The fourth specification of objection charges the fraudulent concealment of money realized from a lawsuit. The special master recommended the dismissal of this objection because of insufficient evidence to support it. Yet when we turn to the bankrupt's examination at the first meeting of creditors, we find him admitting that he received $2,589 within a month and a half prior to the filing of the bankruptcy petition in settlement of a lawsuit; that he collected the check received for this amount in cash; that no part of it went into his bank account; that no payments were made to business creditors out of this money, with the possible exception of one in the sum of $100; that he made payments to relations for money owing to them. (Test. p. 9 to 25).
These admissions of the bankrupt are sufficient, in our opinion, to show to the satisfaction of the court that there are reasonable grounds for believing that the bankrupt was concealing this asset, which would prevent his discharge and place on the bankrupt the burden of proving that he has not concealed any assets. Section 14 of the Bankruptcy Act, as amended by Act of May 27, 1926, § 6, 11 U.S.C.A. § 32; In re Cooper (C.C.A.) 230 F. 991; In re Perlmutter (D.C.) 256 F. 862; Heilbronner v. Dinkelspiel Co. (C.C.A.) 20 F.2d 93; In re Sperling (C.C.A.) 72 F.2d 259. This burden the bankrupt has not met.
The fifth specification deals with another charge of concealment of assets, i.e., Twelve shares of stock in Hochberg's Inc. As to this specification also, the special master submitted a recommendation of dismissal for lack of evidence. But here also he overlooks the testimony at the first meeting of creditors, where it appears (Test. pg. 47, et seq.) that the bankrupt assigned ten shares of this stock to one brother-in-law, and two to another, within a few months of bankruptcy, for one-half of what he paid for it a few months before. This, too, was sufficient, in our judgment, to put upon the bankrupt the burden of showing by satisfactory evidence that they were bona fide sales. This he has not done.
The ninth specification also is in the category of objections which the special master was of the opinion should be dismissed for want of evidence. It charges failure to explain the difference in assets to meet liabilities. This objection is based in part on the facts in specifications fourth and fifth, which we have held sufficient to bar a discharge. In part also it is based on the charge that bankrupt has failed to explain satisfactorily a shrinkage of assets in the approximate amount of $138,244.33. This amount is arrived at by comparing bankrupt's own statement of his financial worth on December 31, 1931, and the assets listed in his bankruptcy schedules.
Thus, in our view, creditors made out a prima facie case which bankrupt must by satisfactory evidence explain away. In re Gerson (D.C.) 35 F.2d 539; In re Learner (D.C.) 29 F.2d 796. This he failed to do. This specification of objection should be sustained.
We, therefore, sustain the exceptions to the special master's report, and also sustain specification of objections numbered 1, 2, 3, 4, 5, 9, and will deny bankrupt's petition for discharge. An order may be submitted accordingly.
Since the argument of this case on exceptions to the special master's report, the Commercial Investment Trust, Inc., has asked leave to amend its specification of grounds of opposition to discharge, in that he made a false oath and account in, and in relation to the proceedings in bankruptcy, in that he swore in his schedules on the 2d day of February, 1933, Schedule A, Form No. 3, that he owed a certain debt to Clara Hochberg, and others. This objection we have not passed upon, and do not deem it necessary to do so, because, as we view it, the specifications already filed are sufficient to bar the discharge.
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