Court Opinion

ID: 8168232
Source: CourtListenerOpinion
Date Created: 2022-09-09 21:05:38.923347+00
Date Added: 2024-06-11T16:39:42.177639
License: Public Domain

ELLETT, Justice
(concurring).
I concur but desire to add a few words by way of clarification.
Section 14c. (3) of the Bankruptcy Act, which is U.S.C.A., Title 11, Chap. 3, Sec. 32(c) (3), as amended in I960, provides:
The court shall grant the discharge unless satisfied that the bankrupt has * * * (3) while engaged in business as a sole proprietor, partnership, or as an executive of a corporation, obtained for such business money or property on credit or as an extension or renewal of credit by making or publishing or causing to be made or published in any manner whatsoever a materially false statement in writing respecting his financial condition or the financial condition of such partnership or corporation; * * *.
The defendant was president of a corporation engaged in the automobile business, but he did not obtain money for the corporation. He borrowed for himself and made false oral statements about the financial condition of the corporation, which business would be the source of his ability to repay, and thus he induced the plaintiffs to make various loans to him.
Section 17a. (2) of the Bankruptcy Act, which is U.S.C.A., Title 11, Chap. 3; Sec. 35(a) (2), provides:
A discharge in bankruptcy shall release a bankrupt from all of his provable debts, whether allowable in full or in part, except such as * * * (2) are liabilities for obtaining money or property by false pretenses or false representations, or for obtaining money or property on credit or obtaining an extension or renewal of credit in reliance upon a materially false *186statement in writing respecting his financial condition made or published or caused to be made or published in any manner whatsoever with intent to deceive, * *
It is to be noted that Section 14c. (3) above set out has reference to the duty of the bankruptcy court in determining whether or not to grant a discharge. It applies only to commercial men, that is, to those who engage in business and borrow money for the business. Section 17a. (2) states what effect a discharge has upon the debts of the bankrupt after he is granted the discharge. There is no conflict between the two sections whatsoever.1 This section applies to all bankrupts and not just to those engaged in business.
It is the defendant’s contention that since he did not give a false statement in writing, his debt is discharged by reason of Section 17a. (2) of the Bankruptcy Act. I think he would be correct in this contention were it not for the fact that not only did he make a false oral statement regarding the financial condition of the business concern, but he actively prevented the plaintiffs from learning of the deceit. Mr. Gear was a director of the corporation of which the defendant was president, and the defendant gave specific instructions to the secretary of the corporation not to notify Mr. Gear of board meetings when the financial condition of the corporation was to be discussed. I think this active fraud is sufficient to defeat the defendant’s claim of discharge, and I therefore concur in the main opinion.

. 8A c.J.S. Bankruptcy § 510, at page 1061.