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possession of the lessee, and thereby threw a burden upon the lessee that the agreement did not call for, in that it compelled the lessee to take care of the machinery, preserve and guard the same although at that time, according to the position now taken by the lessor, the lessee had no right whatever to the said machinery, and the machinery was absolutely the property of the lessor. If this be so, what right had the lessor to compel the lessee to assume such a burden, except upon the theory that by tacit agreement a new clause had been read into the contract, whereby the rent could be paid at any time, and the machinery would not be taken away except after due notice and ample opportunity to pay up the arrears?
"The conclusion of the referee is that the intention of the parties to make time of the essence of the contract is clearly expressed in the words of their agreement, but it must be judicially assumed that this intention was changed by the conduct of the petitioner in (1) not insisting upon prompt payment of rent due; (2) allowing rent to fall in arrears without demur many times and for long periods; (3) never attempting, despite these defaults and its claim of right under the contract, to retake possession of its machinery.
"In accordance with this opinion, the referee finds: (1) That at the date of bankruptcy title to the machinery was in the petitioner. (2) That there was then due to the petitioner a balance of ‘rent' amounting to $10.5, with interest as follows: On $25 from June 30, 1906, to October 20, 1906, 3 cents; on $25 from July 30, 1906, to October 26, 1906, 36 cents; on $25 from August 30, 1906, to October 26, 1906, 23 cents; on $25 from September 30, 1906, to October 26, 1906, 11 cents,--total interest, $1.18. (3) That there was due to the petitioner the sum of $1 purchase money, if the option to purchase the machinery was exercised. (4) That the said several sums, amounting to $167.18. were duly tendered to the petitioner by the receiver in bankruptcy and refused. (5) That the option to purchase the machinery was thus duly exercised by the receiver, and that the right of title to the said machinery thereby passed to the receiver. (6) That it was the duty of the petitioner to convey the machinery to the receiver by bill of sale, and that the receiver was entitled to specific performance of the same.
"Now therefore, it is ordered that the trustee pay to the petitioner the said sum of $167.18, less all costs of this proceeding, and that thereupon title to the said machinery, now represented by the special fund of $.300, held by the receiver as the proceeds of the sale, vests in the receiver as of the date of the aforesaid tender, to wit, November 8, 1906."
These findings of fact, however, should not be understood to mean that the installments were never paid when they fell due. Most of them were paid promptly, but several installinents were not paid at the proper date, and some were not paid at all.
I have no disposition to contend with the claimant concerning the construction of the vital clause in the agreement. No doubt the parties made prompt payment an essential element of their contract, and annexed the penalty of forfeiture to the failure of the bankrupt to comply. This was a provision which it was competent for the contracting parties to adopt, and such a clause will no doubt be enforced in equity as well as at law.
The only question in the case, as I view it, is this: Did the parties afterwards so conduct themselves as to justify the inference that the strictness of this provision for forfeiture was at least suspended, if not altogether waived? Unquestionably, it lay within their power to modify the clause for forfeiture if they chose to do so. It was merely a part of their agreement, and therefore a subsequent contract, either in writing or by parol, could either qualify it or set it wholly aside. Without discussing the evidence at length, I am disposed to
hold that the proper inference to be drawn from the conduct of the parties is that the forfeiture clause was either suspended or waived, and therefore should not be enforced in the present proceeding. The result of enforcing it would be to give the claimant nearly the full value of the property, as well as the proceeds of the property itself.
The report of the referee is affirmed.
In re GRIFFIN BROS.
It is incumbent on a creditor opposing a bankrupt's discharge to allege in his specifications of objections and prove at least one of the statutory grounds for withholding the discharge; objections not specified in the act being unavailable.
(Ed. Note.-For cases in point, see Cent. Dig. vol. 6, Bankruptcy, 88 714, 720.) 2. SAME-CONCEALMENT-WITHHOLDING OF BOOKS—INTENT.
Specifications of objection to a bankrupt's discharge, alleging concealment of assets and withholding of books, not charged to have been with the fraudulent intent to conceal his true financial condition, were insufficient.
[Ed. Note.--For cases in point, see Cent. Dig. vol. 6, Bankruptcy, 8 714.) 3. SAME_WITHHOLDING OF PROPERTY-FRAUD.
An allegation that a bankrupt withheld and concealed his property and assets from his schedule and from his trustee, failing to charge that such withholding and concealment was knowingly and fraudulently done, was insufficient to prevent his discharge.
