Petition — Colonial Bank of New Orleans v. Vickers

Office -Supreme Court, U.S.

FiLE DD

80-1850

No.

MAY 4 1981

ALEXANO. is L. STEVAS,

RK

IN THE en

Supreme Court of the United States

OcToBER TERM, 1980

In Re: JAMES DWIGHT VICKERS

a/k/a J. D. ViIcKERS

a/k/a JIM VICKERS

a/k/a JIMMY VICKERS

CoLONIAL BANK OF NEw ORLEANS, Petitioner

Vv.

JAMES DwicuHT VICKERS, Respondent.

Petition for Writ of Certiorari to the United States

Court of Appeals for the Fifth Circuit

PETITION FOR WRIT OF CERTIORARI

Bossy KE. SHEPHERD

SPENCER, SPENCER & SHEPERD, P.A.

305 North Washington Avenue

El Dorado, Arkansas 71730

(501) 862-4913

Attorney for Petitioner

Press or Byron S. ADAMS PRINTING, INC., WASHINGTON, D. C.

i

QUESTIONS PRESENTED FOR REVIEW

1. Where objection to discharge of Bankrupt is

premised upon allegations, pursuant to 11 U.S.C.A.

32(¢)(3) and (7), that the Bankrupt obtained money

on credit by the making of a false written statement

respecting his financial condition, and that the Bank-

rupt has failed to satisfactorily explain any losses of

assets or deficiencies of assets to meet his liabilities,

must the granting of discharge by the Bankruptcy

Court be affirmed on appeal unless its findings as to

the ultimate issue or mixed questions of law and fact

are ‘‘clearly erroneous’’; or is such decision subject

to review free of the ‘‘clearly erroneous’’ rule?

2. Where the Bankrupt admits the making of a

personal financial statement in writing reflecting net

assets of approximately 1.1 million dollars and admits

that an accurate statement would reflect zero net as-

sets, did the Bankruptcy Court err in granting dis-

charge over creditor’s objection?

3. Where Bankrupt admits the making of a personal

financial statement in writing reflecting net assets of

1.1 million dollars, and less than two years later files

a voluntary petition for bankruptcy listing assets of

$1,325.00 and liabilities of over $4,000,000.00, and does

not explain this loss of assets or deficiency of assets to

meet his liabilities, was discharge properly granted

over objections of creditor bank?

ii :

PARTIES

The parties to this proceeding are:

Colonial Bank of New Orleans,

New Orleans, Louisiana Petitioner

James Dwight Vickers Respondent

Petitioner, Colonial Bank of New Orleans, is a

Louisiana banking corporation and has no parent

companies or subsidiaries.

The only affiliate of Petitioner is Colonial Leasing

Corporation, a Louisiana Business Corporation.

iii

TABLE OF CONTENTS

Page

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Reports or Orrnions De.iverep BELow ..........++.- 1

JURISDICTIONAL STATEMENT ........0cceeceeecreecees 2

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(i) Opinion and Order from Court below ....... la

(ii) Other Opinions, Judgments, and Orders .... 6a

iv

TABLE OF AUTHORITIES

Cass: Page

a as Earl Milliken, Inc., 359 F. 2d 811 (7th Cir.

Berley v. Fiol, 124 F. 2d 676 (2nd Cir. 1942) ....... 8

Gardner v. American Century Mortg. Inv., 577 F. 2d

OOS (GEN Cir. TUTE). oc evncvcccccecectecideccses

In Re Haggerty, 165 F'. 2d 977 (2nd Cir. 1948) ....... 9

Matter of Hammons, 614 F. 2d 399 (5th Cir. 1980) .. 7

oes Pallos State Bank, 401 F. 2d 63 (7th Cir.

In Re Pioch, 235 F. 2d 903 (3rd Cir. 1956) .......... 8

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No.

IN THE

Supreme Court of the United States

OctoBerR TERM, 1980

In Re: JAMES DWIGHT VICKERS

a/k/a J. D. VicKERS

a/k/a Jim VICKERS

a/k/a JIMMY VICKERS

CoLONIAL Bank or New ORLEANS, Petitioner

Vv.

JAMES Dwicut VicKERS, Respondent.

Petition for Writ of Certiorari to the United States

Court of Appeals for the Fifth Circuit

PETITION FOR WRIT OF CERTIORARI

REPORTS OF OPINIONS DELIVERED BELOW

Neither the opinion of the United States Court of

Appeals for the Fifth Circuit nor the Order Denying

Petition for Rehearing is reported officially or unof-

ficially.

The United States District Court for the Northern

District of Mississippi did not issue an opinion.

2

The opinion of the Bankruptcy Judge, United States

District Court for the Northern District of Mississippi

was not reported, officially or unofficially.

JURISDICTIONAL STATEMENT

The United States Court of Appeals for the Fifth

Circuit, by decision dated November 24, 1981, affirmed

the decision of the United States District Court for

the Northern District of Mississippi which affirmed

the order of the Bankruptcy Judge, United States

District Court for the Northern District of Mississippi,

Greenville Division in this case.

Petition for Rehearing was timely filed, and by order

dated and filed on February 19,1981, the United States

Court of Appeals for the Fifth Circuit denied this

petition.

The jurisdiction of this Court to grant this writ is

based upon 28 U.S.C. 2101 (c).

STATUTES AND RULES

11 U.S.C.A., sec. 32(c){1), (3) && (7)

‘‘The court shall grant the discharge unless satisfied

that the bankrupt has (1) committed an offense pun-

ishable by imprisonment as provided under section 152

of Title 18; or... (3) obtained money of property on

credit, or obtained an extension or renewal of credit,

by making or publishing or causing to be made or pub-

lished in any manner whatsoever, a materially false

statement in writing respecting his financial condition;

or ... (7) has failed to explain satisfactorily any

losses of assets or deficiency of assets to meet his lia-

bilities: Provided, That if, upon the hearing of an

3

objection to a discharge, the objecter shall show to

the satisfaction of the court that there are reasonable

grounds for believing that the bankrupt has committed

any of the acts which, under this subdivision, would

prevent his discharge in bankruptcy, then the burden

of proving that he has not committed any of such

acts shall be upon the bankrupt.”’

Bankrupicy Rule 752

‘*(a) Effect. In all matters tried upon the facts

without a jury or with an advisory jury, the Court

shall find the facts specially and state separately its

conclusions of law thereon, and the judgment shall be

entered pursuant to Rule 921(a). Requests for findings

are not necessary for purposes of review. Findings of

fact shall not be set aside unless clearly erroneous, and

due regard shall be given to the opportunity of the

trial court to judge of the credibility of the witnesses.

If an opinion or memorandum of decision is filed, it

will be sufficient if the findings of fact and conclusions

of law appear therein. Findings of fact and conclusions

of law are unnecessary on decisions of motions under

these rules except when, on a motion to dismiss under

Rule 741, the court renders a judgment on the merits

after a trial on the facts.

