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10 F.(20) 116 WILLIAMS, District Judge. This ap- davit traversed all allegations, except such as peal brings under review action of the low- specifically admitted, and prayed in part: er court in confirming an order of the ref- “That upon final hearing the said Charles eree in bankruptcy requiring appellant to Edward Hickerson [bankrupt] be denied account to the trustee for certain property, any order for the payment of any sums of or proceeds thereof.
money or the delivery of any property by the Charles Edward Hickerson, a farmer and First State Bank of Crook, Colo. [appelstockman, on his voluntary petition in bank- lant], and that the trustee (appellee] in the ruptcy, filed on November 21, 1923, was ad- said cause be denied any order requiring the judicated a bankrupt on November 23, 1923. First State Bank of Crook, Colo., to deliver On January 22, 1923, bankrupt made and to the said trustee certain property alleged to delivered his note to appellant bank, pay- belong to the said bankrupt. able six months after date, secured by chattel The referee found (1) that possession mortgage on certain personal property. On was taken by the appellant bank prior to the same day bankrupt made and delivered an- filing of the petition in bankruptcy; (2) that other note, payable six months after date, lien under mortgage to the hardware comto Crook Hardware Company, in sum of pany, assigned to said appellant, had ex$239.50, secured by chattel mortgage, made pired prior to said date, and that, though by its terms subject to mortgage in favor of possession was taken as found by him, as appellant bank, covering same property, to the hardware company note and mortgage with exception of one item. Said note and appellant became an unsecured creditor, and mortgage to hardware company being also could only as such participate in distribution held by appellant bank through assignment of said funds; and (3) that, the Parvin on August 21, 1923, before expiration of 30 judgment having been obtained within four days from maturity of said notes, affidavit months before filing of petition in bankruptwas filed in office of county clerk and re
cy, no lien attached as result of the execution corder, extending mortgage executed to said and garnishment, and that moneys in hands bank until October 22, 1923, and specifying of appellant in excess of the sum of $1,that $1,000 thereon was unpaid; no extension 000, with interest at the rate of 10 per being made as to hardware company note. cent. per annum from August 20 to DecemOn November 14, 1923, appellant bank, by ber 4, 1923, together with cost of recovering filing affidavit, further extended said mort- the property, expense of sale, attorney's fee, gage lien until 22d day of February, 1924, not to exceed $100, and taxes, should be paid specifying amount then unpaid to be $1,000 to trustee in bankruptcy. and interest. On September 29, 1923, ap.  1. As to jurisdiction of the referee, conpellant S. R. Parvin obtaining judgment tention is made that, the proceeding being against bankrupt, execution was duly issued instituted in the name of the bankrupt, and and placed in hands of sheriff of county in not the trustee, though for benefit of the which said property was located, before ap- trustee, the referee was without jurisdiction; pellant bank took possession of same on No- the trustee being proper party to commence vember 19, 1923, under mortgages held by it. such proceeding. As initiated, it was for On December 4, 1923, said property being the benefit of the estate, and obviously with sold by appellant bank at public auction un- consent of the trustee, as the attorney who der terms of said mortgages, after paying commenced the proceeding in the name of the necessary expense and costs, including at- bankrupt was also attorney of record for the torney's fees, and debt and interest, a balance trustee. Appellants, in traversing allegaremained in hands of appellant bank in sum
tions as made by the bankrupt, specifically of $310.59. On December 5, 1923, sheriff, ask for relief against trustee of the estate. garnishing appellant bank, said amount being At what period in the proceeding this quesplaced in registry of state court, it was then tion was brought to attention of the referee paid to appellant S. R. Parvin. On April is not disclosed by the record. No such ob9, 1924, bankrupt, through his attorney, who jection was made in the pleadings or eviwas also attorney of record for trustee in dence, as reported, before the referee as bankruptcy, commenced, by motion sup- same appear in the record. ported by affidavit, proceeding before referee In the certificate of the referee we find the in bankruptcy to have all of said property, following: "Appearances: First State Bank or proceeds thereof, delivered to possession of Crook, S. R. Parvin, by Coen & Sauter, of trustee.
