Case ID: f_156/html/0543-01.html
Source: Caselaw Access Project
Author: {"author": "HOLT, District Judge.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

In re WOLF.
    (District Court, S. D. New York.
    June 28, 1907.)
    No. 9,632.
    BANKRUPTCY — DrSOiIAKGE---D>:.STETTCTION OF BOOKS OF ACCOUNT.
    Under Bankr. Act July 1, 1898, e. 511. § 14b (2), 30 Stat. 550 |U. S. Comp. St. 3901, p. 3428], as amended by Act Feb. 5, 1903, c. 487, § 4, 82 Stat. 797 [U. S. Comp. St. Supp. 1907, p. 1026], which makes it a ground for refusal of a discharge if the bankrupt has, “with intent to conceal his' financial condition, destroyed, concealed or failed to keep books of account or records from wbicb such condition might be ascertained,” a bankrupt is not entitled to a discharge where he admittedly destroyed his books of account with Intent to conceal the record of his business, although he testifies that it was done to destroy evidence of his violation of a statute of the state and to defeat a criminal prosecution therefor.
    [Ed. Note. — For cases in point, see Cent. Dig. vol. 6, Bankruptcy, § 739.]
    In Bankruptcy. On application for discharge.
    M. A. Lesser, for bankrupt.
    L. M. Berkeley, for objecting creditor.
   HOLT, District Judge.

This is a motion to confirm a referee’s report recommending a discharge. The discharge was objected to on the ground that the bankrupt had destroyed his books of account with intent to conceal his financial condition. The bankrupt admits that he destroyed his books of account, and testifies, in substance, that he did so because he had been engaged in the business of making loans upon usurious interest, that the district attorney had instituted criminal prosecutions under the usury laws against others in the same business, and that he had destroyed his books in order to prevent the district attorney obtaining through them evidence upon which to prosecute him, and not for the purpose of concealing his condition from his creditors. The referee has reported that his purpose was to thwart .a prosecution for crime, and not to conceal his financial condition, and recommends his discharge.

The language of the act (Bankr. Act July 1, 1898, § 14b[2], as amended in 1903, 32 Stat. 797, c 487 [U. S. Comp. St. Supp. 1907, p. 1026]) is that the court shall discharge the bankrupt unless he has, “with intent to conceal his financial condition, destroyed, concealed or failed to keep books of account or records from which such condition might be ascertained.” Perhaps the first impression which the language “with intent to conceal his financial condition” gives is an intent to conceal such condition from his creditors, but the act does not say so. In this case the bankrupt admits that he destroyed his books with intent to conceal the records of his business, which, if exhibited, would show that he had been doing business in violation of a criminal statute; and I think that he therefore destroyed his books with intent to conceal his financial condition. It would be a dang'erous precedent to establish in the bankrupt law that a man who willfully destroyed his books with the intent thereby to conceal evidence of a crime, and defeat a criminal prosecution, could thereby defeat objections to his discharge. Such an act is a willful destruction of the evidence which the bankrupt act contemplates should be preserved for the benefit of creditors. It is an act which, in fact, conceals his financial condition from his creditors. I think that such an act, if actually done with the intent of concealing a crime, and not of injuring the creditors, comes within the language of the act. If such a defense should be held good, it might be falsely set up.

In my opinion, upon the whole, the specification of objection to the discharge was proved, and the discharge should be refused.