Minnick v. Lafayette Loan & Trust Co., 16407-8.
| Decision Date | 20 February 1968 |
| Docket Number | No. 16407-8.,16407-8. |
| Citation | 392 F.2d 973 |
| Parties | In the Matter of Geraldine Minnick. Geraldine MINNICK, Appellant, v. LAFAYETTE LOAN & TRUST CO., Appellee. In the Matter of Leland Lafayette Minnick. Leland Lafayette MINNICK, Appellant, v. LAFAYETTE LOAN & TRUST CO., Appellee. |
| Court | U.S. Court of Appeals — Seventh Circuit |
J. Frederick Hoffman, Lafayette, Ind., for appellants.
William C. Burns, Harry P. Schultz, Lafayette, Ind., for appellee, Schultz, Ewan & Burns, Lafayette, Ind., of counsel.
Before HASTINGS, Chief Judge, and SCHNACKENBERG and CUMMINGS, Circuit Judges.
These are appeals by bankrupts, husband and wife, from orders of the district court affirming orders of the referee in bankruptcy denying the bankrupts their discharges in bankruptcy, following the objection of a creditor.
In No. 16407, the appealing bankrupt is Geraldine Minnick, the wife. In No. 16408, the appealing bankrupt is Leland Lafayette Minnick, the husband. The objecting creditor is Lafayette Loan & Trust Co., appellee. Both appeals have been consolidated in this court and will be treated jointly, as they were in the district court.
Geraldine Minnick was duly adjudicated a bankrupt on January 13, 1966, the day she filed her voluntary petition in bankruptcy. Similar action was taken with respect to Leland Lafayette Minnick on January 16, 1966, when he filed his voluntary petition in bankruptcy.
A first meeting of creditors was held on February 11, 1966, at which time George E. Weigle of Lafayette, Indiana was appointed as trustee in each case.
March 11, 1966 was set as the last day for filing objections to discharge. On that date, appellee filed specifications of objections to each discharge alleging that on December 23, 1965, the bankrupts disposed of their home for $500, when their equity therein was $3,466.36, and that this was done "to secrete and hide assets from the lawful claims of petitioner and other creditors."
Objections filed by two other creditors are not the subject of this appeal and may be disregarded.
On June 2, 1966, a hearing was had on the objections before the referee. No stenographic record was made of the evidence. However, a summary of the evidence at this hearing was prepared and signed by the attorneys for all parties and made a part of the record below.
On August 23, 1966, based on the evidence at the hearing, the referee denied a discharge to each bankrupt following entry of findings of fact and conclusions of law.
The referee found, inter alia, that bankrupts' equity in their residential real estate was not less than $2,500. He then found in each case:
Based on this finding, a discharge was denied to each bankrupt.
Petitions for review were filed and entertained by the district court. The trial court considered the summary of evidence agreed on, the findings and conclusions of the referee and the respective pleadings and briefs of the parties. No new evidence was adduced. In substance, the court held:
After considering all the referee's findings, including Finding 8, supra, the court determined that, under § 14(c) of the Bankruptcy Act,1 it would not disturb such findings and affirmed the referee's denial of discharge on the basis of appellee's objections.
The sole issue before us on this appeal is whether the district court erred in affirming the denial of a discharge in bankruptcy to each bankrupt.
Implicit in the resolution of this primary issue are two underlying questions raised by appellants: (a) does the "clearly erroneous" rule apply in reviewing a finding of the referee that property has been conveyed with intent to defraud creditors, and (2) was the finding of the referee that the home of bankrupts had been conveyed with intent to defraud creditors supported by the evidence.
The evidence on this issue as contained in the summary of evidence filed and in the bankruptcy schedules is indeed brief and largely undisputed.
In their voluntary petitions in bankruptcy, in answer to Question 10 of the Statement of Affairs concerning property transferred within the last year (prior to January, 1966) each bankrupt answered:
In appellee's objection to the discharge, it alleged in substance that on December 23, 1965, bankrupts disposed of their home for $500, when at that time the value of such real estate was at least $11,000, subject to a mortgage of $7,533.64, with a resultant net equity of $3,466.36, and that "it appears that the said bankrupt has undertaken to secrete and hide assets * * * and such conduct herein has been fraudulent and deceitful and in conflict with the provisions of the Federal `Bankruptcy Act.'"
The only witness for appellee, a vice-president of Lafayette Loan & Trust Co., merely testified that on October 25, 1963, when bankrupts borrowed money from appellee, they told him they then owed $8,300 on their home, and also testified concerning the subsequent conveyance to Greives and the current mortgage balance of $7,533.64.
It appears from the schedules that Lafayette Loan & Trust Co. was an unsecured creditor on personal loans made to the bankrupts. The other two objecting creditors were small loan companies.
The referee found that bankrupts testified they had about $10,000 invested in the real estate showing a mortgage indebtedness of about $7,000, but that other evidence indicated the indebtedness as being about $7,500; that they owed Greives $250 (on a grocery bill) at the time of the conveyance to him; that bankrupts' equity in the real estate was not less than $2,500; that bankrupts testified the consideration for said conveyance was $500 in cash and cancellation of the $250 indebtedness (to Greives).
One witness for an objecting small loan creditor testified that in October, 1965, when the bankrupt wife was refinancing a loan, she told him their home was worth $23,000 and their debts were less than $4,000. It is significant that the referee makes no mention of this unsupported testimony.
It is undisputed that prior to the sale of their home to Greives, bankrupts were $400 (4 months) delinquent on their real estate mortgage payments; their automobile had been repossessed; and they needed money to begin personal voluntary bankruptcy proceedings. They had chattel loans, numerous other...
To continue reading
Request your trial
-
Matter of Supreme Plastics, Inc.
...do not fall within the clearly erroneous rule; the court must make its own determination concerning legal issues. Minnick v. LaFayette Loan & Trust Co., 392 F.2d 973 (7th Cir.), cert. den. 393 U.S. 875, 89 S.Ct. 170, 21 L.Ed.2d 146 (1968); Solomon v. Northwestern State Bank, 327 F.2d 720 (8......
-
Matter of Porter
...Borg-Warner Acceptance Corp. v. Fedders Fin. Corp. (In re Hammons), 614 F.2d 399, 403 (5th Cir.1980); Minnick v. Lafayette Loan & Trust Co. (In re Minnick), 392 F.2d 973, 977 (7th Cir.), cert. denied sub nom. Lusk v. Strickland, 393 U.S. 875, 89 S.Ct. 170, 21 L.Ed.2d 146 (1968); Harris v. S......
-
Scarlata, Matter of
...771 F.2d 304, 306 (7th Cir.1985). The burden is on the objecting creditor to prove exceptions to discharge. Minnick v. Lafayette Loan & Trust Co., 392 F.2d 973, 976 (7th Cir.), cert. denied, 393 U.S. 875, 89 S.Ct. 170, 21 L.Ed.2d 146 (1968). Although Goldberg may have proved that Scarlata m......
-
Adlman, In re
...417 U.S. 642, 94 S.Ct. 2431, 41 L.Ed.2d 374 (1974); In re Tabibian, 289 F.2d 793, 795 (2d Cir. 1961); Minnick v. Lafayette Loan & Trust Co., 392 F.2d 973, 977 (7th Cir. 1968). More specifically, in order to deny a discharge under section 14c(4) of the Act, 11 U.S.C. § 32(c)(4), the court mu......