Gladys F. Fox, trusOn April 26, 1924, appellant bank by afi- tee, by W. L. Hays, her attorney." Both
trustee and referee treated the matter as at by taking possession under mortgage which
livery of an execution to the sheriff exists;
ler, it was held: "The statute of Colorado 3. (a) Did a valid lien exist on the prop- provides that 'no writ of fieri facias, or other erty covered by the mortgage to the hardware writ of execution, shall bind the estate of the company at time of sale? Section 5085, defendant but from the time such writ is Compiled Laws of Colorado 1921, provides: delivered to the sheriff or other proper officer “Every chattel mortgage shall be good and to be executed.' Under this statute, an exvalid between the parties thereto until the ecution on a judgment is a lien on the debtindebtedness secured thereby is paid, or bar- or's property from the time it is delivered red by the statute of limitations."
to the sheriff to be executed, which will be Section 5093 Compiled Laws of Colorado protected in bankruptcy, and will not be de1921, providing for extension of mortgage feated hy a petition in bankruptcy, filed after lien by filing of an affidavit showing amount the delivery but prior to the levy of the exdue and unpaid, relates only to rights which ecution.” may be acquired by attaching or levying  Judgment being rendered on September creditors or subsequent lienholders. In Bog- 29, 1923, against bankrupt, execution was don, Trustee, v. Fort, 75 Colo. 231, 225 P. placed in hands of sheriff some time before 247, involving defect as to mortgage on ac. appellant took possession under its mortcount of failure to acknowledge and record, gage, which was on November 19, 1923, and it was held that: “Even though the mort- prior to filing of petition in bankruptcy. gage is invalid as to creditors or third per. The bankrupt testified that “Parvin obtained sons, whose rights or interests have become a judgment against me on the 29th day of a lien through judicial process or contract September, 1923. The sheriff was out with during the time that the property remains
an execution, but did not take possession; in possession of the purchaser mortgagor, but afterwards the bank did.” On December yet if the mortgagee takes possession, and 5, 1923, the sheriff, on the day after the sale thereafter continuously retains it before such under the mortgage, served garnishment sumrights of creditors and third parties attach, mons on appellant bank. The execution such taking of possession by the mortga- lien was not avoided by appellant's possesgee cures defects in the execution and re- sion under its prior mortgage, nor by failure cording of the instrument, and the mortgagee of sheriff to make an effectual levy as against thus acquires a superior right.”
possession of appellant bank; the right of [3, 4] The holding of the Colorado court in the execution creditor existing only as to construction of its mortgage statute is con- whatever remained after satisfaction of prior trolling here. The referee's finding that appel- claims existing by virtue of the mortgages lant bank was in possession under its mort- held by appellant bank. gages at and prior to date of adjudication in [7-9] 3. (c) Was said lien of judgment bankruptcy, as confirmed by the trial court, creditor void on account of arising within is sufficiently supported by evidence. So, four months immediately preceding filing pe having taken possession under mortgage tition in bankruptcy? That the bankrupt within four months immediately prior to was insolvent when judgment was recovered filing of petition in bankruptcy, same being within four months, such lien thereunder given prior to said four months period, bank- existing prior to filing of petition in bankruptcy did not operate to avoid lien preserved ruptcy, must be proved to the satisfaction of
10 F.(20) 119 the court by the trustee in bankruptcy, ap. 3. Bankruptcy Om 409(1)-Failure to keep ac, pellee herein. Liberty National Bank v.
count books and intent to conceal financial
condition must concur, to warrant denial of Bear, 265 U. S. 365, 44 S. Ct. 499, 68 L. Ed.
discharge on that ground. 1057; Taubel, etc., Co. v. Fox, 264 U. S. 427,
Before a bankrupt can be denied discharge, 44 S. Ct. 396, 68 L. Ed. 770. Nor does the under Bankruptcy Act, $ 14b (2), as amended fact that sales of the property of the bank. by Act June 25, 1910, $ 6 (Comp. St. $ 9598), rupt, made by the trustee some time after for failure to keep books of account, there
must appear, not only such failure, but an indate of adjudication in bankruptcy, did not
tent on part of bankrupt to conceal his true realize an amount sufficient to pay the debts financial condition, which intent, however, may of the bankrupt, establish fact of insolvency be presumed from facts and circumstances. at a time anterior to filing of bankruptcy 4. Bankruptcy 414(3)-Evidence held to petition. Liberty National Bank v. Bear, su- warrant denial of discharge for failure to pra. Insolvency at time of rendition of the keep account books. judgment and placing of execution in hands Evidence held to warrant denial of dig. of the sheriff is not sustained, either by amended by Act June 25, 1910, § 6 (Comp.
