(dissenting)-
Charles S. Cunningham was engaged in the wholesale distribution of candy and notions, under the name of Acme Candy and Notion Company, during 1947 and for several years prior thereto. In the conduct of his business, Cunningham bought merchandise from Elco Distributors, Inc., a corporation. The stockholders in this corporation were Mr. and Mrs. Emil Levin. During the course of their business relationship, Elco Distributors extended Cunningham credit during various periods in large amounts, at one time Cunningham owing them, on open account, more than $52,-000. Sometime about June, 1947, the Levins began worrying about Cunningham’s indebtedness to them, which at that time amounted to about $6,000. They began pressing him for payment and Cunningham was not in a position where he could pay. As a result, the Levins and Cunningham began to discuss a loan from a bank so that the Levins would secure a payment on their account of $6,000. Cunningham told Levin that he couldn’t get any loan from the banks in his home town of Zanesville. There is some dispute between them as to what happened thereafter. Cunningham says that Levin asked him to prepare a financial state*92ment and bring it over to Steubenville, where the Levins lived, and they would try to get the bank there to loan him the money. Levin says that Cunningham asked him if he couldn’t bring the statement to the Levins’ bank. In any event, Cunningham and Levin called at the Steubenville bank and discussed the note and took a blank form for a financial statement which Cunningham was to fill out. Cunningham testified that at the time he thought he had some interest in the home which he and his wife were living in because he was contributing to the payments. However, the fact was that he had no interest in their home; but Cunningham says that Levin suggested that he include the home in his statement of assets and that he have Mrs. Cunningham sign the note with him. Levin denies that he proposed that Mrs. Cunningham sign the note. Mrs. Cunningham had no interest in, or connection with, her husband’s business, and to ask her to pledge her home, or her interest in her home, for a past due business debt of her husband would seem like putting pressure on.
A few days after Levin and Cunningham had called at 'the bank, Cunningham returned to Steubenville, and according to his testimony, told Levin that his wife would not sign the note. The financial statement set forth as an asset certain real estate owned in Zanesville, Ohio, of the value of $9,200, with a mortgage thereon of $5,000. This declaration contained the statement, “see Schedule” under the listing of “Real Estate owned.” Below the statement was a “Schedule of Real Estate Owned,” setting forth the real estate at Zanesville, Ohio, as follows:
611 Larzelere Ave. C. S. & Ollie
Zanesville, Ohio Cunningham
Imp. App. Value Mortgage Insurance
$10,000.00 $4,900.00 $5,000.00
On the reverse side of the statement appeared items of expense and income, merchandise valuation, insurance, and like items. The heading, “Life Insurance carried” showed $34,000, with a cash value of $1,100, with the beneficiary, “Ollie Cunningham, wife.” According to Mrs. Le-vin’s testimony, Cunningham had told her that he and his wife owned real estate in Zanesville which consisted of their home. He further told the bookkeeper of the Levins that the property which would be collateral for the note would be his home. The bookkeeper further testified that Mrs. Levin had stated that Cunningham’s house would be good for the collateral. If Cunningham had been, as represented in the statement, a tenant in common with his wife, his interest in the home would have amounted to one-half of their equity of $4,300, or $2,150. The total assets which he set forth in his financial statement, which are not questioned, amounted to $55,729.14.
Cunningham testified that when he told Levin that his wife would not sign the note, he told Levin that he would go to the bank with him, but that Levin said, “No, I’ll have a hard enough time getting it through myself,” and that Levin took the note and the statement to the bank alone. The referee made no findings on this phase of the case, stating that, no matter who took the note and statement to the bank, the bank made the loan relying on the statement. The referee did, however, find that it must be assumed that Cunningham, hoping to secure the signature of his wife, authorized his bookkeeper to include the real estate in the financial statement. The bank, however, would not loan anything on the note unless Levin and his wife signed as endorsers. Mrs. Levin was in the hospital at the time, but three days later, she signed as an endorser, and with her husband’s name also on the note, $6,000 was paid over to the Levins. They, in turn, credited this amount on Cunningham’s indebtedness to them. Cunningham paid $2,440 on the note, and upon his default in payments, the Le-vins were called upon, as endorsers, to pay the balance of $3,560, which they did. Later, Cunningham was adjudicated bankrupt. The bank was, therefore, paid in full, and has never made any claim of fraud.
