Peterson v. Peterson

• Decision Date: 26 August 1968
• Docket Number: No. 18648.,18648.
• Citation: 400 F.2d 336
• Parties: Palmer A. PETERSON, Appellant, v. Faye V. PETERSON, Robert W. Dygert and James P. Rorris, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

400 F.2d 336 (1968)

Palmer A. PETERSON, Appellant, v. Faye V. PETERSON, Robert W. Dygert and James P. Rorris, Appellees.

No. 18648.

United States Court of Appeals Eighth Circuit.

August 26, 1968.

Irving Shaw, St. Paul, Minn., for appellant.

Robert W. Dygert, Minneapolis, Minn., for appellees; Thomas G. Lovett, Jr., Minneapolis, Minn., was with him on the brief.

Before BLACKMUN, GIBSON and HEANEY, Circuit Judges.

BLACKMUN, Circuit Judges.

Palmer A. Peterson appeals from his adjudication in bankruptcy by Judge Lord made on a jury's answers to special interrogatories.

The appellant is a physician and surgeon. The controversy has emerged from the bitter domestic difficulties which arose between Dr. Peterson and his wife. They were divorced by decree of the Hennepin County, Minnesota, District Court entered August 19, 1964, and thereafter amended and supplemented. See Peterson v. Peterson, 274 Minn. 568, 144 N.W.2d 597 (1966). The petition for adjudication of the doctor as a bankrupt was filed February 25, 1966, by Mrs. Peterson and two attorneys who represented her in the divorce proceedings. There were other creditors but none of these joined in the involuntary petition. Mrs. Peterson's claim was for past-due alimony and child support. The respective claims of the attorneys were for fees for legal services and disbursements in the divorce action.

The petition, as amended during trial, alleged the first act of bankruptcy set forth in § 3(a) of the Bankruptcy Act, 11 U.S.C. § 21(a), namely, concealment of property, with intent to hinder, delay or defraud creditors, within the preceding four months. The doctor's answer denied insolvency and also denied the commission of any act of bankruptcy. He made timely written application for a jury trial of these issues as § 19(a), 11 U.S.C. § 42(a), permits.

Insolvency and concealment were the issues actually tried. Judge Lord submitted to the jury two special interrogatories, namely, (1) "Was Palmer A. Peterson insolvent on February 25, 1966?" and (2) "Did Palmer A. Peterson commit any act of bankruptcy within a four-month period prior to February 25, 1966?" The court, however, ruled that Dr. Peterson's refusal to answer questions on November 16, 1965, at supplementary proceedings under M.S.A. § 575.02¹ was an act of bankruptcy as a matter of law. Accordingly, the court instructed the jury to answer the second interrogatory in the affirmative. The jury did this and also returned an affirmative answer to the first interrogatory.

Dr. Peterson, as appellant, asserts five points: (A) legal insufficiency of the creditors' petition; (B) error in directing the answer to the second interrogatory; (C) insufficiency of the evidence on the act of bankruptcy issue; (D) insufficiency of the evidence on the insolvency issue; and (E) trial errors.

A. The insufficiency of the petition. The attack upon the petition is twofold. It is said that it lacks the requisite particularity in its allegation of an act of bankruptcy. It is also said that the three petitioning creditors did not possess separate and distinct claims and thus did not constitute the minimum of three usually required under § 59(b), 11 U.S.C. § 95(b), for an involuntary petition.

1. The petition as originally filed alleged that on November 16, 1965, a date within four months, "and ever since said time", the doctor "concealed and refused to disclose information with respect to his property, with intent to hinder, delay, or defraud his creditors". During the trial counsel for the creditors observed that "it seems that the language of our petition is somewhat ambiguous". Over objection, but with the court's permission, the petition was amended to read:

"* * * within four months next preceding the filing of this Petition the said Palmer A. Peterson committed an act of bankruptcy in that he did heretofore, to-wit: 1. Conceal and secrete his property during all of said period. 2. On November 16, 1965, and at all other times during said period, refused to disclose information with respect to his property. 3. Admitted in writing on or about January 28, 1966, that he was insolvent and unable to pay his just debts."

We note, initially, that the allegation as to the doctor's written admission of insolvency was not tried and is not a factual issue before us. We therefore need not be concerned with the problem whether the allegation as to the written admission is that of a newly alleged act occurring more than four months prior to the amendment. Confining ourselves, as the trial court was confined, to the other allegations, we are satisfied that the amendment was no more than a clarification of the original petition and thus appropriately related back to the date of the original petition. In re Yellow Motor Co., 34 F.2d 118, 120 (8 Cir. 1929), cert. denied 280 U.S. 590, 50 S.Ct. 38, 74 L.Ed. 639; In re Magone Furniture Co., 227 F.Supp. 358, 360 (D. Or.1964).