STATEMENT OF THE CASE

In the summer of 1977, the respondent, James

Dwight Vickers, as a managing officer of Toche Enter-

prises, Inc. and individually, for the purpose of ob-

taining a loan for shipbuilding purposes in excess of

$1,300,000 from petitioner, Colonial Bank of New Or-

leans, submitted to the Bank his personal financial

statement revealing a net personal worth of at least 1.1

million dollars. Petitioner contends that such financial

4

statements were submitted in the form of documents

dated April 30, 1977, and October 31, 1977. Respond-

ent, Vickers, contends that neither of these documents

is an authentic financial statement. Respondent admits

however, that he did submit to petitioner, a financial

statement reflecting such net worth in the summer of

1977.

Petitioner contends and respondent admits that such

financial statement listed as a personal asset, an Ar-

kansas plantation home valued, according to the state-

ment, at $900,000; an interest in Mainstream Ship-

yards (a separate enterprise) and personal property

and jewelry with a listed value in excess of $100,000.00.

In actuality at the time of the submission of such

financial statement the Arkansas real estate had al-

ready been conveyed solely to Respondent’s wife; and

the interest in Toche Enterprises, Inc. (an expired op-

tion to purchase) was valueless.

In November, 1978, Vickers filed his voluntary peti-

tion for bankruptcy in the United States District Court

for the Northern District of Mississippi, Greenville

Division, listing assets of $1,325.00 including only $200

for personal jewelry and liabilities of $4,130,989.71,

including the debt to petitioner ($300,000.00 listed by

Respondent although Petitioner asserts such debt ex-

ceeds $1,000,000.00).

Petitioner, Colonial Bank of New Orleans filed a

complaint objecting to respondent’s discharge alleg-

ing several grounds including failure to explain satis-

factorally loss of assets and deficiencies of assets to

meet his liabilities and, that Vickers, as managing of-

ficer of Toche Enterprises, Inc. and individually for

the purpose of obtaining money or property on credit

5

or obtaining an extension or nenewal of credit made

and published, and/or caused to be made and published

a materially false statement in writing respecting his

financial condition.

Trial on the complaint of Colonial Bank of New

Orleans was held on May 10th through 11th, 1979. By

memorandum opinion dated May 30, 1979, the Bank-

ruptey Court determined that the complaint of Colonial

Bank of New Orleans should be dismissed. (See Ap-

pendix) This decision was affirmed by The United

States District Court for the Northern District of

Mississippi on February 13, 1980 (see Appendix) and

by the United States District Court of Appeals for

the Fifth Circuit on (See Appendix) On February 19,

1981, the Court of Appeals denied Petitioner’s peti-

tion for rehearing. (See Appendix)

Federal jurisdiction in the Court of first instance

is premised upon the provisions of,the Bankruptcy

Act providing for the filing of such complaints by cred-

itors against the bankrupt in order to determine the

dischargeability of debts and vesting in the Bankruptcy

Court jurisdiction to hear such complaints. 11 U.S.C.A.

32(b), (c) (Sec. 14(b), (c) of the Bankruptcy Act

of 1898.)

ARGUMENT

The United States Court of Appeals for the Fifth «+

Circuit in its decision in this case has so widely de-

parted from the usual course of judicial proceedings

and has sanctioned such a wide departure from the

applicable rules of law by the lower courts, so as to

call for an exercise of this Court’s power of supervi-

sion by reviewing the decisions below.

6

Petitioner’s complaint below was premised upon the

allegations that Respondent, bankrupt, as a managing

officer of Toche Enterprises, Inc. and individually for

the purpose of obtaining money or property on credit

or obtaining an extension or renewal of credit made

and published or caused to be made and published a

materially false statement in writing respecting his

financial condition and that further the respondent

had failed to attempt in any manner to explain satis-

factorally the loss of the assets or deficiency in assets

during the years preceding his bankruptcy. These ob-

jections were premised upon Section 14(c) (3) and (7)

of the Bankruptcy Act of 1898, 11 U.S.C.A. 32(¢) (3)

and (7).

In this regard the Respondent contended that doc-

uments dated April 30, 1977, and October 31, 1977, were

not authentic financial statements prepared by the Re-

spondent and submitted to the Petitioner bank.

It became evident below however, that the authen-

ticity of such documents was not essential in order for

Petitioner’s objections to prevail for the respondent

consistently admitted in deposition and in testimony

at the trial before the Bankruptcy Judge, that he had

in fact during the time period in question submitted

at the request of the bank his personal financial state-

ment upon which the Petitioner bank relied in ad-

vancing monies for the respondent’s benefit.

Among the assets which the Respondent admittedly

listed on his financial statement was a home in Chicot

County, Arkansas for which he asserted a value of

$900,000. Additionally, Respondent admitted that the

financial statement included as an asset stock acquisi-

tion costs in Mainstream Shipyards.

7

It was revealed at the trial of this matter that

months before such financial statement was presented

the home in Arkansas had in fact been conveyed by

Respondent to his wife and became her sole property.

Further, it was revealed that the only interest of

the Respondent in Mainstream Shipyards was an op-

tion which he purchased for $200,000 which had ex-

pired prior to the submission by respondent of his

financial statement.

The decisions below depart from accepted legal prin-

ciples and further conflict with decisions of other fed-

eral courts of appeal involving similar fact situations.

First, the decisions below premise the affirmance of

the Bankruptcy Judge’s decision to a great extent on

finding that the Bankruptcy Court’s determination

were not ‘‘clearly erroneous.’’ (Appendix, Order of

U. 8. District Court for the Northern District of

Mississippi, Greenville Division; and Opinion of U. S.

Court of Appeals for the Fifth Circuit, November 24,

1980.)

It is submitted however, that the ‘‘clearly erroneous’’

rule is applicable only to findings of fact made by

the Bankruptcy Court. Bankruptcy Rule 752.

In this case far more than findings of fact were

made by the Bankruptcy Judge. By determining that

the respondent had not made and published or caused

to be made and published a materially false statement

in writing respecting his financial condition the Bank-

ruptcy Court applied law to the facts as he found

them and determined the ultimate issue in question.

As stated in Matter of Hammons, 614 F. 2d 399 (5th

Cir. 1980) at page 403:

‘“‘The Bankruptcy Judge’s ‘new and different busi-

ness’ determination was a conclusion as to the

8

legal significance of evidentiary facts. As such,

it was subject to review free of the clearly er-

roneous rule.”’

The cited case further proffers the proposition that

the Appellate Court must independently determine the

correctness of the ultimate legal conclusion adopted

by the Bankruptcy Judge on the basis of the fact

found.

Directly in point is In re Pioch, 235 F.2d 903 (3rd

Cir. 1956). There it is stated at page 905:

‘‘Before Pherae: further, it must be pointed

out that the District Court erred in its view that

‘“‘The Referee’s conclusion that the bankrupt in-

tended to hinder, delay, and defraud his creditors

must be affirmed by this court unless it is clearly

erroneous.’

‘‘With respect to the Referee’s ‘conclusion’, it

must immediately be noted that it was in the na-

ture of an ultimate finding of fact and on that

score, it is well settled that such a finding is but a

legal inference from other facts and as such is

subject to review free of the restraining impact of

the so-called ‘clearly erroneous rule’ applicable to

ordinary findings of fact by the trial court.”’

