Starr v. Patterson

STARR v. PATTERSON. N. Y. Supreme Court, First Department, Chambers ; March, 1891. Insolvents discharge; o?nissio7i of a creditor fro7?i schedule.] The omission of a debtor to insert the name of a creditor in his sworn schedules is not excused by showing that he omitted it under advice of counsel that he had a good defence. The sa77ie; subseque7it insertio7il\ If intentionally omitted under circumstances not consistent with good faith, the objection which the omission creates to the granting of a discharge is not cured by the subsequent insertion of the name. For the provision of theN, Y. Code on the point, see §§ 2162, 2186. [MAJORITY — Barrett, J.] Barrett, J. I am unable to concur in the conclusion arrived at by the learned referee in this case. The error is in the finding that the debtor, in omitting the creditor’s name from his schedules, relied upon the advice of counsel. The affidavits do not support this finding. They state that the creditor’s name was omitted because of counsel’s advice, that the debtor had a good defense to the then existing action upon the plaintiff’s c.aim. Even this is not supported by a statement of what defendant disclosed to his counsel. But there is not a suggestion that the name was omitted because of the advice of counsel that it was unnecessary to insert it. The debtor does not pretend that he took advice upon that point. Having received advice as to the substantial character of his defense to the then existing suit, he proceeded without further advice —so far as appears—to secure • his discharge without inserting the creditor’s name in the schedules. In other words, because he was advised that he could defeat the creditor in the then existing action, he took it upon himself to ignore such creditor and to proceed as though the latter did not exist. The debtor cannot, therefore, shield himself from the consequences of his conduct by any pretense of oversight. He omitted the creditor’s name deliberately and without legal advice as to the necessity of inserting disputed claims in his schedules. But even if he had taken legal advice it would not have shielded him, because here advice to omit the creditor’s name could not have been given or received in good faith, for the reason that one of the notes then in suit was undisputed, and as to that, at least, the plaintiff was avowedly a creditor. The entire omission of his name from the schedules -was therefore a palpable fraud. The defendant knew that the plaintiff was a creditoi and he wilfully omitted his name. He could have had but one motive and that motive is distinctly chargeable to him, namely, opposition to the discharge predicated of the activity suggested by the existing action. The facts that the plaintiff happened to hear of the proceedings, and that the defendant inserted the plaintiff’s name when it was too late are immaterial. They do not help the matter, as the invalidity results from the false oath to the original schedules. Exceptions sustained and motion denied, with costs.