Court Opinion

ID: 9651217
Source: CourtListenerOpinion
Date Created: 2023-08-23 16:10:30.661168+00
Date Added: 2024-06-11T18:12:30.972695
License: Public Domain

SWAN, Circuit Judge.
The appellant was adjudicated bankrupt upon his voluntary petition filed on July 7, 1943. He scheduled no assets, except insurance policies claimed as exempt, and listed unsecured creditors whose claims total $2,265.05. He was denied a discharge for failure to keep books of account or records from which his financial condition and business transactions might be ascertained. The sole question presented by this appeal is whether the court should have found such failure “to have been justified under all the circumstances of the case.” 11 U.S.C.A. § 32, sub. c(2).
The bankrupt contends that the nature of his business is such as not to require the keeping of books or records. He is ' an itinerant peddler of rags and old clothes, going from door to door to solicit the sale of such discarded articles and reselling his-purchases to second hand dealers and junk men. All of these transactions are on the basis of cash in hand, and no writings, bills or statements are given by him in connection with either purchases or sales. Individually the transactions are insignificant in amount, the prices he pays for old clothes running from ten to seventy-five cents. The articles he purchases he usually sells to some second hand dealer on the same day. He has no place of business, no source of income except the earnings from his business, and no bank account. His wife owns an automobile which he uses in collecting his purchases and delivering his , sales. He testified that part of the money paid for it was given her by her father and the balance she saved out of the weekly sums the bankrupt gave her for their household expenses. They live in rented quarters for which the monthly rent is $32. He says that he makes about twenty-five or thirty dollars a week, and that his income was $1200 in 1941 and $1350 in 1942. These figures, however, are merely an estimate or the result of his recollection; there are no records to substantiate them. The debts that the bankrupt scheduled were not incurred in the years during which he has been a peddler. Some ten or fifteen years ago he conducted in partnership with his, first wife, from whom he is now divorced, a department *61store business of considerable size. But that business failed in 1930 or thereabouts. All of his present debts go back to that period and most of them are evidenced by judgments entered in 1933 or earlier years; only one for $100 was entered as late as 1936. The objecting creditor’s judgment was obtained in 1931. Its recent efforts to collect on this judgment caused the bankrupt to file the present petition in order to get clear of his old debts.
 It is true as the appellee contends that without the keeping of records the bankrupt’s creditors are wholly unable to check his testimony as to the amount of his earnings. Nevertheless we can not think that a peddler of rags and old clothes who does only a cash business, involving ,so many transactions each so trifling in amount, should be held to the need of keeping books. It has been held that if a bankrupt’s business is such that books would not ordinarily be kept, a failure to keep them should not bar his discharge. In re Neiderheiser, 8 Cir., 45 F.2d 489, 490, 73 A.L.R. 1152. See also, In re Weismann, D.C.S.D.N.Y., 1 F.Supp. 723; In re Hatch, D.C.S.D.Me., 43 F.2d 463; Devorkin v. Security Bank & Trust Co., 6 Cir., 243 F. 171, 172; Collier on Bankruptcy (14th ed.), § 14.32. The test in applying this section of the bankruptcy act is a loose test, concerned with the practical problems of what can be expected of the type of person and the type of business involved. Klein v. Morris Plan Industrial Bank, 2 Cir., 132 F.2d 809, 810, 144 A.L.R. 1278, and cases there cited. In our opinion the bankrupt’s failure to keep books under the circumstances disclosed does not justify withholding his discharge.
Order reversed.