The appellant's particularity argument begins with what is said to be a distinction between the statutory requirement under § 3(a) (1) of concealment of property² and an emphasis in the petition upon the concealment of information about property. Certainly, however, the petition as amended flatly alleges the concealment and secretion of property throughout the four month period. And we read the petition prior to amendment as alleging concealment of property as well as refusal to disclose information; we do not read it as confined to concealment of information.

It has been held, as the appellant points out, that a mere failure voluntarily to disclose information may not equate with concealment of property within the meaning of § 3(a) (1). Continental Bank & Trust Co. of New York v. Winter, 153 F.2d 397, 399 (2 Cir. 1946), cert. denied 329 U.S. 717, 67 S.Ct. 49, 91 L.Ed. 622; In re Shoesmith, 135 F. 684, 687 (7 Cir. 1905), appeal dismissed 198 U.S. 582, 25 S.Ct. 804, 49 L. Ed. 1172. And too general averments, or those which merely employ the language of the statute, have been held to be insufficient. South Suburban Safeway Lines, Inc. v. Carcards, Inc., 256 F. 2d 934, 935 (2 Cir. 1958). Facts must be alleged with sufficient clarity and specification as to apprise the alleged bankrupt of what he must meet. In re Adams, 53 F.Supp. 982, 983-984 (M.D. Pa.1944). But "Where the act of bankruptcy consists of a concealment of the bankrupt's property, the precise details of the act of concealment may not, from the nature of the act, be capable of allegation". 1 Collier on Bankruptcy (14th Ed.), para. 3.106, p. 425. "The manner and details, however, of the concealment, are matters of evidence, and not of averment". In re Bellah, 116 F. 69, 72 (D. Del.1902). Thus, in the case last cited it was held that if it is alleged that a specific fund was concealed with the requisite intent, the petition is not defective for want of particularity. "If the defendant concealed the specified fund as alleged, it must be assumed that the details and circumstances of the concealment were within his knowledge, and no hardship can be involved in requiring him to answer and meet the charge of concealment * * *." P. 73 of 116 F.

This court has observed that the statutory definition of concealment in § 1(7) "does not purport to be exclusive. It may also mean to prevent the discovery of or to withhold knowledge of * * *." Coghlan v. United States, 147 F.2d 233, 236 (8 Cir. 1945), cert. denied 325 U.S. 888, 65 S.Ct. 1569, 89 L.Ed. 2001. This same approach to the concept of concealment appears in other cases. In United States v. Schireson, 116 F.2d 881, 884, 132 A.L.R. 1157 (3 Cir. 1940), Judge Goodrich observed that the word "conceal" is not confined to secreting or hiding away. "It means, also, `to prevent the discovery of or to withhold knowledge of'". See, also, In re Verona Constr. Co., 126 F.2d 976, 977, footnote 3 (3 Cir. 1942); In re Glazier, 195 F. 1020, 1021 (M.D.Pa.1912); Burchinal v. United States, 342 F.2d 982, 985 (10 Cir. 1965), cert. denied 382 U.S. 843, 86 S.Ct. 46, 15 L.Ed.2d 84.

Here the petition originally alleged concealment and refusal to disclose on a specified date and continuously after that date and, after amendment, throughout the four month period. The date specified was a legally significant one, namely, that on which testimony in supplementary proceedings was requested of Dr. Peterson. Thus, so far as the allegations are concerned, there was nothing mysterious or indefinite or unknown for the alleged bankrupt. He was clearly apprised of what he had to meet. We hold that, under the circumstances here, the petition meets the requirements of particularity and is legally sufficient in its concealment allegations.

2. The argument relating to non-separateness of claims is that the three claimants are Dr. Peterson's divorced wife and attorneys who acted for her in the divorce proceedings; that her claim consists, at least in part, of unpaid alimony which, under § 17(a) (2), 11 U.S. C. § 35(a) (2), is not dischargeable; that the claims of the attorneys are merely derivative under M.S.A. § 518.14; that the divorce decree provided that Mrs. Peterson "have and recover" of the doctor specified sums "as and for reasonable attorneys fees" for the respective attorneys and "as and for reasonable expenses incurred" by them; and that the three claims, therefore, are only one debt.

The answer to this argument lies in the specific and clear language of the cited Minnesota statute. M.S.A. § 518.14 is set forth in the footnote³ in the form it has possessed since its amendment by Laws 1955, c. 687, § 1. From a reading of the statute it is apparent that an award of an attorney's fee and its collection are enforceable either in the divorce court itself or by the attorney in an independent action in his own name. It is thus an asset individually and separately owned by him irrespective of the fact that the divorce decree incorporates, for the protection of the spouse, an "award" to her for the...