Troeder v. Lorsch

CourtUnited States Courts of Appeals. United States Court of Appeals (1st Circuit)
Citation150 F. 710
Docket Number645.
PartiesTROEDER v. LORSCH et al. In re TROEDER.
Decision Date02 October 1906

150 F. 710

LORSCH et al.


No. 645.

United States Court of Appeals, First Circuit.

October 2, 1906

Julius Nelson and Edwin N. Hill, for appellant.

Alexander Whiteside (Warren & Garfield, on the brief), for appellees.

Before COLT, PUTNAM, and LOWELL, Circuit Judges.

PUTNAM, Circuit Judge.

This is a proceeding in bankruptcy in which, on an application for his discharge by Samuel A. Troeder, a bankrupt, it was refused by the District Court, followed by an appeal to us by the bankrupt. The statute on this topic is very narrow, so the whole of it may well be quoted, as found in the fourth section of the amendatory act, approved on February 5, 1903 (32 Stat. 797, 798, c. 487 (U.S. Comp. St. Supp. 1905, p. 684)), as follows:

'b The judge shall hear the application for a discharge, and such proofs and pleas as may be made in opposition thereto by parties in interest, at such time as will give parties in interest a reasonable opportunity to be fully heard, and investigate the merits of the application and discharge the applicant unless he has (1) committed an offense punishable by imprisonment as herein provided; or (2) with intent to conceal his financial condition, destroyed, concealed, or failed to keep books of account or records from which such conditions might be ascertained; or (3) obtained property on credit from any person upon a materially false statement in writing made to such person for the purpose of obtaining such property on credit; or (4) at any time subsequent to the first day of the four months immediately preceding the filing of the petition transferred, removed, destroyed, or concealed, or permitted to be removed [150 F. 711] destroyed, or concealed any of his property with intent to hinder, delay, or defraud his creditors; or (5) in voluntary proceedings been granted a discharge in bankruptcy within six years; or (6) in the course of the proceedings in bankruptcy refused to obey any lawful order of or to answer any material question approved by the court.'

The only part of the section on which the objecting creditors rely is that relating to offenses punishable by imprisonment declared by paragraph 'b' of section 29 of the original statute of bankruptcy, approved on July 1, 1898 (Act July 1, 1898, c. 541, 30 Stat. 554 (U.S. Comp. St. 1901, p. 3433)), as follows: First, 'having knowingly and fraudulently concealed, while a bankrupt, or after his discharge, from his trustee any of the property belonging to his estate in bankruptcy'; and, second, having 'made a false oath or account in, or in relation to, any proceeding in bankruptcy.' On the second branch the objections to the discharge relate to numerous alleged false oaths all of which occurred in the course of the bankrupt's examination before the referee, and commenced at the first meeting of his creditors as provided in section 7 of the original statute. That the answers given at such an examination are within the statutory provisions to which we have referred, and may be made the basis of specifications of objections to a discharge, are clear. in re Gaylord, 112 fed. 668, 669, 50 C.C.A. 415.

One difficulty in reference to the second branch of the objections to the bankrupt's discharge arises from the fact that the bankrupt's examination was commenced on December 28, 1903, was very voluminous and protracted, and was made in installments, of which the last commenced on February 1, 1905. It was then broken into by the examination of several witnesses, and evidently not completed until some date, not made clear, on or after March 23, 1905. We find incorporated in the specifications what amounts to 15 printed pages of extracts from the bankrupt's examination, including what appears there as so-called direct examination and what appears there as so-called cross-examination, in the precise form in which it was taken down by the referee. There are no allegations setting out specifically any false oath, or explaining its materiality and relevancy, according to any rules of pleading in proceedings at law. Thus this portion of the specifications is clearly insufficient, because the practice with reference thereto is settled in accordance with the fundamental principles of pleading, although not according to strict rules, and to the effect that the allegations must be specific and of such a character that their sufficiency may be met by demurrer, or by exceptions analogous to those allowed in equity. However, no objection is made on this score by the bankrupt, and therefore we refer to the topic simply because the form in which the case is made in this respect has confused the issues, and permits, and, indeed, tends to lead, the court to borrow improperly from one part of the proofs to support improperly other parts; thus ending in the mischief which so often arises where issues are not clearly made. It becomes, therefore, all the more necessary to be careful in reviewing the case as it appears before us.