This clearly established principle was not followed

by the United States Court of Appeals for the Fifth

Circuit in this case.

Accordingly, the Appellate Court departed from the

applicable rule and applied the clearly erroneous stand-

ard to the case at hand.

Additionally, the Court departed from the usual

course of proceedings such as this in disregarding the

authority of Berley v. Fiol, 124 F. 2d 676 (2d Cir.

9

1942) in which the bankrupt on a financial statement

had listed his home as an asset. At a hearing on

objection to his discharge the bankrupt testified that

the title to the property had been in fact in his wife’s

name. It was held:

“There is not the slightest doubt that the state-

ments above referred to were false in that they

represented that the bankrupt owned his own house

_ failed to disclose the large judgment against

Mises

From the Seventh Circuit 1s Pascal v. Pallos State

Bank, 401 F. 2d 63 (7th Cir. 1968) in which it is

stated at page 65:

‘‘The testimony of the bankrupt before the referee

was that the house listed as an asset was in fact

in trust for his wife. The record before this Court

is void of any evidence a by the bankrupt

to controvert this fact. Therefore, under the pro-

viso of Section 14(c)(3), the burden of proof

clearly had shifted to the bankrupt and the referee

was completely justified in his finding that ‘the

financial statement of May 6, 1964, was a false

statement.”’

It is accepted that when a materially false finan-

cial statement is shown by the objecting party the

burden shifts to the respondent to disprove the pre-

sumed intent to deceive. 11 U.S.C.A. 32(c); In re

Haggerty, 165 F.2d 977 (2nd Cir. 1948).

The Court of Appeals, the District Court, and the

Bankruptcy Judge in this case disregarded the above

cited rules of law. It is submitted thot if this case

is reviewed it will be found that the evidence points

inescapably to the conclusion that a false financial

statement was submitted by the bankrupt Respondent

10

in that by his own admission a financial statement

was submitted which contained a listing of some assets

which in fact the respondent did not possess.

The granting of this petition for writ of certiorari

is also appropriate in that a departure was made by

the Courts below from accepted and recognized law

preventing a discharge in bankruptcy where the bank-

rupt has failed to satisfactorily explain the loss of

assets leading to bankruptcy.

At trial Respondent admitted that in 1977 he sub-

mitted a financial statement to Petitioner which re-

vealed a net worth of approximately 1.1 million dollars.

In November, 1978, Respondent filed his voluntary

petition for bankruptcy listing assets of $1,325.00 in-

cluding only $200 for personal jewelry and liabilities

of $4,130,989.71 including an indebtedness to Peti-

tioner, Colonial Bank of New Orleans, in the sum of

at least $300,000.00.

Upon review it will be found that Respondent has

in no way or manner sought to explain this fantastic

diminution in assets in a period of a few months, In

this regard Gardner v. American Century Mortg. Inw.,

577 F. 2d 928 (5th Cir. 1978) states that when a prime

facie case for denying a discharge is made by a creditor

the burden of proving that the debtor has not com-

mitted acts justifying the denial of discharge shifts to

the bankrupt. Further, once the objecting creditor

meets the initial burden of producing evidence to

prove the facts to establish the objection the burden

passes to the bankrupt to go forward with evidence

that will ‘‘explain satisfactorily’? the losses or de-

ficiencies.

11

The cited case further establishes that more is re-

quired of the bankrupt in explanation than mere

generalities.

Additionally, the Seventh Circuit in Baum v. Earl

Milliken, Inc., 359 F. 2d 811, 814 (7th Cir. 1966) de-

termined that:

‘*A ‘satisfactory exy'anation’ of a loss of assets

to meet liabilities within the meaning of Section

14(c)(7) of the Bankruptcy Act must consist of

more than the vague, indefinite and uncorroborated

hodgepodge of financial transactions presented by

the bankrupt in thise case...”

It is submitted that in view of the departures from

established law and practice by the Court below, the

conflict of decisions of other Circuits, and the enormity

of the indebtedness to Petitioner which Respondent

seeks to discharge, that a granting of Petitioner’s

petition for writ of certiorari is appropriate.

Respectfully submitted,

Bossy EK, SHEPHERD

Spencer, SPENCER & SHEPERD, P.A.

305 North Washington Avenue

El Dorado, Arkansas 71730

(501) 862-4913

Attorney for Petitioner

APPENDIX

la

APPENDIX

i. Opinions from court below

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Unit A

No. 80-3191

Summary Calendar

In the Matter of:

James Dwicut Vickers, a/k/a J. D. Vickers,

a/k/a Jim Vickers, a/k/a Jimmy Vickers, Bankrupt.

Corona, Bank or New Onveans, Plaintiff-Appellant,

versus

James Dwicut Vickers, Defendant-Appellee.

Appeal from the United States District Court for the

Northern District of Mississippi

(November 24, 1980)

Before Cuartes Ciark, Reavizy and WuiuuiaMs, Circuit

Judges.

PER CURIAM:

This is an appeal from an order of the bankruptcy judge,

affirmed by the district court, which dismissed on the

merits the complaint filed by Colonial Bank of New

Orleans objecting to the discharge of James Dwight Vick-

ers on his petition for bankruptcy.

The principal ground asserted by the bank for denial

of the discharge is based on § 14(c)(3) of the Bankruptcy

Act of 1898, which provides that the bankruptcy court shall

grant the discharge unless it is satisfied that the bankrupt

has obtained money on credit by the making of a false

2a

written statement respecting his financial condition. The

bank contends that Vickers submitted a false financial

statement to it in connection with a loan it made to keep

his corporation in business.

The bankruptcy judge found that the signature on the

financial statement introduced into evidence by the bank,

which it contends was false, was a forgery of Vickers’

signature. Although recognizing that it was not necessary

for the bank to have a signed financial statement from the

bankrupt in order to come within §14(c)(3), the bank-

ruptcy judge concluded that the forgery on the document

offered by the bank as being the bankrupt’s financial state-

ment lent credence to Vickers’ testimony that the document

was not the financial statement he furnished to the bank.

The judge found that the document was, therefore, not the

financial statement that Vickers furnished to the bank.

‘*Since no other financial statement of James D. Vickers

. . was offered in evidence,’’ the bankruptcy judge held

there was no evidence that ‘‘ Vickers obtained money or

property on credit for his corporation by means of a false

statement in writing concerning his financial condition.’’

The bank on appeal argues that although no other finan-

cial statement of Vickers was offered into evidence, there

was evidence of a false financial statement adduced during

trial; specifically, the bank argues that Vickers’ own testi-

mony clearly established that he furnished the bank with

a false financial statement—albeit not the one offered by it.

We cannot agree.

After thoroughly reviewing the record herein, we are

unable to find anything in the bankrupt’s testimony tend-

ing to prove that he gave the bank a false financial state-

ment. Therefore, we are unable to hold that the findings of

the bankruptcy court—specifically, that there was no evi-

dence of Vickers making a false statement in writing about

his financial condition—are clearly erroneous. See In the

Matter of Bardwell, 610 F.2d 228, 230 (5th Cir. 1980).

