Case ID: f-supp_26/html/0933-01.html
Source: Caselaw Access Project
Author: {"author": "HARRY E. WATKINS, District Judge.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

In re SIMS.
    District Court, N. D. West Virginia.
    March 24, 1939.
    
      William Bruce Hoff and Richard Moore, both of Parkersburg, W. Va., for Workman’s Finance Corporation.
    .. John J. Yankiss, of Parkersburg, W. Va., for bankrupt.
   HARRY E. WATKINS, District Judge.

On May 26, 1938, Workman’s Finance Corporation, a creditor of the bankrupt) filed verified objections to discharge on the ground that bankrupt had obtained credit from it by making a materially false financial statement. The special master to whom the objections were referred has reported that: (1) The required indemnity for costs has not been paid, and (2) that bankrupt had given the objecting creditor a new note or other evidence of indebtedness, and that objecting creditor desired its objections to discharge be withdrawn. Tne referee recommended that discharge be granted. No creditor has opposed confirmation of the master’s report- or otherwise objected to discharge. There being no assets to administer, and the case arising prior to the effective date of the Chandler Act; no trustee was appointed. The question before me is whether bankrupt’s discharge should be granted now.

Except as otherwise expressly provided, the provisions of the Chandler Act govern proceedings so far as practicable in cases pending on September 22, 1938 (section 7), when it took effect. Ch. 14, § 6(b), 52 Stat. 940, 11 U.S.C.A. § 1 note. Express provision has been made in Section 14(d) of the Chandler Act, 11 U.S.C.A. § 32(d), to cover the exact factual situation now arising in this case. Upon request of the court it is the duty of the United States Attorney to “examine into the acts and conduct of the bankrupt and, if satisfied that probable grounds exist for the denial of the discharge and that public interest warrants, he shall oppose the discharge of such bankrupt in like manner as provided in the case of a trustee”.

Although this case was pending when the Chandler Act became effective, it appears entirely practicable to here apply the provisions of Section 14(d) and request that the United States Attorney investigate the conduct of the bankrupt. The amendment was intended to cover such a situation.

It would seem that small loan companies such as the Workman’s Finance Corporation would be vitally interested in the prosecution of objections to discharge in cases of this kind. If interest is lost as soon as their debts are satisfied, it is the duty of the court to protect the interest of all parties by requesting investigation of the acts of fraud described in the finance company’s sworn specifications of objection to discharge. If the charges against bankrupt are false, he should be exonerated; if they are true, his discharge should be denied, in the. interest of justice, irrespective of the fact that the creditor making the charges of fraud is no longer interested in prosecuting its objections.

An order may be entered requesting the United States Attorney to investigate the conduct of the bankrupt. Action on the petition for discharge will be withheld for a reasonable time to permit such investigation to be made.