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In re Weinroth

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT


decided: March 15, 1971.

IN THE MATTER OF IRVING B. WEINROTH, INDIVIDUALLY AND TRADING AS THE FAIR AND THE DUGOUT, DEBTOR. IRVING B. WEINROTH, INDIVIDUALLY AND TRADING AS THE FAIR AND THE DUGOUT, APPELLANT, THE FIRST NATIONAL BANK OF BOSTON, OBJECTING CREDITOR, AND EUGENE M. BERNSTEIN, TRUSTEE, APPELLEES

Seitz and Van Dusen, Circuit Judges, and Masterson, District Judge.

Author: Per Curiam

Opinion OF THE COURT

This is an appeal by Irving B. Weinroth, a bankrupt, from a district court order affirming the referee's denial of his discharge in bankruptcy, pursuant to section 14(c) (3) of the Bankruptcy Act, 11 U.S.C. § 32(c) (3) (1964).*fn1 The referee found that the bankrupt issued a "materially false" financial statement in writing for the purpose of obtaining credit or a renewal of credit.*fn2 In order to come within the above-mentioned statutory phrase (11 U.S.C. § 32(c) (3)) "materially false statement in writing respecting his financial condition," a statement must be more than inaccurate in material respects. To bar a discharge, the materially inaccurate financial statement must be either knowingly or intentionally false, or made "'carelessly and with reckless indifference, to the actual facts," In re Barbato, 398 F.2d 572, 573 (3d Cir. 1968). See also In re Butler, 425 F.2d 47 (3d Cir. 1970); In re Butler, 407 F.2d 1059 (3d Cir. 1969); In re Perlman, 407 F.2d 861 (3d Cir. 1969); Schapiro v. Tweedie Footwear Corp., 131 F.2d 876 (3d Cir. 1942); 1 Collier on Bankruptcy para. 14.40, at 1396-99 (14th ed.). The record in this case does not contain among the findings or conclusions that the statement was issued by the bankrupt with knowledge of its falsity or made with reckless disregard for the actual facts.*fn3 The above decisions of this court require that such a finding be made by a referee before he may deny a discharge under section 14(c) (3).

Accordingly, the judgment of the district court and the order of the referee will be vacated, and the case will be remanded to the referee for findings covering the issue whether the bankrupt knowingly made or published or caused to be made or published the false financial statements, or did so with reckless indifference to the facts.*fn4 See In re Butler, 407 F.2d 1059 (3d Cir. 1969); In re Barbato, 398 F.2d 572 (3d Cir. 1968).


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