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Company, again it is evident that the parties were using the phrase "seven-twelfths" as descriptive of Solley and Johnson's actual interest, and not as an arithmetical formula for the division of the fund. The decree is affirmed. •

In No. 2406, a companion case, the decree is affirmed.


(Circuit Court of Appeals, First Circuit. August 25, 1917.)


No. 1289.


An order of the trial court, confirming the referee's report overruling objections to composition, based on the ground that bankrupt had obtained credit by means of a materially false written statement, will not be disturbed on appeal, where the evidence did not clearly show that the trial court was wrong.

Appeal from the District Court of the United States for the District of Massachusetts; James M. Morton, Jr., Judge.

In the matter of the bankruptcy of Samuel A. Myers and others. Composition was offered, and the International Trust Company, a creditor, objected. The report of the referee, overruling the objections, was sustained by the District Court, and the International Trust Company appeals. Affirmed.

The following is the opinion of Morton, District Judge, on confirmation of composition:

The objections chiefly relied upon in argument are based upon the statement of financial condition made by the alleged bankrupts to the objecting creditor. It was given to the creditor on March 27, 1916, at the latter's request, and purported to state the financial condition of the alleged bankrupts as it appeared on their books on January 1, 1916. The referee finds that there was no borrowing on the strength of the statement until October 2, 1916, and that the statement was a correct abstract of the respondents' books; and these findings are not disputed.

The objecting creditor, in support of the contention that the statement was intentionally false, relies principally upon two matters. The first of these is the omission altogether from it of a note for $3,000, made by the alleged bankrupts and secured by a mortgage on their real estate in Stoughton. The respondents owned real estate in Stoughton and mortgaged it for $3,000 to the Stoughton Trust Company. They did not include this mortgage indebtedness in their statement. Neither did they include the value of the real estate, which appears to have been more than the amount of the mortgage. They apparently supposed that the statement covered only their commercial business, and that the Stoughton real estate was outside of it. If the real estate had been shown as an asset, and the mortgage indebtedness as a liability, the result would have been an increase in the net worth of the respondents.

The other item relied upon by the objecting creditor is the "Accounts Receivable," which are given in the statement as $58,425.06. That the respondents had on their books accounts receivable of that amount is not disputed. At the date of the statement, however, $27,000 of these accounts had been assigned to the Commercial Investment Trust, which had advanced 80 per cent.

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

of the face value thereof. Further adjustments were to be made between the respondents and the Commercial Investment Trust in respect to the other 20 per cent. The respondents included as, assets in their "Accounts Receivable" the $27,000 of accounts so assigned; on the other side they included in their liabilities as debts the sums received on the assigned accounts.

The objecting creditor contends that the accounts in question, having been absolutely assigned, were no longer the property of the respondents, and could not properly be included as assets; that the sums received upon said accounts were payments of the accounts pro tanto, and were not loans to the respondents; that the statement was therefore false; and that, as the respondents knew all the facts, they are fixed with knowledge of the falsity. The facts as found by the referee hardly support this view of the transactions between the respondents and the Commercial Investment Trust; but the case does not, I think, turn upon a close and exact analysis of these transactions. A false statement of the character here in question (Bankruptcy Act, § 14b (3) [Comp. St. 1916, § 9598]), in order to be a bar to a discharge, must have been made with knowledge that it was false, and with the actual intent to obtain property or credit by means of a false statement. The learned referee has found, in substance, that the respondents did not intend the statement to be false, did not believe that it was false, and had no purpose dishonestly to obtain credit. I am asked to disregard his findings, and to hold that he was plainly wrong in his views. I am not prepared to do so. There is no persuasive evidence of dishonesty. It seems to me that the learned referee, who saw the respondents and heard them testify, and was in a much better position than I am to decide correctly whether there was a dishonest purpose or intent, was probably right in his conclusions on this point.

The objecting creditor urges that, if the assignment of almost half of the accounts receivable had been disclosed to it, credit would not have been extended; that there was a duty on the part of the respondents, when called upon for a statement of financial condition, to state the fact of the assignments; and that the statement, not disclosing such fact, was therefore knowingly and intentionally false. The short answer is that, if the objecting creditor considered that point material, it ought to have inquired about it. The statement shows on its face what it is. It ought not to be extended by implication to include recitals which it does not contain, and which were never made by the alleged bankrupts.

The other objections relied on are based upon alleged false statements made by the respondents in the schedules and on their examinations. Both in the original schedules, and on the examinations before the receivers, each respondent stated under oath that all his policies of life insurance were payable to his wife. The facts were that on the life of each respondent was a $20,000 policy payable to the firm. After the examination the schedule was amended to show these facts. Various policies of life insurance owned by the respondents had been assigned to their wives on January 2, 1917. The explanation offered by the respondents for their failure to refer to the $20,000 policies in their schedules and in their examinations was that each of the respondents supposed that his $20,000 policy had been assigned to his wife at the time when his other policies were so assigned. The learned referee accepted the explanation offered, and does not find any intentional concealment or misstatement in respect to these two policies. It cannot be said that in this conclusion he was clearly in error. The other specifications of objection based on the policies of insurance are waived by the objecting creditor.

No sufficient reason appearing for disregarding any of the learned referee's findings, his report stands confirmed.

Offer in composition approved.

John R. Lazenby and Julius Nelson, both of Boston, Mass., for appellant,

Before DODGE and BINGHAM, Circuit Judges, and HALE, District Judge.

