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In re Kaufhold

June 5, 1958

IN THE MATTER OF HENRY KAUFHOLD, BANKRUPT. W. LOUIS SCHLESINGER, TRUSTEE OF THE ESTATE OF HENRY KAUFHOLD, A BANKRUPT AND FOREST R. TAYLOR, APPELLANTS.


Author: Kalodner

Before GOODRICH, McLAUGHLIN and KALODNER, Circuit Judges.

KALODNER, Circuit Judge.

This is an appeal from the reversal by the District Court of the Order of the Referee in Bankruptcy denying a bankrupt his discharge in bankruptcy.

The situation presented is rather unusual in this respect: The Referee premised his denial of the discharge on the ground that the bankrupt had committed an offense under Title 18 U.S.C. ยง 152,*fn1 which provides, among other things, "Whoever knowingly and fraudulently makes a false oath or account in or in relation to any bankruptcy proceeding * * * Shall be fined * * * or imprisoned * * * or both."

On review of the Referee's Order the District Court proceeded to take additional testimony.*fn2 Thereafter it filed a "Memorandum and Order"*fn3 in which it "overruled, vacated and set aside" the Referee's Order and directed that the bankrupt be discharged.

The District Court premised its action on its finding it was "unable to find that the false oath so-called was knowingly and fraudulently made; * * * the Bankrupt acted upon advice of counsel after a full disclosure by him of the factual situation; [and] Under the circumstances it is not believed that the Bankrupt could have been convicted at any time of a violation of 18 U.S.C.A. 152."

The critical facts as far as the instant appeal is concerned may be summarized as follows:

On November 15, 1951, the Supreme Court of Pennsylvania*fn4 affirmed a money judgment in favor of Forest R. Taylor against the bankrupt, Henry Kaufhold ("bankrupt"). On January 31, 1952 bankrupt filed a voluntary petition in bankruptcy listing two creditors in his schedules: Forest R. Taylor ("Taylor"), a judgment creditor in the amount of $14,254.90, and a law firm in Erie, Pennsylvania in the amount of $1,869.96.

Shortly after filing of the bankruptcy petition the Referee authorized the Trustee in Bankruptcy to join with Taylor in instituting an equity suit in the Court of Common Pleas of Eric County, Pennsylvania, against the bankrupt and his wife to subject certain real estate held by the bankrupt and his wife as tenants by the entireties to the claims of the bankrupt's creditors.

The bill alleged that the real estate was purchased with assets that were the individual property of the bankrupt and that title was taken by the entireties in order to defraud his creditors. The State Court, after hearing, entered a decree nisi subjecting the jointly held real estate to a pro tanto charge in favor of bankrupt's creditors.*fn5 It specifically found (Finding of Fact No. 33) that the bankrupt was "guilty of fraud and intended to hinder, delay and defraud Forest R. Taylor, his creditor."*fn6

The bankrupt filed no exceptions to the adjudication or the decree. Exceptions filed by his wife were dismissed and a final decree similar in terms to the decree nisi was entered. She then appealed to the Supreme Court of Pennsylvania, which affirmed the lower court's decree. Taylor v. Kaufhold, 1954, 379 Pa. 191, 108 A.2d 713.

The Bill in Equity in the Erie County suit and the bankrupt's Answer to it constitute the premise for the specification*fn7 objecting to the bankrupt's discharge on the ground that he had "knowingly and fraudulently" made a false oath in relation to a bankruptcy proceeding.

In paragraph 9 of the Bill it was alleged that the bankrupt had caused title to be taken in his name and that of his wife (to the real estate involved) "with the intent by Henry Kaufhold to conceal the same and place the same beyond the reach of Forest R. Taylor or any other creditor of the said Henry Kaufhold."*fn8 In paragraph 9 of his Answer bankrupt "expressly denied" the allegations in paragraph 9 of the Bill.*fn9

In his Affidavit to the Answer bankrupt swore that the facts stated therein "are true and correct to the best of his ...


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