Case ID: f_164/html/0691-01.html
Source: Caselaw Access Project
Author: {"author": "PHILIPS, District Judge.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

SETGEL v. CARTEL et al.
    (Circuit Court of Appeals, Eighth Circuit.
    October 19, 1908.)
    No. 2,681.
    1. Bankruptcy (§ 414) — Failure of Bankrupt to Account for Property —Presumption.
    Where a bankrupt fails to schedule or to surrender to his trustee goods shown to have been in his possession a short time prior to his bankruptcy, the burden rests upon him to account for the same, and, if he fails to do so, the presumption is that he sold them and conceals the proceeds.
    [Ed. Note. — For other cases, see Bankruptcy, Dec. Dig. § 414.]
    2. Bankruptcy (§ 467) — Discharge—Credibility of Witness — Discretion of Court.
    Whore the granting of a discharge to a bankrupt was objected to on the ground that he fraudulently concealed the proceeds of property sold, and there was reasonable ground for the action of the District Judge in discrediting his testimony in explanation, the exercise of his discretion will not be reviewed.
    [Ed. Note. — -For other cases, see Bankruptcy, Cent. Dig. § 929; Dec. Dig. § 467.]
    Appeal from the District Court of the United States for the Southern District of Iowa.
    M. H. Cohen, for appellant.
    N. T. Guernsey and C. F. Maxwell, for appellees.
    Before SANBORN and HOOK, Circuit Judges, and PHILIPS, District Judge.
    
      
      For other oases see same topic & § number in Dee. & Am. Digs. 1907 to date, & Rcp’r Indexes
      
    
   PHILIPS, District Judge.

This is an appeal from an order of the District Court refusing the petition of the bankrupt for final discharge. There are six specifications of objections to the discharge. If any one is good in law and is sustained by sufficient evidence, the order and decree of the District Court must be affirmed.

The substance of the first objection is that the bankrupt, within the four months immediately preceding the filing of the petition in bankruptcy, for the purpose of hindering, delaying, and defrauding his creditors, transferred, removed, destroyed, and concealed, or permitted to be transferred, removed, destroyed, and concealed, certain of his assets; appi'oximately $11,000 worth of his stock of merchandise, consisting of furniture, stoves, carpets, etc. The evidence clearly enough shows that this merchant, between the 1st day of January, 1904, and August of that year, just preceding the proceeding in bankruptcy, disposed of between eleven and thirteen thousand dollars worth of goods. In other words, he was short that amount of stock at the time of the declared bankruptcy. He was called upon by the referee to account for these goods or their proceeds; the presumption being, as they were not on hand, that he had disposed of them and the proceeds were in his possession. In re Deuell (D. C.) 100 Fed. 633; In re Cashman (D. C.) 103 Fed. 67. Not having scheduled or surrendered the property to the trustee, the concealment of the proceeds, within the provisions of the statute, is presumed. In re Finkelstein (D. C.) 101 Fed. 418; In re Meyers (D. C.) 96 Fed. 408; In re Morgan (D. C.) 101 Fed. 982.

The only tangible explanation of this shortage of funds by the petitioner is that he lost the money in gambling at poker. His evidence was that he had long indulged this habit of gambling, and estimated that he had probably at different times lost an aggregate of $100,000. As he seems to have been a most unlucky gambler, to say the least, it was not honest for him to thus take the proceeds of the goods he had purchased on credit to indulge his passion at the expense of his confiding creditors. While the statute does not deny the benefit of the bankrupt act (Act July 1, 1898, c. 641, 30 Stat. 544 [U. S. Comp. St. 1901, p. 3418]) to such a derelict, in administering the beneficent spirit of the act, the court, to prevent it becoming a covert to the delinquent undeserver, should see to it that his accounting is clear and free from reasonable doubt. Fie kept no book account of the withdrawal of this money or its disbursement. He did not introduce any evidence corroborative of the losses at gaming. He failed on close inquiry to give the name of one person with whom he played or the name of the proprietor of the establishment where he played, save one who was out of the state and last heard of at the St. Louis World’s Exposition, thus making it quite impracticable, if not impossible, for the objecting creditors to contradict him. He could give no particular dates or particular sums lost at “the sittings.” The credibility and reasonableness of his story were addressed to the judicial discretion of the District Judge. As there was, in our judgment, reasonable ground for discrediting his explanation, we will not review the exercise of that discretion. See In re Leslie (D. C.) 119 Fed. 406.

It results that the decree of the District Court must be affirmed.