Court Opinion

ID: 9447980
Source: CourtListenerOpinion
Date Created: 2023-08-03 23:19:08.638337+00
Date Added: 2024-06-11T17:31:14.973726
License: Public Domain

HUTCHESON, Circuit Judge
(dissenting).
I cannot agree with the opinion of the majority which, holding that the bankrupt should have been denied his discharge, reverses the findings and order *41of the referee and district judge, that he was entitled to a discharge.
With deference, it seems clear to me that the opinion completely overlooks the fact that the referee heard the testimony of the bankrupt and was in the best position of anybody to determine whether the necessary ingredient of fraud and intent was present and accompanied the making of the statements. '
As everyone knows, bankruptcy is an act of grace, having for its purpose and object the highly remedial one of doing away with the burdens and disabilities which in the olden days, before its passage, followed a man’s heavy involvement in debt, sometimes sent him to debt- or’s prison, and, even after imprisonment for debt was abolished, broke and destroyed the lives of persons whose chief fault was that they had dared to take a chance in the business world. The statute authorizing discharge, 11 U.S.C.A. § 32, reads: “(a) The adjudication of any person * * * shall operate as an application for a discharge: * * * ”, and in subsection c reads: “The court shall grant the discharge unless satisfied that the bankrupt has” done one of the things set out in that section. (Emphasis supplied.) These are (1) that he has “committed an offense punishable by imprisonment as provided under section 152 of Title 18;” or that he has done one of the specific criminal or fraudulent acts or things stated in the other subdivisions of that section.
Recognizing the remedial character of the discharge provisions, and that the prime purpose of bankruptcy is to secure a discharge and to start a new life for an unfortunate debtor, the courts have uniformly held that the definition of a materially false statement in writing respecting his financial condition as set out in subsection (3) of Section 32, sub. c, includes and requires criminal scienter, that is a willful purpose and intent to defraud and that especially where the bankrupt testifies and the trier has the opportunity to judge his credibility, the finding of fact of the referee that the bankrupt has not made a “materially false statement in writing respecting his financial condition”, within the meaning of the statute, is entitled the greatest respect and consideration.
The referee in this case, a long time referee in the Western District of Texas, with great knowledge and experience in administering bankruptcy, has, as he points out in his opinion and findings of fact, deliberately found in the bankrupt’s favor on this important fact, and the district judge, in refusing to set aside the referee’s finding, specifically pointed out that the referee had the opportunity to determine the bankrupt’s credibility in respect to this matter of criminal intent, and that he felt bound by the finding.
In these circumstances, it seems to me that, in reversing the referee’s findings of fact on the basis of an analysis of the statement, the opinion of the majority tithes mint, anise and cumin, and overlooks the weightier matters of the law, when it undertakes, by a dry bones accounting analysis, to convict the defendant of intentional and willful fraud, contrary to his testimony believed and accredited by the referee.
Where, as here, a single creditor, a bonding company which knew that, in bonding a contractor who was as much spread out as this one was, it was entering a speculative and risky business, seeks to prevent the bankrupt from making a new and clean start, as between the findings of the referee, based as they were upon actual observation of the bankrupt and not merely an analysis of figures, and the dry as dust effort of the majority, by an analysis of figures, to determine the presence of criminal intent, I choose to take my stand with the opinion of the referee and the district judge, that the bankrupt did not deliberately intend to defraud so as to be justly subject to loss of the benefits of the statute, and: to cast my vote for affirmance. I, therefore, respectfully dissent.