Rosenberg v. Bloom

Decision Date10 October 1938
Docket NumberNo. 8806.,8806.
PartiesROSENBERG v. BLOOM et al.
CourtU.S. Court of Appeals — Ninth Circuit

James A. Johnstone and J. B. Zimdars, both of San Francisco, Cal., for appellant.

Aaron N. Cohen and Sidney Rudy, both of San Francisco, Cal., for appellees.

Before DENMAN, MATHEWS, and STEPHENS, Circuit Judges.

STEPHENS, Circuit Judge.

This is an appeal from an order denying a discharge in bankruptcy to one Melville Rosenberg, appellant, who will herein be designated as the bankrupt.

The bankrupt petitioned for his discharge and the trustee, Monroe Bloom, and certain creditors, to-wit, Monroe Bloom and Henry Bloom, filed specifications of grounds of opposition to such discharge. The petition for a discharge and the objections thereto were referred to the referee in bankruptcy for the purpose of hearing the objections and reporting his findings to the Court. The petition for a discharge was opposed on four grounds, which were, briefly:

(1) That said bankrupt failed to keep or has destroyed any books of account or records from which his financial condition and business transactions might be ascertained;

(a) More particularly in that they failed to disclose the monies borrowed from D. C. Bloom or the transactions in which the money was used.

(2) That the said bankrupt has failed to explain satisfactorily a loss of assets.

(3) That said bankrupt, in response to material questions approved by the referee, gave vague and evasive testimony as to his business transactions.

(4) That said bankrupt during his examination gave false testimony with regard to his business transactions and the disposition of his assets.

The referee filed his report, stating his findings and conclusions, and recommending that the discharge be denied. He found that the second, third, and fourth specifications should be dismissed, but that the first specification should be sustained. The creditors excepted to the report of the referee so far as it related to the specifications found to be without merit, and the bankrupt sought review of the report as to the ground of opposition which was sustained. The District Court denied the petition for review; overruled the exceptions to the report, and confirmed the same; and denied the petition for discharge. The bankrupt alone has taken an appeal.

Bankrupt's petition for discharge was denied on the ground that by virtue of section 14b, subdivision 2, of the Bankruptcy Act, as amended, 11 U.S.C.A. § 32 (b) (2), now 11 U.S.C.A. § 32(c) (2), he is barred of his discharge because, without justification under all the circumstances of the case, he destroyed or failed to keep records from which his financial condition and business transactions might be ascertained.

It appears from the statement of evidence that between the years 1919 and 1926 the bankrupt received as loans, large sums of money from one D. C. Bloom. These advances totaled between $140,000 and $160,000. This money was used by the bankrupt to purchase properties for himself, and in lending money on property. No written evidence of indebtedness was exchanged between the parties until May 1, 1930, when, after prolonged negotiations, the bankrupt entered into an agreement with D. C. Bloom by which the amount to be repaid to D. C. Bloom (and to another) for moneys advanced was fixed, and which provided for the conveyance of nine parcels of property to the California Pacific Title & Trust Company in trust to secure the indebtedness. The obligation thus evidenced has never been repaid, and the properties securing it are valueless. It represents a large portion of the indebtedness from which bankrupt now seeks to be discharged. The objecting creditors are nephews of D. C. Bloom and inherited his claim upon his death in 1932.

It further appears that at least until 1930 or thereabouts, the bankrupt was engaged on a substantial scale in the real estate business, in buying and selling, and in making loans. Since 1930 the bankrupt had only about three real estate transactions, and has engaged in no other business activity. The bankrupt filed his petition in bankruptcy on January 30, 1936, and was adjudicated a bankrupt on the following day. The petition for discharge was filed on December 18, 1936.

The only written record furnished by the bankrupt was a memorandum book containing notations made in January of 1936. The bankrupt testified that he destroyed the original memoranda from which this "record" was made up. It purports to contain a record of practically all the bankrupt's transactions since May 1, 1930. The earliest transaction noted is indicated to have occurred June 14, 1929. The notes in the book make reference to various events and obligations, and are not in chronological order. The bankrupt furnished no records of his business transactions for the period prior to June 14, 1929. His testimony as to such records was that he kept a record of transactions with D. C. Bloom prior to 1930, but that after May 1, 1930, there was no use for them, and that he kept some and destroyed others; that he now has no records of such period. Bankrupt also testified that he kept a record of the transactions in two ...

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18 cases
  • In re Milne
    • United States
    • U.S. District Court — District of New Jersey
    • 29 July 1941
    ...Karger v. Sandler, 2 Cir., 62 F.2d 80; In re Underhill, 2 Cir., 82 F.2d 258; Koufman v. Sheinwald, 1 Cir., 83 F. 2d 977; Rosenberg v. Bloom, et al., 9 Cir., 99 F.2d 249; Hedges v. Bushnell, 10 Cir., 106 F.2d 979. The determination of this issue must necessarily rest upon all the facts and c......
  • Burchett v. Myers
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • 11 March 1953
    ...When failure to keep adequate books or records is established, the burden of justification is upon the bankrupt. Rosenberg v. Bloom, 9 Cir., 99 F.2d 249; In re Wellin, 7 Cir., 132 F.2d 262; In re Underhill, 2 Cir., 82 F.2d 258; 1 Collier on Bankruptcy 1352-1353 (14th The bankrupt's principa......
  • In re McNay
    • United States
    • U.S. District Court — Southern District of California
    • 16 February 1945
    ...gross abuse. See Baash-Ross Tool Co. v. Stephens, 9 Cir., 1934, 73 F.2d 902; Hultman v. Tevis, 9 Cir., 1936, 82 F.2d 940; Rosenberg v. Bloom, 9 Cir., 1939, 99 F.2d 249. This is also the rule in other circuits. See Texas National Bank of Beaumont v. Edson, 5 Cir., 1939, 100 F.2d 789; Baily v......
  • Matter of Russo
    • United States
    • U.S. Bankruptcy Court — Eastern District of New York
    • 12 February 1980
    ...Karger v. Sandler, 2 Cir., 62 F.2d 80; In re Underhill, 2 Cir., 82 F.2d 258; Koufman v. Sheinwald, 1 Cir., 83 F.2d 977; Rosenberg v. Bloom, 9 Cir., 99 F.2d 249; Hedges v. Bushnell, 10 Cir., 106 F.2d "What will justify failure depends largely upon how extensive and complicated the bankrupt\'......
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