charge, under Bankruptcy Act, $ 14b (2), as pleading or proof. This burden rested on
St. $ 9598), for failure to keep books of account appellee. The judgment and lien thereunder, or records, except as to creditors who were though within four months immediately pre- estopped to oppose discharge. ceding filing of petition in bankruptcy, was 5. Bankruptcy Om 405Creditors held estopped some time anterior thereto. The record is to oppose discharge. without evidence to establish bankrupt's in- Creditors, who, after managing debtor's solvency at time lien was created under said business for several months through a credit execution.
association, procured execution by debtor of a
deed of trust of all his property, less exempThis cause is remanded, with instructions tions, to manager of the association, for the to modify order appealed from, so as not only benefit of creditors, in which they agreed to reto award to appellant bank a sum sufficient lease him from all claims to same extent as he to discharge the $1,000 note, with interest, and who thereafter violated covenants of the
would be released by proceedings in bankruptcy, costs, attorney's fees in the sum of $100, and deed, and threw debtor into bankruptcy, held taxes, but also the hardware company note, estopped to oppose a discharge. and the balance, in the sum of $310.59, to ap- 6. Bankruptcy Om 405-Creditors authorizing pellant S. R. Parvin, on account of his execu- execution of deed of trust in their names held tion lien.
As respects estoppel to oppose discharge, creditors, who by power of attorney authorized manager of credit association in their names
to join in execution of deed of trust by debtor SCHIEBER V. HAMRE.
for benefit of creditors, held bound by the terms
of the deed, though their names were not in (Circuit Court of Appeals. Eighth Circuit.
Appeal from the District Court of the
United States for the District of North Da1. Bankruptcy M413(V2)-Attorney, to vote on question of authorizing trustee to oppose kota; Andrew Miller, Judge. discharge, need not produce power of attor.
In the matter of the bankruptcy of P. C. ney from clients.
Hamre. From a decree granting bankrupt's Under Bankruptcy Act, $ 14b, as amended by Act June 25, 1910, 8 6 (Comp. St. § 9598), petition for discharge, 0. A. Schieber, trusattorney authorized to practice in federal tee, appeals. Proceeding remanded, with incourts, assuming to represent clients, creditors structions to modify decree. of bankrupt, need not, in absence of challenge to his authority, produce a power of attorney
G. W. Twiford, of Minot, N. D., for apfrom his clients to empower him to vote on pellant. question of authorizing trustee to oppose dis- Halvor L. Halvorson, of Minot, N. D., charge; and trustee's opposition to discharge for appellee. was not unauthorized, because directed only by vote of attorney.
Before KENYON and BOOTH, Circuit 2. Bankruptcy 467, 468_Trial is de novo
Judges, and AMIDON, District Judge. on appeal in bankruptcy proceedings; case will be disposed of on appeal.
BOOTH, Circuit Judge. On September On appeal in bankruptcy proceedings, as
29, 1923, P. C. Hamre, on the petition of in equity, trial is de novo, and, if record is three of his creditors, was adjudicated a sufficiently full, case will be disposed of in appellate court, except in cases involving peculiar bankrupt. In due course he applied for a facts.
discharge. The trustee appeared in opposition. The matter was referred to a special In re Ruhlman (C. C. A.) 279 F. 250; Credmaster, who reported, recommending that a itors v. Williams, Fed Cas. No. 3,379; In re discharge be denied. The court below disre- Knoepfel, Fed. Cas. No. 7,891; In re Palmer, garded the recommendation of the special Fed. Cas. No. 10,682; In re Purvis, Fed. Cas. master, and ordered that a discharge be No. 11,476. That such power of attorney is granted. An appeal by the trustee has not necessary is held either directly or imbrought the matter here.