Specifications objecting to Cunningham’s discharge in bankruptcy were later filed by *93Levin on behalf of Elco Distributors, which, as above mentioned, was owned by Levin and his wife. The specification objecting to the discharge was as follows: “For the reason that said bankrupt obtained money or property by making a false financial statement; that said statement was given on or about June 30, 1947, to a bank at Steubenville, Ohio, and that said bankrupt induced this creditor to sign a note to said bank by listing among his assets certain real estate located in Zanesville, Ohio, when in truth at said time said bankrupt did not own said real estate.” This specification' is based upon Title 11 U.S.C.A. § 32, which provides for denial of discharge where the bankrupt has: “obtained money or property on credit, or obtained an extension or renewal of credit, by making or publishing or causing to be made or published in any manner -whatsoever, a materially false statement in writing respecting his financial condition”.
On the factual question whether the bank relied upon Cunningham’s financial statement in making the loan, the vice president of the bank in question was a witness on behalf of Levin, and the most that could be claimed to show reliance on the financial statement was "his answer, in reply to a question of Levin’s attorney: “The statement showed quite a bit of equity in property and along with Mrs. Levin’s signature and endorsement on it it was considered sufficient to justify the loan.” The only equity that could have been considered by the bank was $2,150, as the statement showed the property was owned by Cunningham and his wife, and their total equity was only $4,300. Furthermore, this equity of $2,150 was only one item in a statement showing assets of $55,729.14, and a net worth of $35,624.14 — items which were unquestioned except for the equity item. Nor was anything said by the bank of the fact that the value of the real estate was given in one place as $10,000, and in another place, as $9,200; that in one place on the statement, it was set forth as “owned” by Cunningham, and in another, shown to be owned by him and his wife. The vice president of the bank did not know that the statement represented that the real estate was owned by Cunningham and his wife. He thought that Cunningham owned it all until payments on the note were in default, when he asked Mrs. Cunningham to sign the note also. And, in this, he seems not to have been remiss for reasons that hereafter appear.
The only reasonable conclusion from the foregoing is that the bank was not interested in the details of the financial statement and was not relying on the statement in making the loan. And it seems to me that this conclusion is confirmed by the undisputed evidence in the case. According to the testimony, the bank had on file financial statements from both Mr. and Mrs. Levin. The bank refused to make the loan here in question, unless both Mr. Levin and his wife endorsed the note, and Levin’s testimony was undisputed that they would not have had to have Cunningham’s financial statement in order to go to the bank and get the money. If the bank would loan the money to the Levins on their signatures without Cunningham’s statement, the bank was not loaning the money here in question in reliance or partial reliance on Cunningham’s financial statement, inasmuch as both Levins were required to endorse the note before the money was paid over to them. The vice -president of the bank did not testify that he made the loan in reliance upon the financial statement, or that he would not have made the loan except in reliance upon it; and in view of the fact that the bank would have made the loan to the Le-vins on their signatures without Cunningham’s statement, that may be the reason why such evidence was not forthcoming. Where it is claimed that a bankrupt secured property or credit by means of a false financial statement, a discharge will not be denied to the bankrupt where there was no reliance upon the false statement. Banks v. Siegel, 4 Cir., 181 F.2d 309; In re Livermore, 2 Cir., 96 F.2d 93; In re Little, 2 Cir., 65 F.2d 777; In re Day, D.C. Mass., 11 F.Supp. 400.
But even without regard to the fact that the evidence shows that the bank did not rely on Cunningham’s financial statement in making the loan, there is a more cogent reason in law why the discharge should *94have been granted. The only specification of objection to the discharge in bankruptcy was filed by Levin, who alleged that Cunningham had defrauded him by means of the false financial statement; and that claim is without merit, inasmuch as the referee found, on Levin’s own testimony, that he did not rely upon the statement. The objection now made to the discharge, that Cunningham defrauded the bank by means of the financial statement, is a new attack and will not now be considered inasmuch as it was not set forth in the specification of objection to the discharge.
From Levin’s specification objecting to Cunningham’s discharge in bankruptcy, as above set forth, it appears that no one is alleged to have been defrauded except Le-vin himself. It can not be said, from the language of the specification, that it is charged that the bank was defrauded by the financial statement. It is rather alleged that Levin was defrauded because the “said bankrupt induced this creditor to sign a note to said bank by listing among his assets certain real estate located in Zanesville, Ohio, when in truth at said time said bankrupt did not own said real estate.” Not only does it appear from the specification that Levin was the creditor alleged to have been defrauded by the false financial statement, but the hearing on Levin’s objections was conducted by him and his counsel, with a view to proving that Levin was the person who was defrauded.
All of this is clearly shown by Levin’s testimony. In attempting to prove his specification of objection to Cunningham’s discharge, that he had endorsed the note in reliance upon the financial statement, Le-vin testified he would nevfer have endorsed it, if he had known that the financial statement was wrong. The referee asked him:
“Now what reason can you give that you would not have gone on a note with him had you known his statement was not true ? A. Because I wouldn’t have to have his statement to go to the bank to get money. * * * *
“Q. Did you know at that time that you would be responsible to pay for that note if Mr. Cunningham defaulted? A. I knew . that.
