In re SIMS

In re SIMS. (District Court, N. D. Georgia. March 26, 1914.) No. 3293. Bankruptcy (§ 409)—Grounds for Refusal of Discharge—Failure to Keep Books. Under 'Bankruptcy Act July 1, 1898, c. 541, § 14, 30 Stat. 550 (U. S. Comp. St. 1901, p. 3427), as amended June 25, 1910, c. 412, § 6, 36 Stat. 839 (U. S. Comp. St. Supp; 1911, p. 1496), providing that an applicant for discharge shall be discharged unless he has, with intent to conceal his financial condition, destroyed, concealed, or failed to keep books of account or records from which such condition might be ascertained, where a bankrupt, who was seriously embarrassed financially for several months prior to the bankruptcy, purchased lumber during the seven or eight months immediately preceding the bankruptcy, the larger part of which was never paid for, which he sold for over $11,000 in cash, the last of the transactions occurring but a short time before, the bankruptcy, but failed to keep any record, by books or othérwise, of the disposition of the proceeds of the sales, a discharge would be denied, since it might be assumed that his failure to keep books was in contemplation of bankruptcy, and it was so wholly without excuse that it must have been done v^ith intention to conceal his financial condition. [Ed. Note.—For other eases, see Bankruptcy, Cent. Dig. §§ 739, 752-757; Dec. Dig. § 409.] In Bankruptcy. In the matter of E. S. Sim's, bankrupt. On objections to the bankrupt’s application for discharge. Application denied. H. W. Dent, Alvin E. Richards, Mayson & Johnson, Geo. B. Rush, and Walter R. Brown, all of Atlanta, Ga.,.for petitioning creditors. C. D. Maddox, of Atlanta, Ga., for bankrupt. For other cases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep’r Indexes For other cases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep’r Indexes [MAJORITY — NEWMAN, District Judge.] NEWMAN, District Judge. I have gone carefully over the evidence recently taken in this case, and am satisfied that, under that evidence and under the evidence taken formerly, the bankrupt is not entitled to a discharge. I am compelled therefore to differ with the referee in the conclusion he reached. It is clearly shown here that the bankrupt received over $11,000 worth of lumber, and no records whatever were kept, either by books or otherwise, to show what became of the proceeds of the sale of this lumber. It was sold by Mr.' Akers, acting for Mr. Sims apparently, and Akers says, with which Sims agrees, that all the money received from the sale of said lumber was turned over to Sims. As stated, Sims shows nothing whatever by entries on books of account or by-papers where this $11,000 went. The lumber was all received in 1911 and 1912, and disposed of, it seems, immediately upon its receipt at the railroad, for cash. The bankrupt’s schedule of indebtedness indicates, and such I understand also to be the testimony of the trustee, that a large part of this lumber at least was never paid for. The Bankruptcy Act, section 14, as amended June 25, 1910, c. 412, 36 Stat. 839 (U. S. Comp St. Supp. 1911, p. 1496), provides that all applicants for discharge in bankruptcy shall be discharged “unless he has * * * with intent to conceal his financial condition, destroyed, concealed, or failed to keep books of account or records from which such condition might be ascertained.” The claim here is, not that any books were concealed or destroyed, but that he failed to keep books of account of any kind, or records from which his financial condition might be ascertained. Now this receipt of lumber was during the fall of 1911 and winter of 1912 and along up until June, 1912. There is not a scrap, of writing, so far as this record shows, from which it might be seen what he did with the $11,653 which he received from lumber. The only question, therefore, is whether or not the receiving of this large amount of money during a period of seven or eight months immediately before bankruptcy and keeping no record whatever of his business in connection therewith, certainly failing to show in any way what became of this large sum of money, was with intent to conceal his financial condition. It is certainly fair to assume that he did it in contemplation of bankruptcy, and it was so wholly without excuse that it must have been done, I think, with intention to conceal his financial condition. Sims’ petition in bankruptcy appears to have been filed August 27, 1912, so it was but a short time before bankruptcy that the last of these lumber transactions occurred. The evidence of the bankrupt shows that he had not deposited in the banks for two or three months prior to- the bankruptcy, because of the fact that garnishments were served on the banks in which he deposited. So for some time at least he must have been in a condition of serious financial embarrassment. He must have intended,-of course, the actual and necessary result of his acts, and his acts, or rather his failure to act, were such as to have entirely prevented his creditors and his trustee in bankruptcy from ascertaining his financial condition. In the case of In re Hanna, 168 Fed. 238, 93 C. C. A. 452, decided by the Circuit Court of Appeals for the Second Circuit, this is said: “A provision intended to insure the keeping of correct and complete accounts should be rigidly enforced.” Judge Hough, in the District Court, in the Schachter Case, 170 Fed. 683, after quoting from In re Hanna, supra, says this: “No reasonable excuse for this failure to enter an important transaction is assigned by either of the bankrupts, and the court is left to infer intent from what the bankrupts actually did and the motives reasonably to be assigned for their acts.” The application for discharge should be denied.