pliedly by the following authorities: In re One of the main questions involved is Gasser (C. C. A. 8) 104 F. 537, 44 C. C. A. whether the trustee was duly authorized to 20; In re Peck (D. C.) 120 F. 972; In re oppose the discharge, as required by section Crooker Co., 27 Am. Bankr. Rep. 241. 14b of the Bankruptcy Act, as amended by  We do not think the language of the Act June 25, 1910, § 6 (36 Stat. 838 [Comp. Bankruptcy Act, when properly construed, St. § 9598]). The record discloses that a requires such power of attorney, nor do we meeting of creditors was duly called by the think the conditions of practice in this cirreferee for the purpose of passing on the cuit to be such as to compel us to adopt such question whether the trustee should be so au- a rule. In the case of In re Gasser, supra, thorized. At this meeting appeared one Twi- this court, speaking by Judge Sanborn, said: ford, an attorney at law duly authorized to “Proceedings in bankruptcy are proceedpractice in the federal courts. He had there- ings in court. An attorney at law, admitted tofore represented various creditors in the to practice in a court, is presumed to have bankruptcy proceeding, and he now voted, as authority to appear and act for any party representing these creditors, in favor of au- whom he seeks to represent in that court. thorizing the trustee to oppose the discharge. The Bankruptcy Law of 1898 provides that No other votes were cast. Twiford had no a creditor may file objections to and oppose power of attorney from any of the creditors the discharge of a bankrupt, and that the whom he assumed to represent, save one, term 'creditor shall include the duly authorMarshall Field & Co., and the sufficiency ized agent, attorney, or proxy of a creditor. even of this power of attorney is challenged. An attorney at law, admitted to practice in
Upon this state of facts the court below the court, who enters his appearance for a held that Twiford had no authority to vote creditor in opposition to the discharge of a in behalf of the creditors on the question of bankrupt, is presumed, under the general authorizing the trustee to oppose the dis- law, to be his duly authorized attorney, and charge of the bankrupt, and therefore that is therefore included under the term 'credithe trustee had no authority to make such tor,' and is authorized to appear and to opopposition. In these conclusions we think pose the discharge of the bankrupt.” the court erred, and we do not find it neces- The views thus expressed, with which we sary to pass upon the sufficiency of the Mar- are in hearty accord, are, we think, decisive shall Field & Co. power of attorney.
of the question under consideration in the The authorities are not in accord upon case at bar. Our conclusion is that failure the question whether an attorney at law, who by Twiford to produce powers of attorney is duly authorized to practice in the federal from the creditors whom he represented did courts, and who assumes to represent his cli- not invalidate the vote authorizing the trusents, creditors in a bankruptcy proceeding, tee to oppose the discharge of the bankrupt. must, in the absence of a direct challenge to It is contended by the appellant that this his authority, produce a power of attorney question as to the authority of the trustee. from his clients to empower him to vote on was the only question passed upon by the the question of authorizing the trustee to court below, and that therefore this court oppose the discharge of the bankrupt, or on cannot consider other questions in the recthe kindred question of electing a trustee. ord. We cannot agree with this contention, That such a power of attorney is necessary even conceding, though not deciding, that the is held directly or impliedly by the following court below considered and passed upon only authorities: Remington on Bankruptcy (3d the single question mentioned. Ed.) 8 707; In re Blankfein (D. C.) 97 F.  Upon an appeal in equity, and also up191; In re Sugenheimer (D. C.) 91 F. 744; on an appeal in bankruptcy proceedings, triIn re Eagles & Crisp (D. C.) 99 F. 695; In al is had de novo, and the case will be disre Richards (D. C.) 103 F. 849; In re Scul- posed of in the appellate court, if the record ly (D. C.) 108 F. 372; In re Henschel (D. is sufficiently full, except in cases involving C.) 109 F. 861; Id., 113 F. 443, 51 C. C. A. peculiar facts. Elliott v. Toeppner, 187 U. 277; In re Lazoris (D. C.) 120 F. 716; In S. 327, 23 S. Ct. 133, 47 L. Ed. 200; Houghre Capitol Trading Co. (D. C.) 229 F. 806; ton v. Burden, 228 U. S. 161, 33 S. Ct. 491,
10 F.(2d) 119 57 L. Ed. 780; Courier-Journal Co. v. which provides for a discharge of the bankSchaefer-Meyer Co., 101 F. 699, 41 C. C. A. rupt "unless he has
