Northland Insurance v. Dillman (In re Dillman)

10 B.R. 541, 1981 Bankr. LEXIS 4714
CourtUnited States Bankruptcy Court, N.D. Alabama
DecidedMarch 11, 1981
DocketBankruptcy No. AP80-0947
StatusPublished
Cited by1 cases

This text of 10 B.R. 541 (Northland Insurance v. Dillman (In re Dillman)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Northland Insurance v. Dillman (In re Dillman), 10 B.R. 541, 1981 Bankr. LEXIS 4714 (Ala. 1981).

Opinion

JUDGMENT

L. CHANDLER WATSON, Jr., Bankruptcy Judge.

The above-styled adversary proceeding was commenced on November 18, 1980, by the filing of a complaint which requested that the Court not grant the defendant a discharge in this bankruptcy case and that the Court determine that the debt owed by the defendant to the plaintiff is not dis-chargeable in this bankruptcy case. The defendant filed an answer on November 28, 1980, which denied all allegations of the complaint. On December 11, 1980, the plaintiff amended the complaint by adding a request that the Court grant leave to the plaintiff to proceed to enforce and collect the debt through further legal actions. Also, on December 11, 1980, the plaintiff filed a motion for the Court to enter a summary judgment in favor of the plaintiff and against the defendant. At a pre-trial conference on December 16, 1980, only the defendant’s attorney, plaintiff’s attorney, and the trustee appeared before the Court, and the defendant’s attorney waived a ten-day notice of a hearing on the plaintiff’s motion for summary judgment, and both parties waived the right to argue and file briefs on the motion for summary judgment.

STATEMENT OF FACTS

On December 1, 1980, the plaintiff filed with the Court a copy of a Request for Admission of Facts which was served upon the defendant’s attorney, and on December 19, 1980, the defendant admitted all the facts stated in the plaintiff’s Request for Admission of Facts; therefore, the Court adopts the facts set out in said Request for the purpose of ruling on the plaintiff’s motion for summary judgment.

CONCLUSIONS BY THE COURT ON THE REQUEST THAT THE DEBTOR BE DENIED A DISCHARGE IN THIS CASE

The plaintiff seeks, under 11 U.S.C. § 727, to have the Court deny the debtor a discharge. The grounds for denial of a discharge are found in Subsection (a) of said Section 727. The complaint does not specify any particular grounds upon which the discharge might be denied; therefore, the Court must compare the facts alleged and admitted to the various grounds found in 11 U.S.C. § 727(a)(l-10).

The plaintiff does not allege that the debtor is not an individual, and in fact, the debtor is an individual; therefore, paragraph (1) does not state a ground for denial of a discharge, and the plaintiff does not allege that the debtor did any of the acts listed under paragraphs (3), (6), or (7) of said Section 727(a); therefore, they do not state grounds for denial of the debtor’s discharge in this case.

The plaintiff does not allege that the debtor has been given a previous discharge or that the Court has approved a written waiver of discharge by the debtor; therefore, paragraphs (8), (9), and (10) do not state proper grounds for denial of the debt- or’s discharge in this case.

The allegation by the plaintiff of wrongful conversion by the debtor of the [543]*543truck of another entity, insured by the plaintiff against such loss, is not sufficient to deny a discharge to the debtor under paragraph (2) of said Section 727(a). None of the actions of the debtor relating to the wrongful conversion took place within one year before the date of the filing of the petition or after the filing of a petition; therefore, 11 U.S.C. § 727(a)(2) does not state a proper ground for denial of the debtor’s discharge in this case.

The allegations by the plaintiff that, in connection with a garnishment proceeding in state court, the debtor, as president of Battle House Enterprises, Inc., swore that he was an employee of said corporation and said corporation would withhold the sum sought by the garnishment from his wages and that no amounts were withheld by said corporation are not sufficient to deny the debtor a discharge under paragraph (4) of said Section 727(a). To constitute a proper ground for denial of a discharge to the debtor, “a false oath or account” must be made in, or in connection with, the case. This sworn statement was made in connection with a state court action and not in this bankruptcy case. If this sworn statement were made in connection with this bankruptcy case, the burden of proof would be on the plaintiff to prove the facts essential to its objection.1 The plaintiff did not prove that the debtor knowingly and fraudulently made a false oath, and no intent to defraud can reasonably be inferred from the mere fact that the corporation failed to do what the debtor said the corporation intended to do.

The allegation by the plaintiff that the debtor never gave an explanation of the loss or deficiency of the funds that said corporation was supposed to be withholding from the debtor’s pay on the garnishment is not sufficient to deny the debtor a discharge under paragraph (5) of said Section 727(a). As previously noted, the burden of proof is upon the plaintiff to prove the essential facts when objection is made to a debtor’s discharge. There is no proof that the debtor was ever called upon to give an explanation of the loss of, or deficiency in, these assets, and it was not proved that there were ever any assets of the debtor to lose or in which a deficiency existed. It is not proved that the debtor ever received any salary, wages, or compensation from said corporation after the time the garnishment was issued.

Therefore, after considering the facts alleged and admitted, it is the conclusion of the Court that the plaintiff’s request for relief under 11 U.S.C. § 727 is due to be denied.

CONCLUSIONS BY THE COURT ON THE REQUEST THAT THE DEBT BE DECLARED NONDISCHARGEABLE

The complaint filed by the plaintiff also seeks to have the Court determine that the debt was not dischargeable in bankruptcy, pursuant to 11 U.S.C. § 523(c). Having determined that the debtor must be granted a discharge, the Court may now consider this second question.

Section 523(c) does not state the types of debts which may be adjudged not dis-chargeable in a bankruptcy case. The types of nondischargeable debts are listed only in Subsection 523(a)(l-9). Subsection 523(c) refers to paragraphs (2), (4), and (6) of Subsection 523(a) and to none other. Thus, it must be inferred from the complaint that it is only upon these three paragraphs of Subsection 523(a) that the plaintiff relies.

Paragraph (2) of Subsection 523(a) describes a debt which arises because of false pretenses, fraudulent representations, or fraud in the obtaining of money, property, services or credit. There is no allegation or proof that the vehicle was obtained by the debtor through fraud or falsehood, and paragraph (2) is not established as an exception to the debtor’s discharge. The plaintiff did not allege or prove a fiduciary relationship which is the basis for a debt for fraud or defalcation to be adjudged nondis-chargeable under paragraph (4) of Subsection 523(a). But paragraph (4) also excepts [544]*544from a discharge a debt due to embezzlement or larceny.

The allegation and proof here are that the vehicle in question had been stolen but not that it was stolen by the debtor.

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Cite This Page — Counsel Stack

Bluebook (online)
10 B.R. 541, 1981 Bankr. LEXIS 4714, Counsel Stack Legal Research, https://law.counselstack.com/opinion/northland-insurance-v-dillman-in-re-dillman-alnb-1981.