3a

The bank also argues that the bankruptcy judge erred

by (1) denying its motion after trial to amend its complaint

to allege the making of a false oath in the bankruptcy

proceedings as an additional ground for denial of dis-

charge; (2) refusing to reopen the records to allow the

testimony of two witnesses to the effect that the financial

statement offered by the bank was indeed furnished by the

bankrupt; and (3) refusing to amend its findings of fact

and conclusions of law or to grant a new trial. We hold

these arguments to be wholly without merit.

AFFIRMED.

4a

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Unit A

No. 80-3191

Summary Calendar

In the Matter of:

James Dwicut Vickens, a/k/a J. D. Vickers,

a/k/a Jim Vickers, a/k/a Jimmy Vickers, Bankrupt.

Corona, Bank or New On.eans, Plaintiff-Appellant,

versus

James Dwicut Vickers, Defendant-Appellee.

Appeal from the United States District Court for the

Northern District of Mississippi

ON PETITION FOR REHEARING

(Filed February 19, 1981)

Before Cuartes Ciark, Reavuey and Wituiams, Circuit

Judges.

PER CURIAM:

Appellant, in its petition for rehearing, brings to our

attention that in our prior opinion we overlooked its objec-

tion to the bankrupt’s discharge on the ground that he

failed to satisfactorily explain the loss of his assets.

In his memorandum opinion, the bankruptcy judge wrote:

‘“‘The remaining objections were based principally

upon the items and the values shown on the financial

statement (plaintiff’s Exhibit 1). Since that document

has been discredited, the need to explain the values

which appear on it has disappeared. With respect to

the bankrupt’s interest in Delta Towing Company,

Mr. Vickers testified that the value placed on that

company on the statement which he says he gave to

plaintiff was very much lower than the figure shown

on plaintiff’s Exhibit 1. In any event, the testimony

5a

of the bankrupt and his other witnesses fully explained

what happened to the assets of Delta Towing Company.

‘‘With respect to the other objections, Mr. Vickers

was examined at length with respect to all of the vari-

ous assets shown on plaintiff’s Exhibit 1 and I find

that he has explained what happened to each of those

assets and I find that there has been no failure to

explain losses or deficiency of assets and that there

has been no proof that the defendant transferred,

removed or concealed assets with intent to hinder,

delay or defraud his creditors. Likewise I find that

the objections that he failed to list in his schedules

assets shown on the financial statement have not been

sustained.

‘*QOne item on plaintiff’s Exhibit 1 that deserves some

comment is the home on Macon Lake Plantation, which,

according to plaintiff’s Exhibit 1, was said to have an

appraised value of $900,000.00. Actually, prior to the

making of the loan, the bank had an appraisal made

by a real estate firm of its choosing. That appraisal

showed a value for the home of $300,000.00 and the

bank took a promissory note and mortgage on that

home for $300,000.00, signed by both the bankrupt and

by his wife, Susan Smith Vickers.

‘*It would serve no useful purpose for the court to

detail the evidence with regard to each of the items

of property which the defendant admitted that he had

owned. Suffice it to say that the court finds that he

has fully explained what happened to each of such

items.”’

We, like the district court, have carefully reviewed the

record of this case and conclude that these findings of the

bankruptcy court are not clearly erroneous.

Ir Js Onperep that the petition for rehearing filed in the

above entitled and numbered cause be and the same is

hereby DENIED.

6a

fi. Other opinions, judgments and orders

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF MISSISSIPPI

GreENVILLE Drvision

No. GC 79-187-S

GBK 78-00147

CotontaL Bank or New Onueans, Plaintiff

v.

James Dwicut Vickers, Defendant

This action is before the court upon the plaintiff’s

appeal from the orders of the bankruptcy court dismissing

the plaintiff’s complaint objecting to discharge, denying

plaintiff leave to file an amended or supplemental com-

plaint, and denying plaintiff leave to re-open the proceed-

ings to allow the introduction of certain testimony. Having

carefully considered the record of this case, the transcript

of proceedings, and the memoranda of the parties, the

court is of the opinion that the decision and orders of the

bankruptcy court must be affirmed. The findings of the

bankruptcy court are based upon sufficient evidence, and

this court cannot say that such findings were clearly erron-

eous. See In re Bardweli, No. 77-2863 (5th Cir. Jan. 15,

1980), —— F.2d ——. Accordingly, it is

OrpERED AND ApJUDGED:

(1) That the judgment of the bankruptcy court, entered

on May 31, 1979, shall be and the same hereby is affirmed;

(2) That the bankruptcy court’s order of May 30, 1979,

denying plaintiff’s motion for leave to file an amended and

supplemental complaint, shall be and the same hereby is

affirmed ;

.

7a

(3) That the bankruptcy court’s order of May 30, 1979,

denying plaintiff’s motion for leave to reopen the trial of

the case to permit the testimony of J. Herbert Boydston,

shall be and the same hereby is affirmed; and

(4) That the bankruptcy court’s order of September 12,

1979, denying plaintiff’s motion for leave to amend its

compiaint, and denying plaintiff’s motion to amend find-

ings of fact, or for a new trial, shall be and the same hereby

is affirmed.

This 13th day of February, 1980.

/s/ Onma R. Smira *

United States District Judge

8a

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF MISSISSIPPI

Greenvitie Division

No. GBK78-00147

In ne James Dwiout Vickers,

a/k/a J. D. Vickers,

a/k/a Jim Vickers,

a/k/a Jimmy VICKERS, BANKRUPT

Corona, Bank or New Ornxans, Plaintiff

vs.

James Dwicut Vickers, Defendant

MEMORANDUM ORDER

(Filed May 30, 1979)

Plaintiff, Colonial Bank of New Orleans (Colonial), seeks

in this adversary proceeding to prevent the bankrupt from

obtaining a discharge in bankruptcy. A number of grounds

were asserted for the denial of a discharge, but the prin-

cipal one and the one to which most of the testimony in a

two-day trial was directed was the ground stated in clause

(3) of § 14(c) of the Act which reads:

‘*e, The court shall grant the discharge unless satis-

fied that the bankrupt has... (3) while engaged in

business as a sole proprietor, partnership or as an

executive of a corporation, obtained for such business

money or property on credit or as an extension or

renewal of credit by making or publishing or causing

to be made or published in any manner whatsoever a

materially false statement in writing respecting his

financial condition or the financial condition of such

partnership or corporation; .. .’’ (emphasis supplied).

9a

James Dwight Vickers, the bankrupt, a man with consider-

able background in the towboat and boat building busi-

nesses, took over, early in 1976, the controlling stock in-

terest in Toche Enterprises, Inc. (Toche), a corporation

which was engaged in the shipbuilding business on the

Mississippi Gulf Coast. Toche was in serious financial con-

dition at the time and Vickers bought the stock of the com-

pany without paying any cash for it, but by assuming the

indebtedness. Notwithstanding its financial condition at the

time of purchase, Vickers considered the transaction an

opportunity for him to turn the business around and make

a profit, Toche was at the time indebted to First Mississippi

National Bank of Biloxi (First Mississippi) and was still

so indebted at the time when the petition in this case was

filed.