PER CURIAM. Objections specified by the appellant to an accepted composition were referred to the referee, who reported that he found none of them sustained; 'whereupon the court, after due hearing, confirmed the composition. The appellant has insisted here, not upon all the objections originally specified, but upon one ground of objection only, viz., that the bankrupts had been guilty of obtaining money on credit upon a materially false statement in writing, made by them to said appellant for the purpose of obtaining credit from it. Bankruptcy Act, §§ 12d (2), 14b (3) (Comp. St. 1916, §§ 9596, 9598).

The evidence before the referee, his report thereon, and a memorandum of the District Judge's reasons for agreeing with the referee are before us. That on March 27, 1916, the appellant received from the bankrupts a signed statement in writing purporting to be "a copy of our financial statement taken from inventory January 1, 1916," is undisputed; also that the appellant, relying thereon, thereafter loaned the bankrupts $20,000 in all, on various dates from October 2 to December 18, 1916, both inclusive.

A consideration of the evidence before the referee and the District Judge has left us unable to say that they were clearly in error in finding it insufficient to prove said statement materially false and made for the purpose of obtaining credit thereby. We accept the reasoning and conclusions of the District Judge thereon.

The order of the District Court, confirming the composition, is therefore affirmed, and the appellees recover their costs of appeal.

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Though the letter be privileged, error cannot be predicated on the overruling of objection on that ground to the preliminary question to defendant whether the signature to the letter shown him was his.

2. POST OFFICE 49-USE OF MAILS-FRAUDULENT SCHEME-EVIDENCE. The indictment for using the mails to promote a fraudulent scheme, charging it to be to solicit from physicians the collection of accounts on percentage, and then to convert all the collections, admission in evidence of defendant's advertisement to sell a half interest in a business paying more than a certain amount per month, if tending to show, as it may, that he had made representations in the advertisement which he could make good only by appropriating collections in accordance with the scheme charged, is not reversible error.


Defendant's motion, at the conclusion of the prosecution's evidence, to dismiss, was waived by introduction of evidence on his behalf, and by his failure to move for an instructed verdict at the close of the evidence. For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

4. CRIMINAL LAW 1023(13)—APPEAL-REVIEW-DENIAL OF NEW TRIAL. The Circuit Court of Appeals cannot review denial of defendant's motion for new trial.



Rulings in admitting and refusing to strike evidence cannot be reviewed; exceptions not having been taken thereto.

In Error to the District Court of the United States for the Southern Division of the Southern District of California; Oscar A. Trippet, Judge.

Marion McMillan Clark, indicted as M. M. Clark, was convicted, and brings error. Affirmed.

Oliver J. Marston and Walter A. Ham, both of Los Angeles, Cal., for plaintiff in error.

Albert Schoonover, U. S. Atty., and Gordon Lawson, Asst. U. S. Atty., both of Los Angeles, Cal.

Before GILBERT and HUNT, Circuit Judges, and DIETRICH, District Judge.

GILBERT, Circuit Judge. The plaintiff in error was convicted upon an indictment which charged him, under section 215 of the federal Penal Code (Comp. St. 1916, § 10385), with the offense of using the United States mails to promote a scheme to defraud. He, together with two others, had entered into a copartnership known as the Physicians' Protective Association, for the purpose of soliciting from and collecting for physicians, surgeons, and dentists outstanding accounts on a percentage basis, and the indictment charged that the scheme was fraudulent in that, disregarding such agreement with the physicians, surgeons, and dentists to collect upon commission, the purpose and intention of the defendants was to appropriate and convert to their own use all or any part of such collections as they desired.

[1] The plaintiff in error assigns as error that the court below overruled his objection to the question which was asked him:

"I hand you here a letter, and ask you to look at the signature of that letter and say whether or not it is your signature."

The objection was that the letter was a privileged communication between attorney and client. If the assignment were directed to the admission of a letter which was a privileged communication between attorney and client, a question would be presented for our determination. But, as it is, nothing is brought before us except the bare fact that the plaintiff in error was asked whether he had signed a cerain letter. That question was but preliminary, and no error can be predicated upon the ruling of the court in permitting it to be answered.

[2] It is assigned that the court erred in overruling the objection of the plaintiff in error to the admission in evidence of a certain exhibit, to which objection was made that it was irrelevant, incompetent, and immaterial. That exhibit was an advertisement published by the plain

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes 245 F.-8

tiff in error on August 27, 1914, while he was carrying on the business of the Physicians' Protective Association. So far as it is material to the case, it contained the following:

"For Sale.-One-half interest in an exclusive business now paying more than $250 per month. Will pay buyer $75 per month, and divide profits above that amount."

It is contended that the advertisement tended to show that the plaintiff in error had committed an offense other than that with which he was charged in the indictment. There is nothing in the terms of the advertisement itself to show the commission of an offense. It may have tended to show, and probably it was introduced for that purpose, that the plaintiff in error had made representations in his advertisement which he could make good only by appropriating collections, in accordance with the scheme charged in the indictment. If so, its admission was not reversible error.

[3] Error is assigned to the denial of the motion of plaintiff in error to dismiss at the conclusion of the plaintiff's testimony. To this it is sufficient to say that the motion was waived by the introduction of evidence on behalf of the plaintiff in error, and his failure to move for an instructed verdict at the close of the evidence.

[4] The assignment that the court erred in overruling the motion of plaintiff in error for a new trial presents no question that this court can review. That proposition is so well settled as to make the citation of authorities unnecessary.

[5] In the brief of the plaintiff in error, other alleged errors in the admission of evidence, and the refusal of the court to strike evidence from the record, are discussed; but no exceptions were taken to the rulings of the court below, and we cannot consider them.

The judgment is affirmed.

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