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IN RE WILLIAMS

June 8, 1946

In re WILLIAMS


The opinion of the court was delivered by: KALODNER

Eight specifications of objections to bankrupt's discharge were filed. The Referee dismissed 7 of these specifications but sustained one -- the 5th specification.

The Referee's finding, which is the subject of this Review, is as follows:

 'The 5th specification of objection is sustained in that the Referee finds that the bankrupt failed to 'preserve' certain books of account and records, to wit, records of accounts receivable and accounts payable of milk purchases, cancelled checks and check book stubs, covering the period February 1st, 1941 to June 1, 1942.' (Page 38 of Record).

 The bankrupt was engaged in the milk distributing business with offices at 4209-11 Germantown Avenue, Philadelphia, Pennsylvania, from February, 1941, until June, 1942, when he ceased operations following a constable's levy on his premises.

 The Referee found as a fact that the bankrupt had 'employed successively two bookkeepers and a firm of accountants' (Page 25 of the Record) and that 'the records kept in the operation of the business were such as should be kept in a business of like size and character' (Page 28 of the Record).

 The Referee further found that when the levy was made the bankrupt's books and records were in the bankrupt's place of business -- that the bankrupt left the premises when the levy was made and that subsequently the keys to the premises were delivered to the Receiver when the bankruptcy was instituted on September 1, 1942.

 The Referee further found that 'during the period therefore, from and after early June, 1942, the bankrupt made no effort to retrieve the records left at the Germantown premises' (Pages 28, 29 of the Record).

 On November 23, 1942, the records were delivered by the attorney for the bankrupt to the Receiver but certain ledger sheets were missing. The Referee found however (Page 28 of the Record) that:

 'The Referee is furthermore of the opinion that a bar of discharge is not justified by the fact that a few records were missing at the time that the Receiver and Trustee took over.'

 On the facts as stated the Referee ruled that the bankrupt had failed to 'preserve' his records in accordance with the requirements of the Bankruptcy Act and for that reason sustained the 5th specification of objection and refused to grant the bankrupt's discharge.

 I am of the opinion that the Referee erred.

 Section 14, sub. c, of the Bankruptcy Act of 1938, 11 U.S.C.A. § 32, sub. c, provides as follows:

 'The court shall grant the discharge unless satisfied that the bankrupt has * * * (2), destroyed, mutilated, falsified, concealed, or failed to keep or preserve books of account or records, from which his financial condition and business transactions might be ascertained, unless the court deems such acts or failure would have been justified under all the circumstances.'

 It is true that the words 'or preserve' were added in the Chandler Act to prior regulation but 'the addition of the words 'or preserve' merely restates what had previously been included, by judicial definition, in the word ...


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