Opinion
No. 78 B 1708
May 18, 1979
Bankrupt — Objections to Discharge — Penal Offense — False Oath
Bankrupt was denied a discharge under Section 14c(1) of the Bankruptcy Act where he committed an offense punishable by imprisonment under Title 18, United States Code, Section 152, by knowingly and fraudulently making false oaths on his bankruptcy schedules and Statement of Affairs, even though truthful answers would not have increased the value of the estate.
Trustee filed a complaint objecting to the bankrupt's discharge under Section 14c(1), alleging false oath with respect to the bankrupt's schedules and Statement of Affairs. Bankrupt swore in his Statement of Affairs that he held no property for any other person and in his schedules, bankrupt denied owning any vehicles. The trustee introduced into evidence the fact that the bankrupt was the registered owner of an automobile. Bankrupt then testified that the vehicle was owned by his son, but registered in bankrupt's name so as to obtain a lower insurance rate.
Bankrupt, in his Statement of Affairs, denied making any transfers of property within one year immediately preceding the filing of the bankruptcy petition and denied earning any income, other than from the operation of bankrupt's business, within the two years immediately preceding the filing of the bankruptcy petition. At the first meeting of creditors, the bankrupt testified under oath that he had transferred his interest in a house, owned in the joint names of bankrupt, his wife, and their children, to his wife, about two years prior to commencement of bankruptcy proceedings, for approximately $20,000. The trustee introduced into evidence a deed from the bankrupt, his wife and two children to a couple who purchased the house for $62,000 less a $35,000 mortgage. The deed was recorded two weeks before the bankrupt's voluntary petition was filed. The bankrupt attempted to support his testimony relative to the transfer to his wife by producing a selfserving informal document which he had signed, evidencing a transfer two years previously. The trustee also introduced into evidence another deed from the bankrupt and his wife to a couple with respect to a condominium. The deed was recorded two months prior to the filing of the petition. The bankrupt testified that he omitted mentioning the sale of the condominium in his schedules and the $2000 that he received on the sale because he sold the property at a loss. The bankrupt also failed to schedule the rent that he received from the condominium while he owned it, as required.
Based on the evidence introduced by the trustee, the court held that the bankrupt knowingly and fraudulently made a false oath in a bankruptcy proceeding and that such false oath was a ground for denying bankrupt's discharge under Section 14c(1). While the court found that bankrupt's denial of ownership of an automobile and his failure to reveal that he held property for his son, if his son was the owner, while standing alone might not warrant a denial of his discharge, when coupled with the bankrupt's lack of candor concerning his property transfer within the year preceding the filing of the petition, caused the court to conclude that his untruthful answers were intentional falsehoods calculated to mislead his creditors and the trustee in bankruptcy. It was considered irrelevant that truthful answers would not have increased the value of the estate because the court would not "countenance a conscious disregard of the truth." See Sec. 14c(1) [§ 727(a)(4)] at ¶ 10,119.