Vickers invested a considerable amount of his own

money in building up the Toche plant. In 1977 Toche had

a contract to build a ship for a corporation named Trade-

winds International, Inc. (Tradewinds). Tradewinds had

a ‘‘take out letter’? from Greyhound Leasing & Financial

Corporation and its wholly owned subsidiary, Railway

Equipment Leasing Corporation (RELC) which, in land-

lubber’s terms, was a commitment by Greyhound and

RELC for permanent financing of the vessel once it had

been completed. The actual form of this financing was to

be a purchase of the vessel by RELC from Toche upon

its completion, followed by a leaseback by RELC to Trade-

winds (plaintiff’s Exhibit 13).

Notwithstanding that permanent financing for the vessel,

then still known only as ‘‘Hull 103’’, had been arranged,

Toche was in need of working capital to complete the con-

struction of this vessel and First Mississippi, from which

Toche had been getting its financing, had already loaned

Toche about as much money as it desired to or could

legally do. Consequently, Toche, represented by Vickers,

and Tradewinds, represented by its officers, actively sought

10a

further financing so that performance of the construction

contract between Toche and Tradewinds could be com-

pleted. In the spring of 1977 they found what they were

looking for at the Bossier Bank and Trust Company

(Bossier) of Bossier City, Louisiana. Bossier, however, for

reasons that were not explained at the trial, preferred not

to make the loan itself, but sent Toche and Tradewinds to

Colonial and recommended to Colonial that Colonial should

make this loan. Colonial was represented throughout the

transaction by its president, George M. Sneed, who was

plaintiff’s principal witness at the trial. Mr. Sneed was no

longer with Colonial at the time of the trial, but, at the

time of the transactions to which he testified, he was the

president of Colonial.

There followed a series of conferences at Colonial at-

tended by Sneed, Vickers and officials of Tradewinds and

officials of Bossier, including, from time to time, Mr. Beebe

who was chairman of the board of Bossier, Herbert Boyd-

ston, and a Mr, Anderson, both of whom were officers of

Bossier.

Toche first wanted a loan of $1,500,000.00, but was cut

down to $1,300,000.00, although later on additional money

was advanced bringing the loan to an amount in excess of

$1,400,000.00. During the negotiations, it was determined

that the loan, at least in form, would be to Tradewinds,

rather than to Toche and, when the loan was closed, Toche

was the only party which signed the promissory note that

constituted the principal obligation to Colonial. Bossier

actively recommended this loan to Colonial and Bossier

participated in the loan, according to Mr, Sneed, Colonial’s

president, to the extent of $700,000.00 of the first $800,000.00

advanced, and ultimately to the extent of $1,000,000.00 out

of the $1,400,000.00 plus that eventually was loaned. How-

ever, notwithstanding that Tradewinds was the only signer

of the notes, Colonial, as part of the loan transaction,

required from Vickers, Toche and others a formidable

lla

number of guarantees, financial statements, and other

documents.

The loan agreement itself was signed on July 27, 1977

at the Colonial Bank, This agreement was signed not only

by Colonial and by Tradewinds, but by Toche, by A. Z.

Marine Transportation, Inc., by P& F Towing Company,

Inc., by Venture Capital, Ine., and by J. D. Vickers, in-

dividually. The agreement was also signed by Philip E.

Watkins, G. F, Smith, and by W. R. Smith, all of whom

were officers of one or more of the various corporate signa-

tories. The agreement required a $150,000.00 limited guar-

anty from W. R. Smith and from Venture Capital, a note

by Tradewinds in the amount of $1,300,000,00 at a rate of

interest fixed at 34%% above the Citibank, N.A. of New

York prime rate and full guaranty agreements by all of

the other signers, both corporate and individual. Toche

executed such a guaranty and so did J. D. Vickers, As fur-

ther security for Vickers’ guaranty, the bank asked for

and received a first mortgage on the Vickers’ residence in

Chicot County, Arkansas, signed by J. D. Vickers and by

Susan Smith Vickers, his wife. In addition, a life insurance

policy was taken out on the life of J. D. Vickers in the

amount of $1,300,000.00 and was assigned to Colonial, The

premium for this policy was to be paid for out of the

proceeds of the loan. Financial statements were to be sup-

plied to Colonial by all of the parties to the agreement

and there was also a provision that as soon as the hull of

the vessel being built by Toche for Tradewinds had been

completed to a point which will cause it to be legally capa-

ble of identification for such purpose, Tradewinds and/or

Toche would execute in favor of Colonial a First Preferred

Ships Mortgage on said hull. There were several other

provisions of the contract, for Colonial’s protection, but

which are not important to the solution of the issues before

this court for decision.

Some time during the negotiations, or thereafter, a

written statement of the financial condition of Mr. J. D.

12a

Vickers individually was furnished to Colonial. The only

such statement that has been offered in evidence is plain-

tiff’s Exhibit 1 and since this exhibit and its contents are

the basis for most of the controversy involved, a copy of

this exhibit will be made an annex to this opinion.

There is a serious factual question as to whether the

document offered in evidence as plaintiff’s Exhibit 1 is

genuine, The defendant strenuously denied that plaintiff’s

Exhibit 1 was the financial statement which he furnished

to Colonial.

Before we reach that factual question, however, there

is a question of law that must first be considered, The

defendant contends that, even if we assume the genuine-

ness of plaintiff’s Exhibit 1, nevertheless this particular

financial statement is not a statement which is included

in § 14(c)(3) of the Bankruptcy Act. This clause of § 14(c)

requires that the bankrupt ‘‘while engaged in business...

as an executive of a corporation obtained for such business

money or property on credit or as an extension or renewal

of credit’’ by means of a materially false written financial

statement. The bankrupt says that in order for the quoted

language to apply to a statement of Vickers’ financial

condition, the statement must have been used to obtain

money or property for Toche, a corporation of which

Vickers was an executive; whereas, says the defendant,

Colonial made its loan to Tradewinds, of which corporation

Vickers was not an executive, and therefore the money or

property was not obtained ‘‘for such business’’, The par-

ties have not found and cited to the court, and the court

has not itself found any case which bears on this specific

question of law.

The defendant’s argument has a certain amount of sur-

face attraction and there may be factual situations where

the furnishing of a financial statement by an executive of

a corporation that was merely a surety on the obligation

. of another corporation might not be within the confines of

13a

§ 14(c)(3). However, a more detailed analysis of this loan

transaction will disclose that, although the loan, in form,

was to Tradewinds, it was really Toche which needed and

which received the proceeds of the loan,

Under the loan agreement, each draw was to be preceded

by a request for an advance, signed by both Toche and

Tradewinds. The first dtaw of $800,000.00, was granted

by the bank only after it had been supplied with a marine

survey showing that Hull 103 already had $800,000.00

worth of labor and materiais in it. Furthermore, the

$800,000.00 was credited to Toche and was disbursed by

a series of cashier’s checks, each signed by Sneed, the

president of Colonial, and each of these cashier’s checks,

most of which were made payable to creditors of Toche,

was preceded by a check in a corresponding amount signed

by Toche. Not only was this so, but some of the bills paid

by Toche with these cashier’s checks were for amounts

owing for materials used by Toche in the construction of

other hulls that Toche was then working on, and the money

was not disbursed solely for debts arising out of the con-

struction of the vessel which Toche was building for

Tradewinds, It has also been pointed out by plaintiff that

the proceeds of this loan were not needed by Tradewinds,

which already had a commitment for permanent financing

of the vessel, but were needed by Toche in order for it to

be able to complete the vessel, and that while the loan

was in form to Tradewinds, what Tradewinds wanted and

needed was interim financing for Toche. I have concluded,

that in view of the factual situation disclosed by the evi-

dence, this was a transaction by which Vickers, helped, it

is true, by the other signatories to the loan agreement,

obtained money or property for Toche.

