Matter of Tucker, 73-112-BK-CA-H.
| Decision Date | 18 August 1975 |
| Docket Number | No. 73-112-BK-CA-H.,73-112-BK-CA-H. |
| Parties | In the Matter of Arthur Raymond TUCKER, Bankrupt. |
| Court | U.S. District Court — Southern District of Florida |
Ferrero, Middlebrooks & Houston, Ft. Lauderdale, Fla., for American National Bank of Jacksonville, respondent.
Brigham & Brigham, Miami, Fla., for bankrupt.
This matter came before the Court on a second appeal from findings of the bankruptcy judge wherein the bankrupt, Arthur Raymond Tucker, was denied a discharge in bankruptcy.
A petition in bankruptcy was filed and pursuant to the provisions of the Bankruptcy Act, § 21(a), Title 11, United States Code, § 44(a), the usual hearings were conducted. The Trustee in Bankruptcy did not offer any objections to the discharge, but the American National Bank, appellee, filed two specifications of Objection to Discharge on August 9, 1973. On August 17, 1973, Tucker was examined in accordance with the provisions of Section 21B of the Bankruptcy Act. A hearing was held in reference to the Objection to Discharge at which the parties submitted their evidence and argument. Both parties relied heavily on the 21B examination to prove their cases. The trial court entered its Order on Discharge denying the discharge on March 5, 1974. Tucker took an appeal from the Trial Court's order to this Court on the sole issue of whether or not the burden of proof provisions of Rule 407, Amended Bankruptcy Rules, had been properly applied.
After examining the record this Court reversed the Bankruptcy Court on the basis that Rule 407 removed the "burden shifting" provision of Section 14(c) of the Bankruptcy Act. Title 11, United States Code, § 32(c), and placed it at all times upon the objecting creditor. The cause was remanded to the Bankruptcy Court with instructions to reopen the case and allow the parties an opportunity to supplement the evidence. At the subsequent hearing the parties did not submit new evidence, but elected to stand on the record. The trial Court again took the matter under advisement and on November 13, 1974, entered its order denying discharge. This appeal followed.
The issue on appeal remains the same as the issue at the prior appeal; did the bankruptcy judge apply Rule 407's burden of proof provision correctly? After examining the record before the Court and hearing argument, this Court determines that the bankruptcy judge erred and that the decision below must be reversed.
Over the years the bankrupt was involved in a number of businesses. His last efforts prior to the filing of his petition for discharge in bankruptcy involved various aircraft companies. His largest creditor was the American National Bank, a secured creditor which loaned substantial sums of money to Tucker over the years and maintained a security interest on the airplanes which Tucker purchased. The bank was the only objector to the discharge and relied on its specification of objection relating to the bankrupt's failure to preserve his books and records throughout these proceedings.1
The case law dealing with the "preservations" of records is scant. There is only one case in which a definition is given and that case holds that preserving records is equivalent to the proper keeping of records. In Re Williams, 66 F.Supp. 157 (E.D.Pa.1946). The facts are strikingly similar to those at bar. Therein a referee also refused to grant discharge for failure to "preserve" books of account. There, too, operation of the bankrupt's business ceased "following a constable's levy on his premises." In both cases the bankrupts had made and kept records and had stored the records in their places of business whereon levies were made. In both cases the bankrupts made no effort to retrieve the records after levy. This Court adopts the determination of the Williams's Court that the addition of a requirement to "preserve" records by amendment to the Bankruptcy Act in 1938 merely restated...
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