In re Schulman

177 F. 191 | 2d Cir. | 1910

COXE, Circuit Judge.

The questions of fact presented by this appeal are peculiarly within the province • of the referee and District Judge. The law cannot be promptly and efficiently administered if the collection and division of the bankrupt’s property is to be suspended and delayed pending appeals from the orders of the court and referee having in view the discovery of' the bankrupt’s property and the prevention of its fraudulent concealment and conversion. Unless convinced that manifest error has been committed, this court should refrain from meddling with the administration of the estate which can safely be intrusted to the officers of the bankruptcy court who are familiar with the local environment and the character and conduct of the parties.

In the case at bar we know nothing of the bankrupt, Schulman, except as he is portrayed in the printed record. The referee, .on the contrary, had an opportunity to see and hear the bankrupt and observe his manner while testifying, which is an inestimable advantage in cases of this character. The testimony of a witness may sound plausible when read afterwards from a printed book and yet his conduct on the stand may have been such that no one who heard him testify believed that he was telling- the truth. The referee certifies that after having taken the oath the bankrupt refused to he examined according to law and deliberately withheld facts within his knowledge as to the disposition of the property of the bankrupt’s firm. Again, he certifies that the bankrupt withheld from the trustee and the court, with the deliberate intention of concealing his condition, the true facts relating to the conduct of his business, his dealings with his creditors and the amount and whereabouts of his property. The referee says:

“The manner of the bankrupt, his recollection when he desired to exorcise it convinced me as I walclied him that where he desired to give the facts iio could do so.".

Disingenuous and evasive as his testimony appears when read, it is obvious that the opportunity to “watch” the bankrupt gave the referee a very marked advantage in determining whether he was acting honestly. His answers “Í don’t remember,” and “What do you mean?” so often given might in some instances have been the result of a defective memory or an honest inability to understand. An appellate court may be unable to detect, under such conditions, the false from the true, the honest from the fraudulent, hut any intelligent person, after observing the witness for hours on the stand could not be. deceived as to his purpose.

The testimony as it appears in the record evinces a deliberate purpose to conceal the truth and prevent: the trustee from becoming possessed of facts which would lead to a recovery of the missing property. The witness was being asked regarding transactions directly within his knowledge and facts which he must have known. When, therefore, he answered repeatedly “f don’t remember,” it is obvious that lie was deliberately withholding information to which the trustee was entitled. Tn effect his attitude was one of defiance. He did not affirmatively tell the referee that he refused to disclose the facts which would enable the trustee to follow the property, although these facts were well known to him, but his conduct produced the same result as if he had stated his purpose openly.

Section -11, subd. 1, of the act (Act July 1, 1898, c. 511, 30 Stat. 556 [U. S. Comp. St. 1901, p. 313/]) provides that:

“A iK'r.son shall not * * * after having taken the oath, refuse to he examined according to law.”

The section further provides that the referee shall certify the facts to the judge and the judges shall thereupon, in a summary manner, hear the evidence and, if it warrants him in so doing, punish such per-s®n as for a contempt committed before the court of bankruptcy. The section does not contemplate a hearing of the contempt proceedings before the referee hut before the jtidge and there is no pretense that the bankrupt was not given the fullest opportunity to be heard upon the motion.

Criticism is made because these proceedings were commenced before the bankrupt’s examination was concluded and before he was “cross-examined.” When it is remembered that this is a proceeding to punish the witness for contempt for refusing to he examined according to law, it will be seen that this complaint is not well founded. When the examination was concluded on January 7th, the offense had then been finally and irrevocably committed and the trustee was justified ip presenting it to the court. He was not required to continue an examination which was absolutely abortive. It will hardly be pretended- that a witness who, during his direct examination, makes an assault upon the presiding judge, cannot be punished for contempt until his cross-examination is concluded. In other words, if the acts complained of amount to a contempt they can he punished immediately, if they do not amount to a contempt they cannot he punished at all.

It is unnecessarj'' to pursue the subject farther. Under section '7 of the act it was Schulman’s duty to “submit to an examination concerning the conduct of his business, the cause of his bankruptcy, his dealings with his creditors and other persons, the amount, kind and whereabouts of his property.” He was lawfully summoned to testify and was interrogated as to all of these subjects. He refused to give the information which he possessed and sought to evade his duty by pretended ignorance, deceit, and falsehood.

We think the action of the District Court was fully justified by the facts and-that the order-should be affirmed.