the court ruled that the report, in connection with the record of the testimony, was a report of the facts within the meaning of General Order XII, 89 F. vii, 32 C. C. A. xvi. He then stated: "I have read the testimony carefully, and also the brief which the bankrupts submitted before the referee. I find that the objection that the bankrupt made a materially false statement in writing for the purpose of obtaining credit has been proved by the objecting creditor." He thereupon entered an order refusing the discharge.

November 8, 1923, the bankrupts filed a petition asking that the decree be vacated and for a rehearing. Their prayer was that the order of October 24, 1923, denying the discharge, be vacated, and that they be afforded an opportunity to be heard on the question whether they were entitled to a discharge. A rehearing was granted on the question of the bankrupts' discharge, and on December 6, 1923, the District Court filed an opinion in which it stated: "I have read the testimony carefully all over again, and find that the bankrupt made a materially false statement in writing for the purpose of obtaining credit. Discharge refused."

The record does not show that the bankrupts requested the District Court to make any specific findings of fact, nor does it include the testimony transferred to that court and considered by it. It is from the decree or order of October 24, 1923, affirmed December 6, 1923, that this appeal is taken.

By their assignments of error the bankrupts seek to raise four questions: (1) Must a creditor, who opposes the granting of a discharge in bankruptcy in the Massachusetts district, sign the specifications of objection in person, or may they be signed by his attorney of record? (2) Must such creditor in that district verify his specifications of objections? (3) Is the District Court, in considering the report of a referee on the question of discharge, bound by the rules of equity practice or does it act in an administrative capacity, the report being merely advisory? And (4) was the denial of the discharge justified by the facts in evidence in the case?

Although no proceeding to revise was taken to the order of April 8, 1918, we assume, without deciding, that the questions sought to be raised by the bankrupts' motion to dismiss the specifications of objection are properly before us and may be considered on this appeal. 1 Whitehouse, Equity Practice, p. 852; 3 Foster's Federal Practice (6th Ed.) p. 3586; Stevens v. Nave-McCord Mercantile Co., 150 F. 71, 80 C. C. A. 25.

The bankrupts' contention is that the objecting creditor is a party in interest, within the meaning of section 14b of the Bankruptcy Act (Comp. St. § 9598), who could sign specifications of objection to the discharge; that form 58 of the Official Forms in Bankruptcy, prescribed in pursuance of section 30 of the act (Comp. St. § 9614), requires that such creditor should sign the specifications; that while section 1, subdivision 9 (Comp. St. § 9585), provides that the word "creditor" may include "his duly authorized agent, attorney or proxy," only an agent, attorney, or proxy who has been duly authorized by the objecting creditor could properly sign the specifications; and that, as the specifications in this case were signed only by the creditor's counsel of record, who does not appear to have had any special authority, the specifications were not properly signed. But we are of the opinion that, inasmuch as section 1, subdivision 9, provides that the word "creditor" may include his duly authorized agent, attorney, or proxy, and the...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT