
    In re BECKER.
    (District Court, N. D. New York.
    January 31, 1901.)
    Bankruptcy — Discharge—Concealing- Interest in Dike Policies.
    A bankrupt will be refused Ms discharge on tbe ground, of knowingly and fraudulently concealing from bis trustee bis interest in policies on bis life, tbey being payable to bim either under their terms, or tbe terms of assignments of them to bis wife, in ease be survives her, or is living at tbe end of tbe 20 years, when tbey are payable, and bis schedules having shown no assets, though tbe policies aggregated $11,000, and tbe annual premiums were $525, and be having resisted tbe efforts of tbe trustee to realize on tbe policies.
    In Bankruptcy. On motion for- a discharge and objections thereto.
    The discharge is opposed upon two- grounds. First, that tbe bankrupt knowingly and fraudulently concealed from bis trustee bis interest in four policies of insurance upon bis life; and, second, that he made a false oath when he verified bis schedules, which stated that he had no policies of insurance or interest therein. The issue joined upon the petition and the objeetiotas was referred to the referee in charge. In December, 1899, the 'referee filed a report, together with an opinion, recommending that the discharge he granted. This recommendation was based upon the ground that the omission to list the policies and other property was an oversight without fraudulent intent; and, also, upon the ground that neither the creditors nor the trustee had, at the date of the report, questioned the transfers to the bankrupt’s wife and that as the legal title was ^tiil in her the bankrupt was not called upon to report the property so held in his schedules. The matter came on for argument upon the pleadings and the report of the referee in December, 1899. Upon the argument it was stated that the trustee contemplated bringing an action in the supreme court of the state to decide the legality of the transfers of the bankrupt and to ascertain the interest of the trustee in the various policies in question. The court reserved its decision upon the question of the discharge, until the determination of this action. The action was tried and resulted in a decree deciding that certain property and policies of insurance alleged to have been fraudulently transferred by the bankrupt actually belonged to his wife and that the trustee had no interest therein. Regarding the four policies of insurance in controversy,'which were issued upon the life of the bankrupt by tbe Northwestern Mutual Life Insurance Company, ihe court found that the first of these was issued September 16, 1881, for $2,000, and was payable to tbe wife of the bankrupt. The second was issued October 4, 1882, for $2,000 and was likewise payable to her. Each of these policies contained this clause: “In case of the death of said beneficiary before or at the time of the death of the person whose life is insured, the amount of the insurance shall be payable at maturity to the executors, administrators or assigns of said person whose life is insured. * * * In case the insured shall not die within the period of twenty years from the dale of the policy, the whole amount shall he payable at the end of that time.” The third policy was issued August 11, 1884, for the sum of $2,000, payable to the insured upon death, with a 20-year tontine feature, which allowed the policy to participate in certain earnings. Among the conditions was one that ihe policy should have at the end of said period a cash value of $S83.40 in addition to such surplus as might be earned. This policy was assigned by the insured to his wife, December 10, 1894, and on the following day was assigned by her and the insured to one Wendell, a .defendant in the action in the state court, as collateral security for the payment of the sum of $4,600. The assignment from the insured to his wife contained the following- clause: “In the event of the death of the said assignee before the policy becomes due, then, in that case, the proceeds thereof shall he payable when due to my executors, administrators and assigns.” The fourth policy was issued January 21, 1889, for $⅛,000, payable to the insured at his death within 20 years, and if he should survive, to him at the end of said- period. On the same day ¡lie bankrupt assigned this policy to his wife. 1he assignment containing this provision: ‘•Provided, however, that this assignment is upon the express condition that if the said Charles \V. Beclter, the person whose life is insured in said policy, shall be living at the expiration of the tontine period named in said policy, then this assignment shall thereupon cease and determine and all interest therein shall thereupon revert to anti absolutely vest in said Charles \V. Becker. The intent of- this instrument being to grant to said assignee the proceeds of said policy only in the event of the decease ol" said Charles W. Becker before ilie expiration of the tontine dividend therein named. ⅜ * * In case of the death of the said assignee before the policy becomes due and before the expiration of the tontine jieriod, then it should be pay-aide to the insured or his executors, administrators or assigns.” The bankrupt and Ms wife, on the 12th of March, ISÜ5, assigned this policy as col-latoral security to said Wendell. The court found that the bankrupt has an interest in these policies, subject to the equitable lieu of his wife and Wendell for premiums, which they may have paid, and the indebtedness of Wendell, for which they may have boon pledged, and that this interest of the bankrupt passed to the trustee to be distributed among the creditors of the bankrupt. The court says: “The peculiar provisions of the policies aw'd the terms of ihe assignments give the insured certain rights under certain circumstances which are "available and are property within ihe meaning of the law.” it was further held that the bankrupt did not procure the assent and did not make Ihe assignment of the policies in question io his wife for her sole uso as provided in chapter 80 of the Haws of 1840 of the state of New York, bat, by his contracts with the insurance company, or by his assignments to her, has '.•(«served to himself certain rights which were property in his hands at the time of the tiling of his petition in bankruptcy. The precise amount fine the trustee under this decision iias not yet been ascertained, a referee having been appoinied to take and stale the account. It was, however, conceded by the counsel for the bankrupt that Hie amount due ¡he trustee under the decision would be about the sum of $1,500. On the other hand counsel for the creditors insist that it will amount to very much more than this sum. The petitions and schedules of the bankrupt were filed March 8, 1S!)Í>. They are in the prescribed form and are verified by the usual oath. In the schedule of his property the bankrupt slated that he hud no “policies of insurance,” no "personal property” and that no portion of his properly had been conveyed by deed or assignment or otherwise for the benefit of creditors. Prior to the action in the state court the trustee demanded that his claim should bo recognized by the bankrupt, but the demand was refused. The question now comes on to be heard upon (ho original papers and in addition thereto upon the findings and decision of the state court relating to the policies in quosiion.