Questions are made with reference to the amount and weight of proof required on the issues before us. It appears that the referee recommended the bankrupt's discharge. The District Court, however, refused [150 F. 712] to accept his recommendation. The bankrupt claims that the recommendation of the referee was as effectual as the report of a special master in chancery; but we have expressly held otherwise. In re Pettingill & Co., Lund, Trustee, Petitioner, 137 F. 840, 842, 70 C.C.A. 338. On the other hand, this proceeding is not criminal in its character, and therefore the creditor is not bound to maintain his objections by proof beyond a reasonable doubt. As determined by us in In re Cole, Petitioner, 144 F. 392, in our opinion passed down on February 16, 1906, ordinary questions of bankruptcy, including those with reference to the concealment of assets, are to be disposed of according to the rules relating to civil cases. Nevertheless, there are many illustrations of the practical fact that a mere preponderance of the formal proofs does not always meet the requirements of civil cases. In referring to them, we pass by instances which rest on the special rules of equity practice, including those regarding bills to set aside governmental patents or formal deeds under seal. Some examples are given in the notes on page 241 of Chase's Stephen's Evidence (2d Ed.), as defenses of usury and propositions to establish gifts causa mortis. In regard to this, the note of the learned editor says:

'The rule, as variously stated, declares that the evidence must be 'clear, unequivocal and convincing,' and 'clear, precise and indubitable,' 'full and clear and satisfactory,' 'clear and conclusive," etc.

In Smithsonian Institution v. Meech, 169 U.S. 398, 399, 405, 18 Sup.Ct. 396 (42 L.Ed. 793), the opinion states, with reference to an alleged oral agreement as to the terms on which certain real estate was to be held, that 'the law is content, if, from a perusal of the entire record, the mind is sure that there was a distinct agreement as claimed. ' In Gage v. Bani, 141 U.S. 344, 357, 12 Sup.Ct. 22, 27 (35 L.Ed. 776), on an issue asserting a tax title, the opinion says that, on a question whether a notice was given which the statute required, the evidence should be 'clear and convincing.' In Schreyer v. Scott, 134 U.S. 405, 409, 10 Sup.Ct. 579, 580 (33 L.Ed. 955), with reference to a claim that certain transfers were void as against subsequent creditors, the opinion says that 'very clear and direct testimony' is essential. A more striking illustration is with regard to alleged anticipatory matter in suits relative to patents for inventions as many times expressed, and which, as in Smith Company v. Sprague, 123 U.S. 249, 264, 8 Sup.Ct. 122, 130 (31 L.Ed. 141), contain such statements as that the proof must be 'full, unequivocal, and convincing.' That these expressions do not relate to the peculiar rules of equity to which we have referred, and which require special proofs, is clear, because, in the particular case cited, they applied against a patentee who was himself claiming priority not shown in his application for his patent.

It is true that it may be said, as was observed by this court in The Metamora, 144 F. 936, 941, that determining the preponderance of a case 'includes weighing the probabilities.' The topic, however, was admirably explained by Mr. Justice Walton, one of the most experienced of all the New England judges, in Decker v. Somerset Insurance Company, 66 Me. 406, 408, 409. In Maine the law is settled that, although the pleadings in a civil action allege specifically all the elements [150 F. 713] of a crime, they are required to be maintained, like the usual allegations in civil cases, by only a preponderance. Nevertheless, with reference to defenses of this character, Mr. Justice Walton, in the opinion referred to, observed as follows:

'To create a preponderance of evidence, the evidence must be sufficient to overcome the opposing presumptions as well as the opposing evidence. Presumptions, like probabilities, are of different degrees of strength. To overcome a strong presumption requires more evidence than to overcome a weak one. To fasten upon a man a very heinous or repulsive act requires stronger proof that to fasten upon him an indifferent act, or one in accordance with his known inclinations.'

Applying these practical rules to the case before us, we find, first of all, that, by the explicit requirements of the bankruptcy statutes, the specifications relied on by the objecting creditors directly charge the bankrupt with criminal offenses of so serious a character that each of them is punishable by imprisonment with a maximum of two years; and the same is so denounced that no alternative of a fine is permitted. The alleged concealment must have been made knowingly and fraudulently; and, according to the practical...

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    ...which determines the verdict must be a preponderance of credible testimony, not a ‘balance of probabilities.”’ In Troeder v. Lorsch, 1 Cir., 150 F. 710, 713, it was said: “To create a preponderance of evidence, the evidence must be sufficient to overcome the opposing presumptions as well as......
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    ...which determines the verdict must be a preponderance of credible testimony, not a 'balance of probabilities."' In Troeder v. Lorsch, 1 Cir., 150 F. 710, 713, it was "To create a preponderance of evidence, the evidence must be sufficient to overcome the opposing presumptions as well as the o......
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