[Ed. Note. For cases in point, see Cent. Dig. vol. 6, Bankruptcy, 8 714.] 4. SAME-DISCHARGE-REVOCATION.
A discharge in bankruptcy may be revoked, if it is made to appear that it was obtained through the bankrupt's fraud, and that the petitioning creditors only obtained knowledge of the fraud after the discharge was granted.
[Ed. Note.-For cases in point, see Cent. Dig, vol. 6, Bankruptcy, $ 869.) 5. SAME-LACHES.
Where a petition to revoke a bankrupt's discharge for fraud alleged that the fraud was not known to petitioners until after the discharge, and they had no opportunity before that time to interpose the fraud in opposition to the discharge as alleged, they were not chargeable with laches.
TOULMIN, District Judge. It is incumbent upon the creditor opposing a discharge to allege in his specifications and to prove to the court one of the statutory grounds for withholding the discharge. In re Thomas (D. C.) 1 Am. Bankr. Rep. 515, 92 Fed. 912. · A concealment of bankrupt's property, in order to be a sufficient ground for refusing him a discharge, must have been knowingly and fraudulently made. In re Cohn (D. C.) 1 Am. Bankr. Rep. 655; In re Pierce (D. C.) 4 Am. Bankr. Rep. 554, 103 Fed. 64; In re Hixon (D. C.) 1 Am. Bankr. Rep. 610, 93 Fed. 440; In re Wetmore (D. C.) 6 Am. Bankr. Rep. 703; In re Taplin (D. C.) 14 Am. Bankr. Rep. 360, 135 Fed. 861 ; In re Mudd (D. C.) 5 Am. Bankr. Rep. 242, 105 Fed. 348; In re Schreck, 1 Am. Bankr. Rep. 367.
The only grounds of objection to a discharge that can be interposed are those enumerated in section 14 and section 29, Bankr. Act. July 1, 1898, c. 541, 30 Stat. 550, 554 (U. S. Comp. St. 1901, pp. 3427, 3133), as relate to it. In re Wetmore (D. C.) 6 Am. Bankr. Rep. 703.
The grounds of objection to a discharge are that the applicant (bankrupt) has committed an offense punishable by imprisonment; or that, with intent to conceal his financial condition, destroyed, concealed, or failed to keep books of account or records from which such condition might be ascertained; or at any time subsequent to the first day of the four months immediately preceding the filing of the petition removed, destroyed or concealed any of his property with intent to hinder, delay, or defraud his creditors; or in the course of the proceedings in bankruptcy refused to obey any lawful order of the court; or who, while a bankrupt, knowingly and fraudulently concealed from his trustee any of the property belonging to his estate in bankruptcy; or made a false oath or account in or in relation to any proceeding in bankruptcy. Sections 14 and 29 of the Bankrupt Act.
The grounds on which a discharge will be revoked are the same as would have originally prevented the granting of the discharge had they been known and presented in time in the form of objections to its allowance. Thus, in a bankrupt's application for discharge, he is required to state that he has wholly surrendered all his property and rights of property and fully complied with all the requirements of the act, which, if not true, and there are grounds for refusing him a discharge constitute a fraud in obtaining his discharge. Brandenburg on Bkrcy., p. 263, § 402, and authorities cited. The bankrupt act provides that a discharge may be revoked if it shall be made to appear that it was obtained through the fraud of the bankrupt, and the knowledge of the fraud has come to the petitioners since the granting of the discharge, and that the actual facts did not warrant a discharge. Section 15 of the Bankruptcy Act. The specifications in opposition to a bankrupt's discharge and the proofs should be clear, positive, and direct; and the opposing creditors must distinctly allege and prove one or more of the statutory grounds for refusing a discharge. In re McGurn (D. C.) 102 Fed. 743. “The specifications must not be mere statements of legal conclusions. It is necessary that the facts be alleged, and that such allegations be distinct, specific, and definite, so as to clearly inform the bankrupt what he is to disprove. If they are vague or general, the court will dismiss them or compel the objecting party to be more definite.” In re Holman (D. C.) 92 Fed. 512; Collier on Bankcy. 138; In re Hirsch (D. C.) 96 Fed. 468-471; In re Kaiser (D. C.) 99 Fed. 689. It is, also, necessary for the petitioners to aver in their application the facts showing their freedom from laches. It is not sufficient to make in the application a general averment of conclusions. In re Oleson (D. C.) 110 Fed. 796; Brandenburg on Ekcy. § 401. To bar a discharge of the bankrupt, failure to keep books, or his destruction or concealment of books or records from which his true financial condition might be ascertained, must be done with intent to conceal his true condition and in contemplation of bankruptcy. In re Spear (D. C.) 4 Am. Bankr. Rep. 617, 103 Fed. 779; In re Ginsburg (D. C.) 12 Am. Bankr. Rep. 459, 130 Fed. 627. The specification charging concealment of assets must contain the allegation that the acts were done knowingly and fraudulently. In re Pierce (D. C.) 4 Am. Bankr. Rep. 554, 103 Fed. 64; In re Hirsch, supra. “The doing of the acts “knowingly and fraudulently' is essential.” In re Taplin (D. C.) 14 Am. Bankr. Rep. 360, 135 Fed. 861; Collier's Bkcy. p. 177, 178.
