Citation Codes Equivalent Citations citation codes Docket Number Nos. 6725 and 6726 Judges Lloyd D. George See more information ... Smart Summary Please sign up to generate summary. IN RE CALHOON. Discharge of Debts — False Financial Statement — Intent — Reliance GEORGE, Bankruptcy Judge Neither the materiality of a misrepresentation in a financial statement made by a bankrupt nor its degree of falseness is sufficient, per se, to deny a bankrupt of discharge of a debt under Section 17a(2) of the Bankruptcy Act without a showing of intent to deceive; and the burden of proving such deceptive intent is on the party seeking to set aside the discharge of a particular debt. Further, the creditor must present some subjective evidence to establish a claim of reliance upon the financial statement of the bankrupt in extending the loan in question. The bankrupts had obtained a loan from the creditor on the basis of an offer they received through the mail providing them with the opportunity to borrow funds upon the submission and approval of a signed financial statement and promissory note. The financial statement required that the bankrupts "(l)ist all outstanding debts and financial obligations, installment and otherwise." Thereafter, the bankrupts filed joint petitions in bankruptcy listing creditors not appearing on the financial statement whose claims appeared to arise from debts antedating the obligation here at issue. The creditor claimed this was indisputable evidence of the materially false nature of the bankrupt's financial statement, therefore creating a nondischargeable debt under Section 17a(2). Section 17a(2) specifically requires that the false statement be made or published by the bankrupt "with intent to deceive" and that this statement be relied upon by the lender so deceived. The burden of proving such deceptive intent is on the party seeking to set aside the discharge of a particular debt and the burden of proving reliance is on the lender. The court accepted as plausible the bankrupt's explanation that he failed to list the disputed education loans which were not then due and owing and several financial obligations arising at about the same time as the signing of the financial statement as a result of "an unfortunate misunderstanding, based upon their own complete naivete, respecting the amounts needed to be listed in the Applicant's statement." The court further noted that arguably the burden of proving reliance may be met by a circumstantial showing that "the statement was made to support an application for credit and that the credit was given after receipt of the statement. . . ." But, the court may not "assume that the lender suffers from a total lack of benevolence toward those who appeal to it for funds or of a sporting spirit in undertaking loans despite deficiencies in a proposed borrower's creditor history. Some subjective evidence must establish the judicious parsimony of each lender who seeks to claim reliance upon the financial statement of a now insolvent loan applicant." As no such evidence was presented here, the debt was discharged. See Sec. 17a(2) at ¶ 2145 and Sec. 523(a)(2) at ¶ 9228.