The burden shifts when the objecting creditor makes out a prima facie case. See Lloyd v. Industrial Bank of Commerce, 2 Cir., 241 F.2d 924 (1957); 1 Collier, Bankruptcy Β§ 14.12 (14th ed. 1956). The record clearly shows that appellee made out a prima facie case whereupon the burden of proof shifted to appellant; hence the referee did not err in so holding.
See 44 Stat. 664. See Morris Plan Industrial Bank of New York v. Parker, 79 U.S.App.D.C. 164, 143 F.2d 665; In re Smatlak, 7 Cir., 99 F.2d 687; Lloyd v. Industrial Bank of Commerce, 2 Cir., 241 F.2d 924. We hold that the trustee went forward far enough on reliance that the burden shifted to the bankrupt.
To except a debt from discharge because it was incurred by false pretenses or false representations, the false representations giving rise to the debt must have been knowingly and fraudulently made, see Century 21 Balfour Real Estate v. Menna (In re Menna), 16 F.3d 7 (1st Cir. 1994); Longo v. McLaren (In re McLaren), 3 F.3d 958 (6th Cir. 1993), although reckless representations or silence regarding a material fact may in some cases be sufficient to constitute the requisite falsity. Coman v. Phillips (In re Phillips), 804 F.2d 930 (6th Cir. 1986); Caspers v. Van Home (In re Van Horne), 823 F.2d 1285 (8th Cir. 1987); In re Weinstein, 31 B.R. 804 (Bankr.E.D.N.Y. 1983) (citing Lloyd v. Industrial Bank of Commerce, 241 F.2d 924 (2d Cir. 1957)). Similarly, to except a debt from discharge because it was incurred through actual fraud, the debtor must have made a misrepresentation which he knew to be false and by which he intended to deceive the plaintiff.
1981); See generally Stern v. National City Co., 25 F. Supp. 948, 957 (D.Minn. 1938). It is well recognized that silence, or the concealment of a material fact, can be the basis of a false impression which creates a misrepresentation actionable under Β§ 523(a)(2)(A). See Llyod v. Industrial Bank of Commerce, 241 F.2d 924 (2d Cir. 1957); In re Kisich, 10 B.C.D. 626, 28 B.R. 401 (9th Cir.App.Pan. 1983); In re Newmark, cite supra; In re Neuman, 13 B.R. 128 (Bkrtcy.E.D.Wis. 1981); In re Thomas, 12 B.R. 765 (Bkrtcy.N.D.Ga. 1981); In re Pommerer, cite supra; In re Quintana, 4 B.R. 508 (Bkrtcy.S.D.Fla. 1980); In re Milbank, 1 B.R. 150 (Bankr.S.D.N.Y. 1979). Case law has additionally gone so far as to extend an affirmative duty to a party in a business transaction to disclose all the facts the concealment of which would mislead the other side. Peerless Mills, Inc. v. American Telephone Telegraph Co., 527 F.2d 445 (2d Cir. 1975); See also In re Harris, 458 F. Supp. 238 (D.Or. 1978) aff'd 587 F.2d 451 (9th Cir. 1978).
They have consequently held that silence, In re Thomas, 12 B.R. 765, 768, Bankr.L.Rep. (CCH) ΒΆ 68,228, p. 79,367 (Bkrtcy.N.D.Ga. 1981), or concealment of a material fact "can be as effective a misrepresentation as an outright lie." In re Pommerer, 10 B.R. at 939; see also Lloyd v. Industrial Bank of Commerce, 241 F.2d 924 (2d Cir. 1957); In re Neumann, 13 B.R. at 130; In re Quintana, 4 B.R. 508, 510 (Bkrtcy.S.D.Fla. 1980); In re Neinhuis, 1 B.C.D. 404, 406 (B.C.S.D.Mich. 1974).
In re Braunbeck, supra, is a case in point. There Judge Kellam cited Banks v. Siegel and Lloyd v. Industrial Bank of Commerce, 241 F.2d 924 (2d Cir. 1957), but held sufficient reliance was not present. And one of the reasons, as here, was that the loan company "was on notice that the financial statement was false." In repose, we find a bankrupt who tendered a materially false financial statement in writing, with knowledge of its falsity and with an actual intent to deceive.
See Industrial Bank of Commerce v. Bissell, 2 Cir., 219 F.2d 624, 626(3); M-A-C Loan Plan, Inc. v. Crane, 4 Conn. Cir. 29, 225 A.2d 33, 36. Avco Finance Co. of Marshall v. Baker, Mo.App., 472 S.W.2d 46, 48(2); Lloyd v. Industrial Bank of Commerce, 2 Cir., 241 F.2d 924; Banks v. Siegel, 4 Cir., 181 F.2d 309, 310(1-3); Yates v. Boteler, 9 Cir., 163 F.2d 953, 955(2); Time Finance Corp. of Springfield v. Clark, 6 Conn.Cir. 200, 269 A.2d 88, 91 (7); Beneficial Finance Co., Inc. v. Gardache, La.App., 164 So.2d 132, 135(4). We recognize that, as defendants' counsel emphasize, a valid discharge in bankruptcy affords a prima facie defense against all debts and the burden of proof then rests on the creditor to show that the debt is nondischargeable.