UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

In Re: DALE ALAN KEY,

Debtor.

DAVID S. WILSON; SMITH MOUNTAIN

REALTY, INCORPORATED, a Virginia

No. 97-1408

corporation,

Plaintiffs-Appellants,

v.

DALE ALAN KEY,

Defendant-Appellee.

Appeal from the United States District Court

for the Western District of Virginia, at Lynchburg.

Jackson L. Kiser, Senior District Judge.

(CA-96-16-L, BK-95-271-WA-1-7, AP-95-27-A)

Argued: October 2, 1997

Decided: December 11, 1997

Before MICHAEL, Circuit Judge, BUTZNER,

Senior Circuit Judge, and MAGILL, Senior Circuit Judge of the

United States Court of Appeals for the Eighth Circuit,

sitting by designation.

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Affirmed by unpublished per curiam opinion.

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COUNSEL

ARGUED: George Irving Vogel, II, VOGEL & CROMWELL,

L.L.C., Roanoke, Virginia, for Appellants. William Floyd Schneider,
SMITH & FALCONE, Lynchburg, Virginia, for Appellee. ON

BRIEF: James Robert Cromwell, VOGEL & CROMWELL, L.L.C.,

Roanoke, Virginia, for Appellants. W. Alan Smith, Jr., SMITH &

FALCONE, Lynchburg, Virginia, for Appellee.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

David S. Wilson appeals a judgment of the district court that

affirmed the decision of a bankruptcy court discharging the debt Dale

Alan Key owed him. We affirm.

This claim arises out of the 1993 sale of a real estate brokerage

business, Smith Mountain Realty, Inc. (SMR), by Wilson to Key. Key

paid $25,000 in cash and signed a purchase money note for the

$60,000 balance, secured by an assignment of SMR's stock and

assets. In January of 1994, Key defaulted on the note. Wilson sued

Key and on February 9, 1995, obtained a judgment against him for

$64,867 plus interest, costs, and attorney fees. Key filed for bankruptcy on February 22, 1995. Key turned the stock and tangible assets

of SMR over to Wilson, as ordered, on or before March 8, 1995.

Wilson contested the discharge of Key's liabilities under 11 U.S.C.

§ 727(a)(3), (a)(4)(A), and (a)(5). Wilson also claimed that the debt

owed him by Key should be excepted from discharge pursuant to 11

U.S.C. § 523(a)(4) and (a)(6). After a trial, the bankruptcy judge dismissed Wilson's complaint and granted Key a discharge of his debts

in bankruptcy. Wilson appealed to the district court. The district judge

remanded the action to the bankruptcy judge to make specific findings

of fact. The bankruptcy judge made findings of fact, to which Wilson

objected. After a hearing on Wilson's objections, the bankruptcy

judge declined to amend his findings of fact.

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The district judge then found that the bankruptcy judge's findings

were not clearly erroneous and affirmed the denial of Wilson's

motion and Key's entitlement to a discharge in bankruptcy. Wilson

now appeals.

While we review the district court's judgment de novo, we review

the bankruptcy judge's findings of fact for clear error and his conclusions of law de novo. See In re Tudor Assocs., Ltd., II, 20 F.3d 115,

119 (4th Cir. 1994). The bankruptcy judge held both a trial of this

case and a later hearing in order to make findings of fact. We review

his findings giving "due regard . . . to the opportunity of the bankruptcy court to judge the credibility of the witnesses." Bankr. Rule

8013. Before addressing Wilson's three assignments of error, we note

that the bankruptcy code favors discharge in bankruptcy and that the

code's exceptions to discharge are narrowly construed. See generally

6 Collier on Bankruptcy ¶ 727.01[4], at 727-12 (15th ed. rev. 1997).

I

Wilson alleges that he proved by a preponderance of the evidence

that Key knowingly and fraudulently made a false oath and that Wilson is therefore entitled to relief under 11 U.S.C.§ 727(a)(4)(A). To

deny discharge under this section of the bankruptcy code, Wilson

must prove that Key "made a statement under oath which he knew to

be false, and . . . made the statement willfully, with intent to defraud."

Williamson v. Fireman's Fund Ins. Co., 828 F.2d 249, 251 (4th Cir.

1987). "Whether a debtor has made a false oath within the meaning

of § 727(a)(4)(A) is a question of fact." Id. The bankruptcy judge

reviewed 11 statements that Wilson alleged were false and found that

Wilson failed to prove the requisite intent to deceive. The bankruptcy

judge further declined to infer fraudulent intent from the facts and circumstances of the case.

II

Wilson argues that he proved by a preponderance of the evidence

that Key did not satisfactorily explain the difference between his 1994

income and his stated annual expenses and that Wilson is therefore

entitled to relief under 11 U.S.C. § 727(a)(5). To merit a denial of discharge under this section, Wilson must prove that Key "has failed to

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explain satisfactorily . . . any loss of assets or deficiency of assets to

meet the debtor's liabilities." 11 U.S.C. § 727(a)(5). The bankruptcy

judge found that Wilson failed to provide evidence as to specific

missing funds and that the fact that Key's income exceeded his

expenditures did not prove that Key was secreting assets. As the

bankruptcy judge noted, "Key's personal and banking records were

introduced, and there was no evidence of any missing funds. Key testified at the hearing, and the court found that such testimony was

credible." (JA 249)

III

Wilson also alleges that he proved by a preponderance of the evidence that Key's withdrawal of funds and transfer of assets from

SMR was contrary to Wilson's perfected security interest and that

Wilson is therefore entitled to relief under 11 U.S.C. § 523(a)(6). To

establish that Key's debt to Wilson should be excepted from discharge under this section Wilson must prove that Key willfully and

maliciously injured Wilson's security interest in the property of SMR.

11 U.S.C. § 523(a)(6). Wilson must therefore prove that Key acted

deliberately and in knowing disregard of Wilson's rights. See In re

Stanley, 66 F.3d 664, 667 (4th Cir. 1995). The bankruptcy judge

found that Key traded some of SMR's equipment but that there was

no evidence that the trade was for less than fair value. The bankruptcy

judge further found that Key's withdrawals of funds from SMR were

in line with compensation paid him by SMR before he took over the

business, were for legitimate business purposes, were not extravagant,

and were not made with the intent to defraud.

IV

We conclude that the bankruptcy judge's findings are not clearly

erroneous. Its decision to discharge Key's debts, including that owed

Wilson, properly applied pertinent sections of bankruptcy law. We

affirm the judgment of the district court upholding the bankruptcy

court's discharge.

AFFIRMED

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