Case Name: In re WILCOX
Court: United States Court of Appeals for the Second Circuit
Jurisdiction: United States
Decision Date: 1900-12-06
Citations: 109 F. 628
Docket Number: No. 18
Parties: In re WILCOX.
Judges: Before LACOMBE and SHIPMAN, Circuit Judges.
Reporter: Federal Reporter
Volume: 109
Pages: 628–631

Head Matter:
In re WILCOX.
(Circuit Court of Appeals, Second Circuit.
December 6, 1900.)
No. 18.
1. Bankruptcy — Discharge—Concealment of Assets.
The failure of a bankrupt to include in his petition and schedules real estate which he caused to be conveyed to another some years before for the purpose of defrauding his then creditors, and which is still held by the grantee on a secret trust for the bankrupt, is a fraudulent concealment of property from his trustee, and his verification of his schedule constitutes a false oath, which defeats his right to a discharge.
8. Same — Hearing of Objections to Discharge — Evidence.
The testimony of third persons, taken on the examination of a bankrupt before the referee, is not directed to a defined issue, and is inadmissible on a subsequent hearing of specifications against the bankrupt’s application for discharge.
Appeal from the District Court of the United States for the Northern District of New York. ■
This is an appeal from an order of the district court for the Northern district of New York, which confirmed the report of the referee upon the petition of Joseph H. Wilcox, a bankrupt, for his discharge from his debts, and upon the specifications in writing of a creditor in opposition thereto, and adjudged that the discharge of the bankrupt was denied. Wilcox, a resident in the Northern district of New York, filed his petition in bankruptcy in the district court for said district. Judge Coxe deeming himself disqualified to hear the issue joined upon the petition for a discharge and objections filed thereto, the matter was certified to the district court for the Northern district of New York.
Kernan Bros. & Quin-and Max J. Kohler, for appellant.
Charles D. Adams, for appellee.
Before LACOMBE and SHIPMAN, Circuit Judges.

Opinion:
SHIPMAN, Circuit Judge.
The specifications in opposition to the discharge were, in substance, as follows:
"(1) That Wilcox, while a bankrupt, concealed from his trustee property belonging to his estate in bankruptcy, viz. lot No. 13 in the Devereux tract, In Oneida county, which he had placed in secret trust for his benefit before filing his petition and being adjudged a bankrupt, the apparent title to which lot was in one William H. Bigelow, his brother-in-law. (2) That the property was omitted from his petition and schedules, and for that reason the verification of each thereof was false."
Lot No. IB and the buildings thereon were omitted from the petition and schedules of the bankrupt. The testimony showed that Wilcox gave a mortgage on July 16, 1888, to Warner Miller, of over 8,000 acres of land in Oneida and Herkimer counties, in the state of New York, including a part of the Devereux tract, which the line between those counties divides, to secure accommodation indorsements. , The Oneida County Bank discounted notes of this class amounting to $10,000, which were renewed, were unpaid, and have been proved in the bankruptcy proceedings. Wilcox also gave on November 25, 1889, to the Oneida County Bank, another mortgage on about 4,000 acres of the land in Herkimer county covered by the Miller mortgage, to secure other notes, amounting to $4,000, which were renewed, were unpaid, and have also been proved against the bankrupt estate. Lot 13 in the Devereux tract in Oneida county is not in tbe Miller mortgage. Lots 5, 6, 7, 12, and 14 in that tract, and in the same county, were included in tbe mortgage to Miller. Each of these lots contains about 100 acres, and all of them are covered by or surround Otter Lake. After the dale of the Miller mortgage, Wilcox permitted all these lots and other portions of the mortgaged lands to be sold for taxes, and at the sale in 1893 by the Oneida county treasurer the Oneida county lots which have been named were bid in by one Banger, who, at Wilcox's instance, assigned tbe bids to one Bigelow, in whose name deeds were made out by tbe county treasurer.. Bigelow was Wilcox's brother-in-law, and a man of no substantial pecuniary means. Wilcox paid the consideration for the purchase of lot 13 and transacted the entire business. Tbe mortgagees, when they learned of these pretended sales, compelled Wilcox and Bigelow to execute to Miller a deed of trust, so as to replace in the mortgage security the lots theretofore in the mortgage, which had been lost by these tax sales and deeds; but lot 13 remained in the name of Bigelow. Before the date of this deed of trust, Wilcox had procured a map of the Otter Lake lots to be made out. Cottage sites were laid out about tbe lake, and in 1896 or 1897 he built a summer hotel upon lot 13, which was burned in 1897, and rebuilt by Mm in 1898. The insurance money of $5,000 paid under the policy in the name of Bigelow was delivered by him to Wilcox. Wilcox kept tbe hotel in 1897, and bad charge of it in 1898, furnished all the money for it, and was its actual owner. The title in Bigelow was a pretense, and the suggestion that Wilcox was his agent in the hotel ownership and business is without foundation. The tax deed was made and received in Bigelow's name, without consideration moving from him, in pursuance of a collusive scheme of Wilcox, who was heavily indebted at the time, so that he might be enabled to remove the Otter Lake property, and whatever should be added thereto, from the reach of existing or future creditors. All the facts connected with these various tax sales and tax deeds to Bigelow show that the object of all these conveyances was to defraud the existing creditors of Wilcox, among whom was the Oneida County Bank; and that which is true in regard to the conveyances of lots under the Miller mortgage is especially true in regard to the conveyance of lot 13. "When a voluntary conveyance is made and received with an actual intent to defraud the then existing creditors of the grantor, it is not a bona fide conveyance, which can protect the grantor against the-claims of subsequent creditors." King v. Wilcox, 11 Paige, 589: Lilienthal v. Drucklieb, 34 C. C. A. 657, 92 Fed. 753, a.nd cases Iherein cited. We concur in tbe finding of facts by tbe district judge that tbe property was held in Bigelow's name upon a secret trust for the bankrupt's benefit, and was fraudulently concealed from the trustee, and fraudulently omitted from bis schedules.
Upon the hearing before tbe referee upon the petition for a discharge and the specifications in opposition thereto the referee admitted the minutes of the testimony of Albert M. .Mills, .Warner Miller, and Bigelow, taken before the same referee at the examination of Wilcox in the bankruptcy proceedings. The appellant excepted to the admission of this testimony as incompetent upon the trial of the issues arising upon t-he petition for a discharge, the ground of the exception being that the testimony was given in other suits, and therefore was not admissible in this suit. The testimony was taken upon the examination of Wilcox in the same bankruptcy proceeding, and the objection of the appellant rests upon the idea that the different motions, petitions, and hearings thereon are several suits, but "a proceeding in bankruptcy, from its commencement to its close upon the final settlement of the estate, is but one suit. The several motions made and acts done in the bankrupt court in the progress of the cause are not distinct suits at law or in equity, but parts of one suit in bankruptcy, from which they cannot be separated." Wiswall v. Campbell, 93 U. S. 347, 23 L. Ed. 923. The testimony taken upon the examination of the bankrupt is taken in the whole pending proceeding, and was properly introduced and read upon the hearing of a petition for a discharge. The order and judgment of the district court are affirmed, with costs of this court.