“The Court: The thing that I had in mind should be cleared up. The witness had stated that he would not have gone on the note had he known the statement was bad. Obviously, it is intended to show reliance on the statement. Now, I can’t understand and will not be able to understand without further testimony from him why he says he would not have gone on that note' had he known the statement was false. (Emphasis supplied.)
Counsel for Mr. Levin: “I think I can develop that. Mr. Levin, when Mr. Cunningham owed you a sizable account, as you previously testified, did you make any reference to entering a suit against him ? A. I did.
“Q. And would you have sued him at the time if payment had not been forthcoming ? A. Absolutely.
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“Q. Will you tell the court at the time that you co-signed or endorsed this note for Mr. Cunningham, if you had reason and did believe that Mr. Cunningham would pay it off? A. I did believe he would pay it off.
“Q. And was the financial statement, as presented to you, part of the reasoning that lead you to that ? A. That was.
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“Q. Did you understand at the time you endorsed this note at the Steubenville Bank just what you were doing for or with Mr. Cunningham ? A. I knew that if he didn’t pay I would have to pay.
“Q. And did you know whether that had the effect of granting to him an extension of credit? A. That did, sir.
“Q. And how did it? A. We gave him merchandise after that.
“Q. Now, at the time you endorsed or co-signed the note, did you place reliance on that financial statement ? A. I. don’t know much about financial statements. I sign them. Mr. Cunningham brought this statement and I didn’t even look at it. * * *
“Q. I’ll ask you what you considered as your security .for co-signing. Mr. Cunningham’s note? A. The property, and the *95amounts of assets he had on his financial statement.
“Q. And, Mr. Levin, if at the time you went over this financial statement in the bank you had observed that he had less assets than he had listed here and had no real estate listed, would you have endorsed the note for him? A. No.”
All of this testimony of Levin was in support of his specification of objection to Cunningham’s discharge, that he had been induced to sign Cunningham’s note in reliance upon a false financial statement. The specification did not include an objection that the bank had made a loan in reliance upon a false financial statement.
The referee did not believe Levin’s testimony that he had relied upon the financial statement, and made findings of fact that the Levins did not rely on the statement in endorsing the note.
In considering the law relating to specifications of objection to discharge in bankruptcy, and what they are required to contain, we revert to the specification filed in this case. Levin’s specification set forth: (1) that Cunningham had obtained money or property by making a false financial statement; (2) that said statement was given to a bank in Steubenville, Ohio; and (3) that Cunningham had induced Levin to sign a note to the said bank by listing among his assets certain real estate which he did not own. This specification can not be read other than an objection by Levin that Cunningham had defrauded him by means of a false financial statement.
With regard to specifications of objection to discharge in bankruptcy, they constitute a pleading; and the allegations set forth therein should be distinct, specific, and definite, and be set forth with exactness and state issuable facts. Kaganowitz v. Manufacturers Trust Co., 2 Cir., 145 F.2d 754; In re Phillips, D.C.Ohio, 298 F. 135.
While specifications opposing the discharge of a bankrupt need not necessarily comply with the strict requirement governing the form of indictments, they must be sufficiently definite to apprise the bankrupt with reasonable certainty of the nature of the charges against him and of the grounds of the objections to his discharge, so that he may be able p'roperly to prepare his defense and to frame and try specific issues of material fact, In re Slatkin, D.C.Mich., 286 F. 242; and a bankrupt is entitled to a discharge unless one of the grounds set forth in the section of the statute is pleaded and sustained by proof, and the burden to do this rests upon the objecting creditor, In re Groves, D.C.Fla., 244 F. 197; In re Epstein, D.C.Fla., 248 F. 191. Objections to a bankrupt’s discharge must not only be stated in the general words of the statute, or their equivalent, but must also state facts sufficient to point out the exact charge against the bankrupt, and show that the act charged is clearly within the statute. In re Woods, D.C.N.H., 283 F. 565.
“When it is alleged that the bankrupt has obtained property on credit from any person upon a materially false statement in writing made to such person for the purpose of obtaining such property on credit, not only must the false representations be set out, but the name or names of the person or persons so alleged to have been defrauded must be given. It is quite true that the proceeding is not a criminal one * * * and that, while the objecting party has the burden of proof, he is not required to prove the commission of the offense alleged beyond a reasonable doubt, a fair preponderance of evidence being sufficient * * *; In re Dauchy, D.C., 122 F. 688, still the bankrupt is entitled to have the specifications of objection made so explicit and definite that he may have notice of the exact charge made and which he is to meet.” In re Levey, D.C.N.Y., 133 F. 572, 576.
