Opinion
No. 3697.
November 22, 1934.
Wayne H. Lamoreux, of Great Bend, Kan., for bankrupt.
In Bankruptcy. In the matter of the bankruptcy proceeding of W.H. Hammond. On petition for discharge.
Petition denied.
The report of the referee is as follows:
The undersigned referee, to whom was referred by special reference the application for discharge of the above-named bankrupt, together with specific instruction, which are attached hereto, respectfully reports his actions thereon as follows:
Upon the receipt of said reference, I did on the 27th day of August, A.D. 1934, set a day for the hearing upon said application, and on the same day sent written notices by mail, a copy of which is attached hereto, to all known creditors of the bankrupt and other persons in interest, to the effect that the bankrupt had filed his application for discharge; that the hearing thereon would be held at the office of the undersigned in Salina, Kan., at 2 o'clock p.m. on the 8th day of October, A.D. 1934; that all creditors were required to show cause why such discharge should not be granted; that any creditor desiring to oppose said discharge must file his entry of appearance in opposition thereto and written specification of the grounds of his opposition with the clerk of this court at Wichita, Kan., on or before the 28th day of September, A.D. 1934, and that, in case no objections were filed, the discharge would be granted as prayed for.
I further report that in due time a creditor of said bankrupt named Joe Jenisch filed objections to the discharge of the bankrupt upon the ground that said bankrupt had been discharged in a bankruptcy proceeding in the Second Division of this court, Case No. 3452, on the 3d day of March, A.D. 1932. He attached to his objections a copy of the order of discharge certified by the clerk of this court under his seal. On the morning of October 8, 1934, I received from the attorney for the bankrupt a withdrawal by said creditor of his objections to the discharge of the bankrupt. At the time fixed for the hearing upon the petition for discharge and the objections thereto, the bankrupt was present in person and by his attorney, Wayne H. Lamoreux. Neither the said Joe Jenisch nor any other creditor was present in person or by attorney.
Ordinarily the failure of creditors to appear at the hearing and offer evidence in support of their objections to a discharge entitles a bankrupt to his discharge as a matter of course, but the rule appears to be otherwise when the objection is based upon the records of the court. I questioned the attorney for the bankrupt regarding the withdrawal of the objections by Jenisch. He stated, in the presence of the bankrupt, that the circumstances were as follows: The bankrupt had given a check to Jenisch which had not been paid. Jenisch thereafter commenced criminal prosecution in the state court against the bankrupt. Since the filing of the objections herein by Jenisch, friends of the bankrupt raised sufficient money for the payment of the debt due to Jenisch. Thereafter Jenisch stated that, having received his money, he would not prosecute his objections to the bankrupt's discharge. The bankrupt and his attorney stated that the withdrawal of the objections was not the result of an agreement to do so if the debt were paid. Such an agreement would, of course, have been contrary to public policy and perhaps a criminal offense under section 29 of the Bankruptcy Act, as amended May 27, 1926 (11 USCA § 52).
The question remains, therefore, as to whether, such an objection having been filed and withdrawn, the court may take judicial notice of the fact that this bankrupt has been previously discharged by this court within less than six years. Section 14b of the Bankruptcy Act, as amended May 27, 1926, 11 USCA § 32(b), provides: "The judge shall hear the application for a discharge and such proofs and pleas as may be made in opposition thereto by the trustee or other parties in interest * * * and investigate the merits of the application and discharge the applicant, unless he * * * (5) has been granted a discharge in bankruptcy within six years." It will be noted that the act requires the judge to "investigate the merits and discharge unless." There is no question as to the facts in the case. This same bankrupt was discharged by this court in an involuntary proceeding less than three years ago. I find no reported case exactly similar to this, but there are a number of cases in which it has been held that the court may take judicial notice of proceedings formerly before it, though no creditor is present objecting to the discharge. One of these is that of In re Glick Brothers (D.C.) 4 F.2d 149, 4 A.B.R. (N.S.) 302. In this case the objecting creditors withdrew their objections after the bankrupt and certain of his relatives had carried out an agreement to deliver to the trustee certain property in settlement of a civil action which had been tried in the same court in which the trustee was plaintiff and the other parties defendants. The court held that it would take judicial notice in the proceedings for discharge of the civil action which it had tried wherein the trustee had recovered from the bankrupt and his relatives property which he had fraudulently conveyed to them. A discharge was refused, and the District Court was sustained by the Circuit Court of Appeals in a case reported in 4 F.2d 151, 5 A.B.R. (N.S.) 381.
In the case of In re Freshman (D.C.) 290 F. 609, 610, 1 A.B.R. (N.S.) 167, the bankrupt had applied for a discharge in an earlier case, but, when the referee reported adversely, he had not pressed the matter, and the judge had never signed a formal order refusing the discharge. Several years later the bankrupt had filed another petition and been adjudged bankrupt. Upon applying for his discharge in the latter proceeding, the court stated: "This court judicially knows, even though it has no actual knowledge, that this same bankrupt has an application pending in this court for a discharge." This case was affirmed by the Circuit Court of Appeals in 294 F. 867, 3 A.B.R. (N.S.) 454, where the court states: "The appellee was an objecting creditor, who, however, failed to sustain his specifications of objections by offering proof, and the referee reported in favor of the discharge. He also reported to the District Judge that the bankrupt had filed a former petition in 1915, listing some of the identical creditors and claims, and had applied for a discharge in that proceeding. * * * The District Judge, differing with the referee, denied the bankrupt his discharge solely because of the pendency of his former application." Upon appeal to the Supreme Court the lower courts were sustained. 269 U.S. 121, 46 S. Ct. 41, 70 L. Ed. 193, 6 A.B.R. (N.S.) 744. A somewhat similar case is the very recent one of In re Emery (D.C.) 6 F. Supp. 896.
As stated above, while none of these cases are on all-fours with the present case, they appear to me to establish a principle applicable in this case, and, the attention of this court having been drawn to its record of the earlier case in which Hammond was discharged less than six years ago, it must take judicial notice of that case and refuse a discharge in this case even though the objecting creditor has refused to offer evidence and has filed a motion to withdraw his objections.
I therefore report that in my opinion, under the facts and the law of this case, the petitioner should be denied a discharge and his petition should be dismissed.
The above-named bankrupt, W.H. Hammond, having filed his petition for discharge, and said petition having been referred to Frank B. Bristow, one of the referees in bankruptcy of this court, to hear and report upon said petition, and said referee having filed his report showing that after due notice to all parties he held a hearing upon said petition and said report recommending that said petition for discharge be denied, for the reason that said W.H. Hammond has been granted a discharge in bankruptcy by this court within less than six years from this date, and no exceptions having been filed to said report, and it appearing that said report should be confirmed and said petition denied, now, therefore, after due consideration, it is ordered that said report be, and it hereby is, confirmed and the petition of said W.H. Hammond for his discharge be, and it hereby is, denied.