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IN RE MORSE
January 19, 1965
IN THE MATTER OF LOUIS MORSE, BANKRUPT.
The opinion of the court was delivered by: John E. Miller, Chief Judge.
There is before the court the petition of the bankrupt, Louis
Morse, for review of an order of the Referee in Bankruptcy
entered October 27, 1964, denying the discharge of the bankrupt.
On May 13, 1965, the bankrupt filed his voluntary Debtor's
Petition which was referred to the Referee on the same date.
In paragraphs 2 and 3 of the petition for review, the following
"That the Bankrupt in his Petition and on the stand
testified that in the two years immediately preceding
the filing of the Bankruptcy herein, he had been
employed as an auctioneer for Lord's Art Gallery of
Hot Springs and had earned salaries totaling
approximately Sixty Thousand Dollars ($60,000) and
has lost said monies gambling.
"It is undisputed that said monies were lost by
gambling at the Southern Club and the Vapors which,
during that time, had operated gambling casinos in
the City of Hot Springs, Arkansas."
The bankrupt further alleged in paragraph 6:
"* * * that he kept no records of his losses; that
he had gambled some monies in the ninety (90) days
prior to filing his Petition for Bankruptcy."
In paragraph 8 he alleged:
"* * * the fact that monies are lost by gambling
and the bankrupt cannot pay his creditors of itself
does not warrant the refusal to discharge in
bankruptcy. It is only where the bankrupt's financial
condition cannot be ascertained that the failure to
keep records will prevent the discharge. In the
present case, the record reflects that the Bankrupt's
financial condition was unquestioned and was so found
by the Referee."
In paragraph 10 he alleged:
"The petitioner would like to point out at this
point that he is a wage earner and that the keeping
of records of gambling losses is not the practice of
gamblers and was, therefore, not compulsory upon this
petitioner in order to receive his discharge in
Prior to the filing of the petition for review and on September
2, 1964, a judgment creditor of petitioner filed objection to the
discharge, and alleged:
"1. That petitioner failed to keep books of account
or records from which his financial condition and
business and gambling transactions might be
ascertained; that petitioner has admitted this both
in his petition and in his examination in open court.
"2. That petitioner has committed an offense
punishable by imprissonment as provided under Section
152 of Title 18 of the United States Code Annotated
in that he admitted in open court that he owns
household goods, furniture, household stores, wearing
apparel and ornaments of the person of a value of
more than $250.00, which is the value listed for same
in his petition."
A hearing on the objection was held in Hot Springs, Arkansas,
on October 23, 1964, at which the bankrupt appeared in person and
by his attorney and the objecting creditor appeared by his
At the hearing the petitioner testified that he lost all his
money gambling, "my salary, what I could borrow, everything I
could get hold of, at the Southern and the Vapors. I still owe
for my furniture." It appeared that the petitioner had not listed
all of his creditors in his petition for adjudication, and the
petitioner stated that he did not "list any of my personal
friends, just the people I knew I couldn't pay." He further
"A. I lost week in and week out, I have no record,
lost up to the time they closed the gambling, and
couldn't gamble any more. I gambled at the
Southern and the Vapors — everyone knows me, they
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