An objection to discharge on the ground that the bankrupt obtained property by means of a materially false statement in writing is insufficient, unless it sets out the statement and alleges wherein it was false, to whom it was made, from whom the property was obtained, and the name of the person claimed to have been defrauded. In re Wood, D.C.N.H., 283 F. 565; In re Levey, supra; In re Epstein, D.C.Fla., 248 F. 191.
Only such grounds of objection as are specified by the objecting creditor will be *96considered; and objections to a discharge which are not set forth in the specifications will not be considered and can not form the basis for denial of the discharge. In re Feinsilver et al., 2 Cir., 24 F.2d 408; In re Russell, D.C.N.H., 52 F.2d 749.
Levin’s specification objecting to Cunningham’s discharge does not allege that Cunningham defrauded the bank, but that he defrauded Levin. If the specification had been based upon the ground that Cunningham had defrauded the bank by a false financial statement, the law required that there be explicitly set forth the name of the bank as the party alleged to have been defrauded and an explicit allegation that the property or credit was obtained from the bank by means of the false financial statement. The specification filed does not cover such grounds. The claim that Cunningham defrauded the bank by means of the financial statement is an afterthought on the part of Levin and was advanced only when the referee indicated that he did not believe Levin had relied on the statement. It was not a ground set forth by Levin in his specification of objections to the discharge. “A denial of a discharge on grounds not covered by the specifications is erroneous and the discharge may be denied only on a ground covered by the Specifications of Objections. In re Feinsilver et al., 2 Cir., 24 F.2d 408; In re Green, D.C.N.Y., 50 F.Supp. 630, 631.” In re Hopper, D.C.Ky., 79 F.Supp. 910, 912.
The referee, in an order affirmed by the district court, denied a discharge in bankruptcy to Cunningham on the ground that he had obtained “money, or property on credit, or obtained an extension or renewal of credit” by means of the false financial statement, and that the bank had relied on the statement in loaning the money on the note. In his findings, the referee stated that he was not impressed with the contentions of the Levins that they were imposed upon by the statement supplied by Cunningham; that the interests of the Le-vins and the bankrupt were all one — to secure from the bank the $6,000 which both parties needed, just as it was secured; that the Levins knew Cunningham was in dire difficulties; that Levin had threatened suit, before getting the loan; and that Levin paid no attention to the financial statement and never even looked at it. Moreover, the referee held that even though the Levins may have been involved in the deception of the bank and cooperated in presenting a false statement to the bank, that fact was immaterial to his decision. As above mentioned, the referee found that it must be assumed that Cunningham had included the real estate in his financial statement in the hope that he could secure the signature of his wife to the note; but failed in that; and regardless of whether or not Levin alone took the note and statement to the bank, Cunningham, in leaving the papers with Levin to be used to secure the loan, was guilty of procuring it on a false financial statement upon which the bank relied in making the loan.
If the Levins had been involved in the deception of the bank, then, at the present time, we are confronted with the somewhat unedifying spectacle of their appearing as creditors who secured the money as a result of such deception, objecting to the discharge of a bankrupt because he cooperated with them in getting the money for them from the bank by means of a false financial statement. From the evidence in the case, I do not believe that Cunningham deceived or defrauded either the bank or the Levins by the use of the statement. Moreover, from the evidence, I do not believe that the Levins imposed upon or deceived the bank by means of the statement. It seems to me, from the evidence, that the only reasonable conclusion is that the Le-vins, in order to collect the last cent of their claim from Cunningham, even though he ■has been adjudicated bankrupt, proceeded on the hearing to object to Cunningham’s discharge on the ground that he defrauded them, and, failing in this contention, they adopted, as an afterthought, the claim that he had defrauded the bank, in order to prevent his securing a discharge.
I am of the opinion that the order denying discharge should be reversed for the reason that, in order to refuse a discharge on the ground of obtaining property on credit by a false financial statement, it must be proved that a creditor relied upon *97such statement; that the evidence shows that the bank did not make the loan in question in reliance upon Cunningham’s financial statement; that the specification objecting to Cunningham’s discharge, which was filed by Levin, was based upon a claim that Levin was defrauded by being induced to sign a note in reliance upon a false financial statement; that the evidence shows Levin did not rely upon the statement in signing the note; that no ground of objection to a discharge will be considered other than that set forth in the specification of objection; and that since the only specification of objection is that filed by Levin claiming that he was defrauded, and such claim is without merit, the discharge should, accordingly, be granted.