with intent 614; Dodge v. Norlin (C. C. A. 8) 133 F. to conceal his financial condition, destroyed, 363, 66 C. C. A. 425; Harrison v. Clarke concealed, or failed to keep books of account (C. C. A. 8) 182 F. 765, 105 C. C. A. 197; or records from which such condition might In re B. & R. Glove Corp. (C. C. A.) 279 be ascertained." F. 372; Unkle v. Wills (C. C. A. 8) 281 F. The record discloses the following facts 29; Wood County Grocer Co. v. Frazer tending to support the specification: That (C. C. A. 8) 284 F. 691; Stalcup v. Jepson during the first half of the year 1922 the (C. C. A. 8) 289 F. 479; Daniels & Fisher bankrupt paid to his wife approximately $2,Stores Co. v. Gregg (opinion this court Nov. 300 on account of debts owed by him to her, 2, 1925) 9 F.(20) 43. In Stalcup v. Jep- and that such payments were made out of son, supra, a case somewhat similar to the the proceeds of the business of the bankrupt, one at bar, this court said:
but were not entered upon the books. These “The order denying discharge is general, payments were made partly from sales of but the record contains a brief opinion of furniture, partly from sales of caskets, partthe District Judge, in which he found that ly from moneys received by the bankrupt discharge should be denied on the second for acting as director at funerals. The recground stated. He expressed no opinion as ord further discloses that the bankrupt kept to whether either of the other grounds of ob- no accurate account of his expenses and that jection was sustained by the evidence. It is the same were not entered upon the books; argued here (a) that the facts do not sup- and the record further discloses that certain port the conclusion stated by the District household furniture was taken from the stock Judge; and (b) that this court has no right of the bankrupt and turned over to his wife to review and weigh the evidence for the pur- and that no record was kept upon the books pose of deciding whether either of the other of such transaction. objections was established; that we are re-  Before a bankrupt may be denied a disstricted to an inquiry as to whether the rea- charge for failure to keep books of account son given by the District Judge is sustained under the clause of the statute above quoted, by the proof, and, if not, there must be re- two things must 'concur: First, there must versal. We must reject both contentions. be a failure to keep proper and accurate As to the first, we have no doubt that the books of account; second, there must be an facts fully support the conclusion of the intent on the part of the bankrupt to conceal court on which the order was entered, and, his true financial condition from his credias to the second, the appeal of the bankrupt tors. . This intent, however, may be precomes here under section 25a (Comp. St. § sumed from facts and circumstances. No 9609), as in equity cases, and the facts and satisfactory explanation was given by the law are both submitted to us for review and bankrupt relative to his failure to keep acdecision."
curate books of account, so far as they reTo the same effect, see Daniels & Fisher lated to the items above mentioned, and unStores Co. v. Gregg, supra.
der these circumstances we think that the Passing to a consideration of the merits, rule announced by this court in McKibbon the record discloses the following ground for v. Haskell, 198 F. 639, 642, 117 C. C. A. opposing the discharge :
343, 346, should apply. In that case the "First Specification.--Said bankrupt has, court in its opinion said: with intent to conceal his financial condition,
“The act of Congress proclaims the prefailed to keep books of account or records, sumption and expectation of the law that from which such condition might be ascer- honest merchants will keep account books tained, in that during the year 1922 said which will disclose their true financial conbankrupt did sell large amounts of merchan- dition. In the absence of prevailing evidise to divers persons and not enter the sales dence to the contrary, every man is preor receipts from said sales on his books or sumed to intend the natural and inevitable records and did not enter on his books and consequence of his acts.” records funerals which he directed and the  Considering the facts in the light of the fees he received from same and did not enter rule quoted, we are led to the conclusion that on his books or records the caskets he sold in the evidence sustains the specification of obthe course of business and the money he re- jection to a discharge, and that, in the abceived for same.”
sence of countervailing considerations, a disThis specification is based upon section charge should be refused.
. 14b (2) of the Bankruptcy Act, as amended, It is contended, however, that the credi