We turn now to plaintiff’s Exhibit 1, which Colonial

contends is the financial statement of James Dwight Vickers

as of April 30, 1977, and which Colonial says was furnished

to it by Vickers during the negotiations leading up to the

l4a

making of the loan agreement dated July 27, 1977, and

on which it relied in entering into said loan agreement.

It is also contended by Colonial that this statement was

materially false in a number of respects.

Mr. Sneed, who was Colonial’s president throughout the

time of the loan transaction and who was also Colonial’s

principal witness, testified that this statement was the

only statement of Vickers’ financial condition which he

had ever seen. He did not know just how this statement

got to the bank. It was not handed to him personally by

Vickers, he was unable to say who did first receive it on

the part of the bank, and he was unable to state just at

what stage of the transaction the statement was received.

During his first appearance on the stand, the nearest he

could come to fixing a date for the receipt of the statement

by the bank was that he knew that he had had the state-

ment in his possession and had discussed it with Vickers

before the second advance under the loan was made in

mid-August, 1977. Although excused as a witness well be-

fore the end of the first day of the trial, Sneed returned

to the stand on the second day of the trial and testified

that, overnight, he had examined the bank’s file and found

in it a copy of a letter which he had written to Boydston,

an officer of Bossier, in which he told Boydston that he

had received this financial statement, plaintiff’s Exhibit 1,

and was enclosing a copy of it with this letter to Boydston.

Sneed testified that from reading the copy of this letter,

his recollection was refreshed, and he could now testify

that he had plaintiff’s Exhibit 1 in his possession not later

than June 17, 1977.

Plaintiff’s Exhibit 1 consists of a single sheet of paper,

letter size, which is headed

** James D. Vickers

Financial Statement

April 30, 1977”’.

l5a

The statement shows Mr. Vickers with a net equity of

$2,486,762.17.

At the bottom of the page, below all the figures, appears

a handwritten signature, which purports to be the signa-

ture of J. D. Vickers. Mr. Sneed admitted that he did not

see Vickers place this signature on the statement. No other

witness produced by the plaintiff saw Mr. Vickers sign

his name to this financial statement, nor did any witness

for the plaintiff testify as to how this particular sheet of

paper came into the possession of the bank. The testimony

was, however, that this paper, plaintiff’s Exhibit 1, did

come from the file maintained by the Bank on the Trade-

winds loan.

Vickers himself, when he later took the stand, denied

that the signature was his. He also stated emphatically

that plaintiff’s Exhibit 1 was not the financial statement

which he gave to the bank. On the contrary, he testified

that the statement he gave consisted of several pages and

included not only a statement of assets and liabilities, but

also a series of notes to the statement, explaining a number

of the entries on the statement. Vickers also said that it

was accompanied by a letter from Mr. L. D. Robertson,

a CPA, explaining the value appearing on the statement

with respect to the bankrupt’s interest in Delta Towing

Company.

Mr. Vickers’ father, J. E. Vickers, his accountant, Mr.

W. E. Bradley, and a bookkeeper for companies operated

by the senior Vickers, some of which were companies in

which J. D. Vickers had an interest, were all placed on

the stand and shown the signature at the foot of plaintiff’s

Exhibit 1. All three of them stated that they were well

acquainted with the bankrupt’s signature and that the sig-

nature appearing at the foot of plaintiff’s Exhibit 1 was

not the bankrupt’s. Of course, none of these witnesses

could be classified as completely unbiased. However, their

testimony was not successfully challenged on cross exami-

16a

nation, nor was it contradicted by the testimony of any

other witness. No handwriting expert was called by either

party. No witness testified that he saw the bankrupt sign

his name to plaintiff’s Exhibit 1 and no witness who was

well acquainted with the signature of the bankrupt, testi-

fied that he recognized this signature as the signature of

J. D. Vickers.

That leaves the court with the duty of determining,

without the assistance of experts, whether the signature

at the foot of plaintiff’s Exhibit 1 was or was not placed

there by the bankrupt. The court, of course, has only the

average layman’s ability to determine whether a particular

‘‘signature”’ is or is not the genuine article. Mindful of

that, mindful also that people do not always sign their

name exactly the same way, but taking into account also

the fact that the plaintiff has the burden of proof through-

out this proceeding (Bankruptcy Rule 407), the court has

compared the signature on plaintiff’s Exhibit 1 with the

unquestioned signatures of J. D. Vickers on some ten other

exhibits offered at this trial by the plaintiff. These are

plaintiff’s Exhibits 6, 7, 8, 9, 10, 11, 17, 18, 19 and 20.

After carefully comparing the signature on plaintiff’s

Exhibit 1 with the signatures on each of the foregoing

exhibits introduced by plaintiff, and taking into account

also the testimony given by Mrs. Hancock and Messrs.

Bradley, J. E. Vickers and J. D. Vickers with regard to the

signature at the foot of plaintiff’s Exhibit 1, I have come

to the conclusion that the purported signature at the foot

of plaintiff’s Exhibit 1 is not the signature of the bankrupt.

The initials are written differently, particular.y the initial

‘*V’’, The ‘‘ick’’ of the name Vickers also seems consider-

ably different from the appearance of the same letters on

the other exhibits, and the final stroke at the end of the

name is totally different. In all of the other exhibits, there

is at the end a circle made by bringing the pen down,

under and back, whereas on plaintiff’s Exhibit 1, the final

17a

stroke continues straight on to the right horizontally, with-

out turning back to make the final circle.

Having found that the signature was not that of the

bankrupt, the next task of the court is to consider what

the significance is of there being a forged signature on

the statement. I say ‘‘forged’’ because the words ‘‘J. D.

Vickers’’ at the foot of plaintiff’s Exhibit 1 is not ordinary

handwriting, but is made to look as though it were a

signature and, while it plainly is not the signature of J. D.