    E. P. White, for bankrupt.
    Henry Y. Borst and Frank W. Thomas, for opposing creditors.
   CGXE, District Judge

(after staling the facts), it has now been judicially determined that at the date of the petition the bankrupt had an interest of at least $1,500 in four policies of insurance upon his own life, aggregating $11,000, upon which the annual premiums amounted io $525. It is incredible to suppose that he had forgotten such important documents and that the omission from the schedules was through inadvertence. This court lias recently had occasion to consider a case of honest mistake growing out of the failure to report policies of life insurance. In re Adams (D. O.) 104 Ifed. 72. If the facts were at all analogous Ore court would, of course, resolve the doubt in favor of the bankrupt, but a casual comparison of the two cases will demonstrate the radical difference upon the crucial point. Here the bankrupt’s interest is not vague, indefinite and uncertain, but clear, obvious and substantial. His schedules show no assets of any kind. His interest in these policies was the only property he owned. If he outlived the tontine period of 20 years the surrender value was due' to him and not to his wife. Upon two of the policies he could realize in two and three years respectively. To find that he did not know of the existence of this interest is to assume that he was deficient in the most rudimentary mental processes. The fact that the- amount was not then ascertained is immaterial as it was his duty to schedule all his property. Bankr. Act, § 7a (8). That he failed to report these policies is conceded, that he did this knowingly cannot be successfully disputed and that he has since resisted the trustee in his efforts to realize upon the policies is established beyond question. The inevitable conclusion would seem to follow that the concealment was with the intent to prevent the property from reaching his creditors. The omission knowingly of property from the schedules and the verification thereof constitutes a false oath within the meaning of section 29b (2) of the act. In re Lewin, 4 Am. Bankr. R. 636, 103 Fed. 852; In re McNamara, 2 Am. Bankr. R. 566, 579; In re Lowenstein, 2 Am. Bankr. R. 193, 106 Fed. 51; In re Hirsh, 2 Am. Bankr. R. 715, 724, 96 Fed. 468; Coll. Bankr. (3d Ed.) 167; In re Alderson, 3 Nat. Bankr. News & R. 189, 98 Fed. 588. In Re Wood (D. C.) 98 Fed. 972, the bankrupt omitted from his schedules a vested remainder of doubtful value which he held in his father’s estate. Although the burden is generally upon the creditors to prove their objections it was decided that when a material omission is shown it is incum-oent upon the bankrupt to explain the transaction. It was held further that the failure to list the interest, coupled with the bankrupt’s testimony that he took nothing under his father’s will, was a fraudulent concealment which forfeited a discharge.

The court is constrained to hold that both the objections as above stated have been established. If the bankrupt had omitted to report to the trustee a note or mortgage on which $1,500 was due, or if he had concealed that sum in cash, there would probably be perfect accord between counsel as to the mala fides of the transaction. How is the situation changed because the sum was due the bankrupt on an insurance policy rather than a note or mortgage? A discharge is intended to relieve misfortune, but it must be misfortune coupled with absolute honesty. It is the reward which the law grants to the bankrupt who brings his entire properly into court and lays it, without reservation, at the feet of his creditors. This much the law demands. Where it is evident that he is scheming to be relieved of his debts while holding property which should be applied to their payment, he is not entitled to consideration from the court of bankruptcy. The discharge is denied.  