UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

In Re: DALE ALAN KEY,
Debtor.

DAVID S. WILSON; SMITH MOUNTAIN
REALTY, INCORPORATED, a Virginia
                                                                      No. 97-1408
corporation,
Plaintiffs-Appellants,

v.

DALE ALAN KEY,
Defendant-Appellee.

Appeal from the United States District Court
for the Western District of Virginia, at Lynchburg.
Jackson L. Kiser, Senior District Judge.
(CA-96-16-L, BK-95-271-WA-1-7, AP-95-27-A)

Argued: October 2, 1997

Decided: December 11, 1997

Before MICHAEL, Circuit Judge, BUTZNER,
Senior Circuit Judge, and MAGILL, Senior Circuit Judge of the
United States Court of Appeals for the Eighth Circuit,
sitting by designation.

_________________________________________________________________

Affirmed by unpublished per curiam opinion.

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COUNSEL

ARGUED: George Irving Vogel, II, VOGEL & CROMWELL,
L.L.C., Roanoke, Virginia, for Appellants. William Floyd Schneider,
SMITH & FALCONE, Lynchburg, Virginia, for Appellee. ON
BRIEF: James Robert Cromwell, VOGEL & CROMWELL, L.L.C.,
Roanoke, Virginia, for Appellants. W. Alan Smith, Jr., SMITH &
FALCONE, Lynchburg, Virginia, for Appellee.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

David S. Wilson appeals a judgment of the district court that
affirmed the decision of a bankruptcy court discharging the debt Dale
Alan Key owed him. We affirm.

This claim arises out of the 1993 sale of a real estate brokerage
business, Smith Mountain Realty, Inc. (SMR), by Wilson to Key. Key
paid $25,000 in cash and signed a purchase money note for the
$60,000 balance, secured by an assignment of SMR's stock and
assets. In January of 1994, Key defaulted on the note. Wilson sued
Key and on February 9, 1995, obtained a judgment against him for
$64,867 plus interest, costs, and attorney fees. Key filed for bank-
ruptcy on February 22, 1995. Key turned the stock and tangible assets
of SMR over to Wilson, as ordered, on or before March 8, 1995.

Wilson contested the discharge of Key's liabilities under 11 U.S.C.
§ 727(a)(3), (a)(4)(A), and (a)(5). Wilson also claimed that the debt
owed him by Key should be excepted from discharge pursuant to 11
U.S.C. § 523(a)(4) and (a)(6). After a trial, the bankruptcy judge dis-
missed Wilson's complaint and granted Key a discharge of his debts
in bankruptcy. Wilson appealed to the district court. The district judge
remanded the action to the bankruptcy judge to make specific findings
of fact. The bankruptcy judge made findings of fact, to which Wilson
objected. After a hearing on Wilson's objections, the bankruptcy
judge declined to amend his findings of fact.

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The district judge then found that the bankruptcy judge's findings
were not clearly erroneous and affirmed the denial of Wilson's
motion and Key's entitlement to a discharge in bankruptcy. Wilson
now appeals.

While we review the district court's judgment de novo, we review
the bankruptcy judge's findings of fact for clear error and his conclu-
sions of law de novo. See In re Tudor Assocs., Ltd., II, 

,
119 (4th Cir. 1994). The bankruptcy judge held both a trial of this
case and a later hearing in order to make findings of fact. We review
his findings giving "due regard . . . to the opportunity of the bank-
ruptcy court to judge the credibility of the witnesses." Bankr. Rule
8013. Before addressing Wilson's three assignments of error, we note
that the bankruptcy code favors discharge in bankruptcy and that the
code's exceptions to discharge are narrowly construed. See generally
6 Collier on Bankruptcy ¶ 727.01[4], at 727-12 (15th ed. rev. 1997).

I

Wilson alleges that he proved by a preponderance of the evidence
that Key knowingly and fraudulently made a false oath and that Wil-
son is therefore entitled to relief under 11 U.S.C.§ 727(a)(4)(A). To
deny discharge under this section of the bankruptcy code, Wilson
must prove that Key "made a statement under oath which he knew to
be false, and . . . made the statement willfully, with intent to defraud."
Williamson v. Fireman's Fund Ins. Co., 

, 251 (4th Cir.
1987). "Whether a debtor has made a false oath within the meaning
of § 727(a)(4)(A) is a question of fact." Id. The bankruptcy judge
reviewed 11 statements that Wilson alleged were false and found that
Wilson failed to prove the requisite intent to deceive. The bankruptcy
judge further declined to infer fraudulent intent from the facts and cir-
cumstances of the case.

II

Wilson argues that he proved by a preponderance of the evidence
that Key did not satisfactorily explain the difference between his 1994
income and his stated annual expenses and that Wilson is therefore
entitled to relief under 11 U.S.C. § 727(a)(5). To merit a denial of dis-
charge under this section, Wilson must prove that Key "has failed to

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explain satisfactorily . . . any loss of assets or deficiency of assets to
meet the debtor's liabilities." 11 U.S.C. § 727(a)(5). The bankruptcy
judge found that Wilson failed to provide evidence as to specific
missing funds and that the fact that Key's income exceeded his
expenditures did not prove that Key was secreting assets. As the
bankruptcy judge noted, "Key's personal and banking records were
introduced, and there was no evidence of any missing funds. Key tes-
tified at the hearing, and the court found that such testimony was
credible." (JA 249)

III

Wilson also alleges that he proved by a preponderance of the evi-
dence that Key's withdrawal of funds and transfer of assets from
SMR was contrary to Wilson's perfected security interest and that
Wilson is therefore entitled to relief under 11 U.S.C. § 523(a)(6). To
establish that Key's debt to Wilson should be excepted from dis-
charge under this section Wilson must prove that Key willfully and
maliciously injured Wilson's security interest in the property of SMR.
11 U.S.C. § 523(a)(6). Wilson must therefore prove that Key acted
deliberately and in knowing disregard of Wilson's rights. See In re
Stanley, 

, 667 (4th Cir. 1995). The bankruptcy judge
found that Key traded some of SMR's equipment but that there was
no evidence that the trade was for less than fair value. The bankruptcy
judge further found that Key's withdrawals of funds from SMR were
in line with compensation paid him by SMR before he took over the
business, were for legitimate business purposes, were not extravagant,
and were not made with the intent to defraud.

IV

We conclude that the bankruptcy judge's findings are not clearly
erroneous. Its decision to discharge Key's debts, including that owed
Wilson, properly applied pertinent sections of bankruptcy law. We
affirm the judgment of the district court upholding the bankruptcy
court's discharge.

AFFIRMED

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