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In re Steiker

decided: July 12, 1967.


Staley, Chief Judge, and Biggs and Hastie, Circuit Judges.

Author: Staley


STALEY, Chief Judge.

The question before us is whether the appellant, Sidney Steiker, a bankrupt, was properly denied a discharge in bankruptcy. In the proceedings below, specifications of objections to the bankrupt's discharge were lodged by the trustee. The referee found that two of the five specifications submitted were well founded and denied the discharge. On a certificate of review, the referee's findings and conclusions were affirmed by the district court; and this appeal followed.

On March 10, 1965, Sidney Steiker filed a voluntary petition in bankruptcy. He represented at that time that he was unemployed. This statement was given under oath as was the subsequent statement that he had neither been self-employed nor employed by others since the businesses of which he was part owner closed in 1961.

At the time these proceedings were before the referee, Mr. Steiker was 52 years old, had been married and divorced three times and lived with his mother and a sister. His mother, Sarah Steiker, owner of all the stock of Steiker Industries, Inc., supported him and two children from his previous marriages. Sarah Steiker was in her late seventies and in poor health during 1964 and 1965. The bankrupt testified that he "spent a lot of time at Steiker Industries" looking after his mother's interests. He also stated that he was vice-president of the company, that he was authorized to sign the checks of the corporation, that he used the company car, supervised its employees, waited on customers and made sales of automobiles.

Mr. Steiker admitted that he has been in grave financial trouble since 1961 and stated that he could not get a job because of the suits brought and judgments obtained against him by his creditors. His sole means of support was the money given to him by his mother and the funds he withdrew from Steiker Industries (with his mother's permission). When asked if the sums advanced to him by his mother and Steiker Industries were loans, he replied that both the pocket money given to him by his mother and the amounts obtained from Steiker Industries were gifts. The schedules filed by the bankrupt listed Sarah Steiker as a creditor in the amount of $29,426.10 (exclusive of "pocket money" gifts), but Steiker Industries was not listed despite the bankrupt's knowledge that a large sum was being carried on the corporate books as a debt.

The trustee filed the following specifications of objections to the granting of a discharge:

"1- Said bankrupt, Sidney Steiker did knowingly and fraudulently make a false oath and account in and in relattion to this bankruptcy proceeding, in that in the Statement of Affairs filed by him and in Answers to Questions propounded at hearings conducted in the above proceedings and while under oath he did falsely, fraudulently and with knowledge aver that he had no income by way of salary or otherwise when, in fact, he so did, which falsity was an offense punishable by imprisonment as provided under Title 18, U.S.C. Sec. 152.

"2- Did file false and fraudulent schedules in this proceeding, with knowledge thereof, in that he failed to list as an alleged creditor, Steiker Industries, Inc."

Section 14(c) of the Bankruptcy Act, 11 U.S.C. § 32(c), provides: "The court shall grant the discharge unless satisfied that the bankrupt has (1) committed an offense punishable by imprisonment as provided under section 152 of Title 18 * * *." 18 U.S.C. § 152 makes it a crime punishable by fine or imprisonment for anyone who "* * * knowingly and fraudulently makes a false oath or account in or in relation to any bankruptcy proceeding."

A number of cases have been decided in this circuit delineating the requisites for the denial of a discharge. Judge Kalodner, speaking for the court in In re Kaufhold, 256 F.2d 181, 185 (C.A. 3, 1958), noted the following well-settled principles:

"A false oath made by a bankrupt in relation to proceedings in bankruptcy, sufficient to justify denial of discharge, must be 'knowingly and fraudulently' made; it is sufficient that the bankrupt knows what is true and, so knowing, wilfully and intentionally swears to what is false; the false oath must be to an untrue statement in a matter material to an issue which is itself material to the proceeding; the making of a false oath is sufficient to justify an inference of an intent to defraud creditors; the burden of proof is on the objecting creditor to make out a prima facie case, but once he has done so the burden shifts to the bankrupt; a finding that an oath was 'knowingly and fraudulently' made is in the nature of an ultimate finding of fact, and although it is subject to review free of the impact of the so-called 'clearly erroneous rule' applicable to ordinary findings of fact by the trier of the facts, nevertheless, it cannot be disturbed if the evidence on which it is premised measures up to the applicable standard of legal proof."*fn1

As to the first specification -- that Steiker testified falsely under oath that he was unemployed -- the question before us is simply whether the false oath related to a material matter in the bankruptcy proceeding. The obvious reason for this is our circumscribed scope of review in an appeal of this type. The referee made numerous findings, many of which were drawn from the undisputed testimony of the bankrupt, and concluded that he was in the employ of Steiker Industries and that he knowingly and fraudulently testified under oath to the contrary. We recently noted in In re Rubin, 378 F.2d 104 (C.A. 3, 1967), that the mandate of General Order 47*fn2 precludes this court as well as the district court from not accepting the referee's basic findings of fact. See In re Wolf, 165 F.2d 707, 709-710 (C.A. 3, 1948). Though ultimate findings are subject to appellate scrutiny free of the "clearly erroneous" rule, as was noted above, those findings should be undisturbed where they are supported by the underlying factual ...

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