Tested by the rules announced in the foregoing authorities, the allegations of the petition in this case are generally insufficient, in that it alleges several grounds for vacating the discharge that are not provided for or enumerated in the bankrupt act as grounds of objection to a discharge and for revoking or vacating a discharge; that it fails to allege the concealment or withholding of books was with the fraudulent intent to conceal the bankrupt's true financial condition, from which books his condition might have been ascertained; that it fails : to allege that the withholding or concealment of property, assets, etc., from his schedule, and from his trustee, was knowingly and fraudulently done; that the real estate in some instances is not sufficiently described; that the allegations as to misrepresentations in regard to the homesteads are no grounds of objection to a discharge, and, if they were, that it is not alleged they were made fraudulently and knowingly, and, furthermore, that the petitioners had the right to object to the allowance of such homestead claims and to except to the trustee's action in reference to the same. If the acts of fraud complained of were committed, and were such as to sustain the petition, if properly alleged and proved, and the knowledge of such acts did not come to the petitioners until after the discharge was granted in this case, then my opinion is that the petitioners were not guilty of laches. The petition alleges that said acts of alleged fraud were not known to petitioners until after the discharge, and they had no opportunity before that time to interpose the same in opposition to the discharge, as alleged, and there was no laches.
Demurrers are sustained to the petition, and petitioners have leave to amend as they may be advised.
MAXEY, District Judge. The sample of drawnwork, referred to as “Exhibit 1,” is in form a table cover, or table square, and contains certain ornamental effects in the corners and other portions of the square.
It was classified by the collector of customs under paragraph 339, Tariff Act July 24, 1897, c. 11, § 1, 30 Stat. 181 [U. S. Comp. St. 1901, p. 1662], as “an article made wholly or in part of lace, or in imitation of lace," or an “article or fabric embroidered in any manner by hand or machinery, or otherwise." And the duty was accordingly assessed at 60 per cent. ad valorem. The importer insists that the article is a woven fabric of flax; that no part of it is lace, imitation of lace, or embroidery in any form; and that it should be assessed for duty under the last clause of paragraph 346 at 35 per cent. ad valorem.
To enter upon a discussion of the manner in which lace, embroidery, and drawnwork are made would be altogether profitless. The subject is fully treated in the elaborate and interesting opinion rendered by General Appraiser De Vries, speaking for the board in the case of J. R. Simon & Co., G. A. 6,452 (T. D. 27,644), and it is unnecessary to repeat what is there said. The present record has been exhaustively examined, and the case of Simon & Co. v. United States (C. C.) 131 Fed. 619, and the same case on appeal to the Circuit Court of Appeals for the Second Circuit, 139 Fed. 3, 71 C. C. A. 415, have been carefully considered. After mature reflection, the court is of the opinion that the finding of the Board of General Appraisers should be affirmed. But in view of the testimony before the court, taken both in New York and at El Paso, there is considerable doubt whether the article of drawn work in question is made in part in imitation of lace. A distinct ruling, however, upon that feature of the case becomes unimportant, since the court is clearly of the opinion that the ornamental work in the corners of the exhibit and the crosses and other ornamental figures appearing elsewhere in the square are embroidery, as the term is understood by lexicographers and writers on lace and embroidery. See, also, Neuss, Hesslein & Co. v. United States (C. C.) 142 Fed. 281; In re Protesis of Homer and Stevens, G. A. 4,613 (T. D. 21,944). The exhibit, therefore, is in part embroidered, as held by the Board of General Appraisers, and the merchandise is dutiable at 60 per cent. ad valorem under paragraph 339 of the tariff act.
The decision of the Board is affirmed.