Lindeke v. Converse

• Decision Date: 26 August 1912
• Docket Number: 122.
• Parties: LINDEKE et al. v. CONVERSE.
• Court: U.S. Court of Appeals — Eighth Circuit

198 F. 618

LINDEKE et al. v. CONVERSE.

No. 122.

United States Court of Appeals, Eighth Circuit.

August 26, 1912

Syllabus by the Court

A denial of a motion to dismiss an application of a bankrupt for a discharge on undisputed facts presents a question of law reviewable by a petition to revise under section 24 of the Bankruptcy Law (Act July 1, 1898, c. 541, 30 Stat. 553 (U.S. Comp. St. 1901, p. 3432)).

Such a denial is discretionary with the bankruptcy court, but only in the same sense in which final orders and decrees in equity are so.

Conscience good faith, and reasonable diligence are requisite to call a court of equity into activity in one's behalf.

The debtor was adjudged a bankrupt on January 4, 1906. In June 1906, she signed an application for her discharge and left it with her attorney. He did not file it until April 26, 1907 when he procured a permissive order of the bankruptcy court on an affidavit which failed to show that he or the bankrupt had been unavoidably prevented from filing it within the year. Between April 26, 1907, and September 12, 1911, neither the bankrupt nor her attorney took any action to bring the application to a hearing. On the latter day they procured an order for a hearing on October 16, 1911, which was met by creditors by a motion to dismiss the application for the discharge for want of prosecution.

Held the motion should have been granted. The bankrupt failed to exercise that reasonable diligence requisite to call a court of equity into action on her behalf.

E. Howard Morphy, Frank H. Ewing, and John M. Bradford, for petitioners.

F. H. Peterson and Edwin Adams, for respondent.

Before SANBORN and HOOK, Circuit Judges, and SMITH McPHERSON, District judge.

SANBORN Circuit Judge.

The question in this case is whether or not the facts presented to the court below on a motion of creditors of the bankrupt to dismiss her application for a discharge for want of prosecution presented lawful grounds for the grant of that motion. This question is raised by a petition to revise which is not challenged by demurrer or answer, and these are the material facts which it discloses: Julia D. Converse was adjudged a bankrupt on January 4, 1906. There was much litigation between her and her creditors until May 21, 1906, when the District Court denied an application to punish her for contempt unless she should comply with an order of the referee to pay $5,500 to the trustee in bankruptcy. On June 5, 1906, she signed an application for a discharge and left it with her attorney. She stated in an affidavit made November 13, 1911, that she was not aware that anything further was to be done by her relative to the matter and did not know what action was taken, or was necessary to be taken until the year 1911. But during all this time a learned member of the bar was her attorney in this matter. He knew the law and the practice, and his knowledge in this regard was her knowledge. The bankrupt's application was not filed within the year, nor until April 26, 1907. Then it was filed pursuant to a permissive order of the District Court made on that day, and the only basis for that order was an affidavit made by her attorney on April 26, 1907, to the effect that he had been the attorney of the bankrupt since June, 1906, that she made and left with him her petition for her discharge in that month, that her estate was not then ready to close up and he did not then present it, that he 'was very busy during the fall of 1906 and was obliged to be away from home and his office much of the time up until the 1st of January, 1907, and since said date has been obliged to be away at St. Paul attending the session of the Legislature until the present time, and that it has not been the fault of said bankrupt that her petition for discharge was not filed before. ' This affidavit fails to show that the attorney was either absent or too busy to take the requisite time, perhaps 10 minutes, to mail this petition to the clerk of the court with directions to file it, during the months of June, July, and August, 1906. It fails to show that either the bankrupt or her attorney were 'unavoidably prevented' from filing this application within the year. Act of July 1, 1898, 30 Stat. 544, c. 541, Sec. 14a; U.S. Comp. Stat. p. 3427.

The application for the discharge was filed on April 26, 1907, and nothing was done by the bankrupt or her attorney to prosecute the application or to bring the matter to a hearing until September 12, 1911, when they caused an order to be made that a hearing should be had upon the application on October 16, 1911. On that day the creditors who have presented this petition made a motion to dismiss the application for the discharge for want of prosecution, upon an affidavit of their attorney that the application for the discharge should have been opposed if it had been brought to a hearing within a reasonable time, on the grounds that the bankrupt, who had been and was conducting a general store at Detroit, Minn., when she was adjudicated, had, with intent to conceal her true financial condition, failed to keep books of account or records from which her financial condition could be ascertained, that within four months preceding the filing of the petition in bankruptcy she had transferred and concealed some of her property with intent to defraud her creditors, and that she had refused to obey orders of the court and to answer material questions approved by the court, that it would be difficult now, and almost impossible, properly to resist her application because nearly six years had elapsed since the commission of the acts constituting the grounds of opposition, that the testimony of the bankrupt's clerks in November and December, 1905, of the officers and clerks at that time of two banks at Detroit, Minn., and of other witnesses, would be necessary, that if these witnesses could be procured the facts and circumstances which could have been shown within a reasonable time after the date of the petition for the discharge cannot now be distinctly remembered by the witnesses, that these witnesses and their testimony could have been procured in 1906, that material testimony has been lost by reason of the long delay in bringing the petition to a hearing, and that he is informed and believes that the petition has not been brought on for a hearing for the purpose of postponing the latter until the evidence of the bankrupt's acts and doings, which could be properly set forth in specifications in opposition to the discharge, should be lost or forgotten and the witnesses should be scattered. In her affidavit in opposition to the motion the bankrupt stated that the reasons for opposition to her discharge suggested by the foregoing affidavit were unfounded in fact. She made no denial, however, that material evidence upon the issues suggested had been lost by the delay, nor did she make any denial that the purpose of the delay had been to cause the loss of this evidence, save that she stated that she did not know it was necessary for her to do more than to sign her petition-- an ignorance that in view of the knowledge of her attorney can hardly avail.

The facts which have been recited seem to cry aloud for a dismissal of the application for the discharge. Counsel for the bankrupt, however, present three arguments in support of the action of the court below. They say that the fifth rule of the...