J. W. Ould Co. v. Davis
Opinion of the Court
The court below granted the bankrupts’ application for a discharge, and the objecting creditor appeals. These facts appear: In January, 1915, a representative of R. G. Dun & Co., the well-known commercial agency, called upon the bankrupts at their place of business in Martinsville, Va., and obtained from R. E. Davis, senior member of the firm, a statement of assets and liabilities according to an inventory taken on the 6th of that month. The referee finds that this statement “was made, signed, and delivered by that firm as a basis of credit.” In the following April, some three months later, a traveling salesman of appellant, wholesale dealer in
In dealing with the case thus outlined it will be assumed that the. statement in question, if made directly to appellant for the purpose of getting property on credit, would bar a discharge because of its material falsity. But the statement was not made to appellant, nor was it procured at the request or with the knowledge of appellant or any other creditor. Neither was it made with any apparent purpose of getting goods on credit from appellant or from any particular dealer. Indeed, the finding that it was made “as a basis of credit” rests upon nothing that occurred at the time it was obtained, but only on a recital to that effect in the printed form used by the agent who got the statement, and such inference as may be drawn from the fact that Davis presumably knew the nature of the business carried on by Dun & Co. In short, the record presents the typical case of a statement of financial condition made to a commercial agency, not procured at the request of any prospective creditor, or made for the purpose of obtaining credit from anjr particular dealer, but which statement is afterwards communicated by the agency to an inquiring subscriber, who in reliance thereon gives credit to the person making the same. If a statement so made be materially false, will it serve to prevent a discharge?
“Or (S) obtained 'property on credit from any person upon a materially false statement in writing made to sucli person for the purpose of obtaining such property on credit.”
Whether this provision covered general statements to commercial agencies, like the one under review, became the subject of dispute, and the decisions were conflicting. In re Kyte (D. C.) 174 Fed. 867; In re Russell, 176 Fed. 253, 100 C. C. A. 77; In re Augspurger (D. C.) 181 Fed. 174; In re Foster (D. C.) 186 Fed. 254. When the law was up for amendment in 1910, the question of allowing false statements to a commercial agency to be available for opposing discharge was specifically considered by the Congress, with full knowledge of the conflict of judicial opinion respecting the 1903 provision. The House pasáed a bill which so amended section 14b (3) as to make it plain that false statements to a commercial agency, like the one in question,, would bar a discharge. 61st Congress, 1st and 2d Sessions, 1909-10, House Rep. vol. 1, Miscellaneous. But the Senate did not concur.
“The tim'd change made by the house bill, that which in effect made the obtaining of property on false written statements to mercantile agencies ground of opposition to discharge, without the creditor whose property lias thus been obtained first asking such mercantile agencies to procure him the written statement, is not concurred in by your committee. Any tendency to make the bankrupt act unduly harsh is to be avoided. It is a sufficient ground of opposition to discharge that the bankrupt has obtained property from a creditor by a materially false statement in writing where that statement was specifically asked for by the creditor or by the creditor’s representative. General statements to mercantile agencies, not specifically asked for by prospective creditors, ought not to be ground of opposition to discharge; it makes the provision too harsh, in the estimation of your committee. Merchants are likely to make careless general statements where they would be very careful were they making statements to creditors from whom they were at the time asking credit. Your committee proposes a substitute for the house amendment of this ground of opposition to discharge, which is thought to go as far as is proper.”
Upon this report the proposed substitute was adopted by the Senate and afterwards concurred in by the House, and thus became the present law, as follows:
“(3) Obtained money or property upon a materially false statement in writing made by him to any person or his representative for the purpose of obtaining credit from such person.” .
Affirmed.
Reference
- Full Case Name
- J. W. OULD CO. v. DAVIS
- Status
- Published