Bankr. L. Rep. P 68,588 John R. Stuhley, Trustee v. Richard Hyatt

The bankrupt, Richard Hyatt, appeals from an order of the district court affirming the denial of a discharge of his debts in a bankruptcy proceeding. In that proceeding the bankruptcy judge concluded that certain acts Hyatt had committed while serving as a “standing trustee” for the bankruptcy court of the Southern District of California in several prior cases had violated paragraphs one and five of 18 U.S.C. § 152 (“Section 152”), the criminal provisions of the Bankruptcy Act. Consequently Hyatt was denied a discharge of his debts pursuant to Section 14(c)(1) of the Act, formerly 11 U.S.C. § 32 (c)(1).

We conclude that even if Hyatt was properly found guilty of violating Sec tion 152, the mere presence of his former bonding company as a non-dischargeable creditor in Hyatt’s bankruptcy proceeding does not create a relationship between the creditors in the prior and subsequent cases sufficient to justify the denial of a discharge of Hyatt’s debts.

Appellant argued before the bankruptcy court that under Pugh v. ADCO, 329 F.2d 362 (5th Cir. 1964), and its precursor, Raphiel v. Morris Plan, 146 F.2d 340, 341 (2d Cir. 1944), he is entitled to a discharge of his personal indebtedness…