Tenn v. First Hawaiian Bank, s. 75-2452

• Decision Date: 15 March 1977
• Docket Number: Nos. 75-2452,75-2453,s. 75-2452
• Citation: 549 F.2d 1356
• Parties: In the Matter of Henry Chong TENN, Bankrupt-Appellant, v. FIRST HAWAIIAN BANK, Creditor-Appellee. In the Matter of Sylvia Tenn LUCKFIELD, Bankrupt-Appellant, v. FIRST HAWAIIAN BANK, Creditor-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1356

549 F.2d 1356

In the Matter of Henry Chong TENN, Bankrupt-Appellant, v. FIRST HAWAIIAN BANK, Creditor-Appellee.

In the Matter of Sylvia Tenn LUCKFIELD, Bankrupt-Appellant, v. FIRST HAWAIIAN BANK, Creditor-Appellee.

Nos. 75-2452, 75-2453.

United States Court of Appeals, Ninth Circuit.

March 15, 1977.

Michael S. Nabi, Cades, Schutte, Fleming & Wright, Honolulu, Hawaii, for creditor-appellee.

Richard M. C. Lum, Honolulu, Hawaii, for bankrupts-appellants.

Appeal from the United States District Court for the District of Hawaii.

Before HUFSTEDLER, GOODWIN and ANDERSON, Circuit Judges.

OPINION

PER CURIAM:

Appellants Luckfield and Tenn appeal from orders denying them discharges in bankruptcy based upon determinations that both had obtained credit by publishing a false statement in writing respecting their financial condition in violation of 11 U.S.C. § 32(c)(3). On appeal they contend that they did not fall within 11 U.S.C. § 32(c)(3) because: They did not meet the "engaged in business" requirement of the statute; the deed that they executed and recorded was not a false statement in writing respecting their financial condition within the meaning of the statute; and they did not fail to explain the loss of assets under the statute. Tenn also contends that he could not be denied a discharge by reason of his knowledge of or acquiescence in the false financial statement which Luckfield delivered to the First Hawaiian Bank.

On August 18, 1970, the appellants obtained credit from the First Hawaiian Bank ("Bank") in the amount of $105,219.16 to purchase a fleet of rental automobiles from another customer of the Bank. Prior to the extension of credit by the Bank, the appellants represented to the Bank that they were the owners of property located at 3755 Diamond Head Circle (the "Diamond Head property"), subject to a life estate in their mother. The Bank obtained a title report which showed that Tenn and Luckfield had undivided one-third and two-thirds interests, respectively, in the Diamond Head property, in which their mother had a life estate. The Diamond Head property had been conveyed to the appellants by their mother by a deed filed in the office of the Assistant Registrar of the Land Court of the State of Hawaii on December 30, 1966. Mrs. Luckfield also delivered to the Bank a financial statement dated as of July 27, 1970 which showed the net worth of Luckfield and her husband as $288,050. The major category of assets listed was under real estate owned with a value ascribed as $250,000 all of which was attributable to Luckfield's interest in the Diamond Head property. On September 9, 1971, a year after obtaining credit from the Bank, appellants recorded a deed reconveying title to the Diamond Head property to their mother. According to Luckfield, the Diamond Head property had always been owned by the appellants' mother and not by them.

In July 1972, First Hawaiian Bank sued Tenn and Luckfield in the state court of Hawaii to collect approximately $70,000 which was due and owing. A default judgment was entered against Tenn and Luckfield, and the sheriff was sent to levy upon the Diamond Head property. The September 1971 reconveyance of title to Tenn's and Luckfield's mother prevented the Bank from levying on this property. In November 1972, appellants filed voluntary petitions in bankruptcy. The Bank filed objections to discharge. The bankruptcy judge denied them a discharge and the district court affirmed.

Appellants face a heavy burden in attempting to overturn the denial of a discharge. The right to a discharge in bankruptcy is left to the sound discretion of the district court. The appellate court will not interfere except in a case of gross abuse of discretion. (Briskin v. White, 296 F.2d 132, 135 (9th Cir. 1961).)...