Vickers, as exemplified by the genuine signatures on plain-

tiff’s other exhibits, it is obvious that someone was making

a clumsy attempt to make it look like the signature of

J. D. Vickers.

Of course, it was not necessary for the bank to have a

signed financial statement from the bankrupt in order to

come within the confines of § 14(c)(3) of the Bankruptcy

Act. All that was necessary was a statement in writing

and this was, even without the signature, a statement in

writing. When, however, Colonial came up with such a

statement bearing a signature which was not the signature

of the bankrupt, it becomes possible to infer that someone

at Colonial, or perhaps someone at Bossier, not convinced

that the statement they had from J. D. Vickers was good

enough to satisfy the bank examiners, or perhaps even

the bank’s own loan committee, decided to supply the bank

with a handsomer appearing statement, and went on to

make the substitute statement appear more genuine (to

gild the lily, if mixed metaphors are acceptable) by sup-

plying what would to someone not familiar with Mr. Vick-

ers’ signature, appear to have been signed by him. The

very least that can be said for the presence of a forged

signature on the paper offered by plaintiff as being the

financial statement of J. D. Vickers is that it lends credence

to the positive testimony of Mr. Vickers that plaintiff’s

Exhibit 1 was not the financial statement which he had

furnished to the bank.

18a

I find that plaintiff’s Exhibit 1 was not the financial

statement on which the bankrupt furnished to Colonial.

Since no other financial statement of James D. Vickers

individually was offered in evidence, there is no evidence

in this case that James D. Vickers obtained money or

property on credit for his corporation by means of a false

statement in writing concerning his financial condition.

Some time during the second day of the trial, which was

a Friday, the plaintiff requested that the court continue

the case inte the following week so that plaintiff would

have an opportunity to bring to the trial Mr. Herbert

Boydston. Mr. Boydston had been an officer of Bossier at

the time of the loan transaction and plaintiff wanted to

offer his testimony with regard to the financial statement

(plaintiff’s Exhibit 1) which we have just been discussing.

It was stated that Mr. Boydston was no longer with Bossier

but was an officer of a bank in West Monroe, Louisiana,

some ninety miles from Greenville, where the trial was

being held. Mr. Boydston had not been present at the trial

on either day and it was stated that he had not been able

to come that day, but could be available the following week.

This request by the plaintiff was overruled by the court,

and I believe properly so. The bankrupt’s testimony that

plaintiff’s Exhibit 1 was not the statement which he had

furnished to the bank and that the signature appearing on

that exhibit was not his signature, did not come as a sur-

prise to plaintiff or its counsel. Mr. Vickers had given

identical testimony during the course of a deposition which

the plaintiff took on April 16, 1979, more than three weeks

before the trial of this adversary proceeding. Parts of that

deposition were offered in evidence at the trial by plaintiff

(plaintiff’s Exhibit 24) and the balance of the deposition

was then offered in evidence by the defendant (defendant’s

Exhibit A). On pages 12 and 13 of the transcript of that

deposition, the following appears:

**Q. But certainly one of the documents that you pre-

pared and signed was your current financial statement;

correct?

19a

A. Let me see. No. I don’t know where he got this.

This is not mine.

Q. That’s not your financial statement?

A. That’s not my signature either.

Q. That’s not your signature at the bottom of it?

A. No, sir. That’s not the one I gave him. That’s not

my signature and that’s not the one I gave him. The

one I gave him was three or four pieces of paper

stapled together with an opinion from L. D. Robertson

on the Delta Towing Company value, and footnotes all

through the back as to what each individual item was

and all is the one I gave Snead. I don’t know where

this came from.

Q. Is this a part of that package?

A. No, sir.

Q. You’re sure of that?

A. Yes sir. ’Cause the one I signed I signed. And

that’s damned sure not my signature. That’s not the

financial statement I gave.”

Plaintiff’s counsel had the financial statement that was

being discussed in the above quoted passage of the tran-

script marked as Exhibit A to Mr. Vickers’ deposition.

It is identical with the financial statement that was marked

as plaintiff’s Exhibit 1 in the trial of this adversary pro-

ceeding.

It is transparently clear that plaintiff’s counsel knew

more than three weeks before the trial that Mr. Vickers

had declared under oath that the financial statement

(plaintiff’s Exhibit 1) was not the financial statement which

he had delivered to the bank and had also denied under

oath that the signature at the foot of the statement was

his. Mr. Boydston apparently was within reach of the sub-

poena power of this court (Bankruptcy Rule 45). If coun-

sel believed that his testimony would be helpful, he should

have been subpoenaed to appear at the trial, or his deposi-

20a

tion should have been taken. Not having had a subpoena

issued for Mr. Boydston, having made no attempt to take

his deposition, and not having made a motion prior to or

at the commencement of the trial for a continuance for

the purpose of securing Mr. Boydston’s testimony, the

court was fully justified, in the exercise of its discretion,

in refusing to allow further time for the production of

this witness.

Although the principal objection relied on by the plain-

tiff was the false financial statement (plaintiff’s Exhibit

1), a number of other grounds of objection to the bank-

rupt’s discharge were alleged in the original complaint.

These were, failure to keep books and records; failure to

explain losses and/or deficiency of assets; the transferral,

removal or concealment of assets with intent to hinder,

delay and defraud creditors; the failure to explain what

happened to the net value of bankrupt’s interest in Delta

Towing Company; and a failure to list on the bankrupt’s

schedules assets shown on the financial statement.

The bankrupt testified fully with regard to what hap-

pened to his books and records, I find that there is no

proof that the bankrupt failed to keep books and records.

The remaining objections were based principally upon

the items and the values shown on the financial statement

(plaintiff’s Exhibit 1). Since that document has been dis-

credited, the need to explain the values which appear on

it has disappeared. With respect to the bankrupt’s interest

in Delta Towing Company, Mr. Vickers testified that the

value placed on that company on the statement which he

says he gave to plaintiff was very much lower than the

figure shown on plaintiff’s Exhibit 1. In any event, the

testimony of the bankrupt and his other witnesses fully

explained what happened to the assets of Delta Towing

Company.

With respect to the other objections, Mr. Vickers was

examined at length with respect to all of the various assets

2la

shown on plaintiff’s Exhibit 1 and I find that he has ex-

plained what happened to each of those assets and I find

that there has been no failure to explain losses or deficiency

of assets and that there has been no proof that the de-

fendant transferred, removed or concealed assets with in-

tent to hinder, delay and defraud his creditors. Likewise

I find that the objections that he failed to list in his sched-

ules assets shown on the financial statement have not been

sustained.

One item on plaintiff’s Exhibit 1 that deserves some

comment is the home on Macon Lake Plantation, which,

according to plaintiff’s Exhibit 1, was said to have an

appraised value of $900,000.00. Actually, prior to the mak-

ing of the loan, the bank had an appraisal made by a real

estate firm of its choosing. That appraisal showed a value

for the home of $300,000.00 and the bank took a promissory

note and murtgage on that home for $300,000.00, signed by

both the bankrupt and by his wife, Susan Smith Vickers.

It would serve no useful purpose for the court to detail

the evidence with regard to each of the items of property

which the defendant admitted that he had owned. Suffice

it to say that the court finds that he has fully explained

what happened to each of such items.

The plaintiff having failed to meet the burden of proof

as to any of its objections, it follows as a conclusion of

law, that the complaint and amended complaint should be

dismissed on the merits and that the bankrupt should be

granted a discharge.

An appropriate judgment will be entered.

The trial of this adversary proceeding was held on May

10 and May 11, 1979. At its conclusion late in the afternoon

of May 11th, the court reserved decision but announced

that it would try to have its opinion filed within a short

time. Thereafter, while the court was in the process of

preparing its opinion, but before the opinion had been

22a

handed down, the plaintiff, on May 21, 1979, filed two writ-

ten motions, both addressed to the discretion of the court.

These must now be disposed of.

One of these motions was to reopen the record so as to

permit the plaintiff to call J. Herbert Boydston, a former

officer of Bossier, to the stand to testify with regard to

plaintiff’s Exhibit 1, its genuineness and the falsity of

figures contained therein. The motion is, substantially, a

mere reflection of the motion that was made and overruled

during the trial, except that it is supported by the affidavit

of Mr. Boydston. I have already discussed, in this opinion,

the reasons why I believe I was vorrect in overruling the

earlier motion. There is nothing in Mr. Boydston’s affidavit

that bears on my finding that plaintiff’s Exhibit 1 was not

the financial statement that Mr. Vickers had delivered to

Colonial and/or Bossier. For that reason and, more espe-

cially for the reasons set out on page 11, 12 and 13 of

this opinion, plaintiff’s motion to reopen the case for the

purpose of presenting the testimony of Mr. Boydston will

be overruled.

Plaintiff’s second motion was for leave to amend the

complaint so as to allege a fresh ground of objection to

the discharge. This proposed amended complaint charges,

in substance, that at the trial on May 10 and 11, the de-

fendant made a false oath in testifying (1) that he had

not made or delivered to Colonial or to Bossier the finan-

cial statement that was introduced into evidence at the trial

as plaintiff’s Exhibit 1; (2) that he neither made nor

caused to be published said statement; (3) that he had

never seen and knew nothing of said statement; (3) that

he had never seen and knew nothing of said statement;

(4) that he had never discussed said statement and the

assets listed therein with Messrs, Sneed and Boydston

nor anyone else. The further allegation is made that these

false oaths were knowingly and fraudulently made.

23a

Since this pleading does not really amend any of the

allegations of the original complaint or of the amended

complaint, but seeks to raise a fresh cause of action which

allegedly arose subsequent to the matter set forth in plain-

tiff’s previous pleadings, it would more properly be called

a supplemental complaint, rather than an amended com-

plaint. That, however, does not affect the question of

whether the motion should be granted. The courts have

been quite liberal in granting leave to amend, and appel-

late courts have frequently stated that the court’s discre-

tion in passing on a motion to amend must be liberally

exercised in favor of granting leave to amend if the other

party is not actually prejudiced.

There are several reasons, however, why I believe that

the motion should not be granted in this substance. First,

this is not a motion made during the trial to conform

pleadings to the proof. It is, instead, a motion made after

the conclusion of the trial to assert an additional ground

for objection to the discharge.

Second, although technically the oaths complained of as

false seem to be within the prohibition of the second para-

graph of §152 of Title 18 of the United States Code, it

was held by Judge Learned Hand that false oaths per-

petrated during the trial of specifications of objection to

While the Kretsch case has been derided by Collier (1A

discharge are not of themselves grounds for denying a

discharge. In re Kretsch (D.C.S.D.N.Y.) 172 Fed. 523.

Collier on Bankruptcy, par. 14.25 footnote 4, p. 1335; idem,

par. 14.26, footnote 3, p. 1339), the only appellate court

that appears to have considered the question, citing In re

Kretsch, supra, had this to say:

‘*. . . . If taken literally the terms used are broad

enough to comprehend a false oath made by the bank-

rupt in the hearing upon the specification of objection

to his discharge.

24a

‘*There is, however, grave doubt whether the bank-

rupt law contemplates that a bankrupt shall be denied

his discharge solely on the ground that he has made

such a false oath.’’

See Manson v. Inge, 13 F.2d 567, 569 (C.A. 4). Despite the

Collier footnotes, I agree with Judge Hand that false oaths

during the trial of the discharge hearing itself are not

grounds for denial of discharge.

Third, this court has already found that the oaths com-

plained of were not false, and that the financial statement

put in evidence as plaintiff’s Exhibit 1 was not the financial

statement which the bankrupt delivered to Colonial or

Bossier. To grant this motion now would allow the plain-

tiff to have a second trial of an issue that has already

been tried and decided by the court. To permit the plain-

tiff to use an amended or supplemental complaint as a

device for obtaining another trial of this issue would not,

in my opinion be in the interest of justice. An order will

be entered overruling the motion for leave to file an

amended or supplemental complaint.

Dated: May 30, 1979.

/s/ EB. J. Rapnaen

Eugene J. Raphael

Bankruptcy Judge

25a

JAMES D. VICKERS

FINANCIAL STATEMENT

April 30, 1977

ASSETS

Current Assets:

Cash in Bank—Checking ..... $ 56,400.00

Cash in Bank—Savings ...... 201,400.00

Stock acquisition costs—

Mainstream Shipyards .... 200,000.00

Total Current Assets ....

Other Assets:

Book Value—

Delta Towing Company .... 685,000.00

Book Value—

Toche Enterprises, Inc. .... 198,962.17

Total Other Assets ......

Fized Assets:

(Estimated Fair Market Value)

1977 Cadillac Seville ........ 12,000.00

1975 % Ton Pickup Truck ... 4,200.00

1977 Chevrolet Luv Truck .... 5,200.00

ho’ fo. re 2,600.00

1 Camper Trailer ........... 600.00

Farm Equipment ........ --. 60,000.00

2 Wheel Tandem Trailer ..... 1,000.00

De geiccvscvesdsacinanse 8,500.00

i ee rrr. 700.00

Home (Macon Lake Plantation)

Appraised Value .......... 900,000.00

Personal Jewelry and

Home Furnishings ........ 300,000.00

Pleasure Boat—1975 ........ 3,000.00

Residential Real Estate

See ED “os cGateedescace 32,000.00

Total Fixed Assets ......

$ 457,800.00

883,962.17

1,329,800.00

$2,671,562.17

—

26a

LIABILITIES

Current Liabilities:

Note Payable—

Citizens Bank, Pillar, Ark. $ 31,000.00

Note Payable—Real Estate .. 153,000.00

Account Payable—G.M.A.C. .. 800.00

Torau LiaBILities ..... $ 184,800.00

EQUITY

James D. Vickers—Equity .........-+++++: 2,486,762.17

Tora. Liasiities anp Equity ...... $2,671,562.17

27a

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF MISSISSIPPI

GREENVILLE Drviston

No. GBK78-00147

In rE: JAMES Dwicut VICKERS,

a/k/a J. D. Vickers,

a/k/a Jim Vickers,

a/k/a Jimmy VICKERS, BANKRUPT

Covon1aL Bank or New Orteans, Plaintiff

vs.

James Dwicut Vickers, Defendant

JUDGMENT

(Filed May 31, 1979)

The above captioned adversary proceeding having duly

come on for trial, and having been tried, and decision

having been reserved, and the court having thereafter filed

an opinion setting forth, in narrative form, findings of

fact and conclusion of law, it is

Orperep anv Apsupcep that the complaint herein be and

it hereby is dismissed with prejudice.

Dated: May 31, 1979.

/s/ EB. J. Rapwaen

Eugene J. Raphael

Bankruptcy Judge