Knapp & Spencer Co. v. Drew

160 F. 413 | 8th Cir. | 1908

ADAMS, Circuit Judge

(after stating the facts as above). 1. Appellant first contends that it was an adverse claimant of the money in question and could not be proceeded against summarily by motion, hut was entitled to defend itself and justify its adverse claim in a plenary suit instituted by the trustee for the recovery of the money. This position, we think, is totally untenable. Appellant made no such claim in its original answer to the order to show cause. On the contrary it denied positively and under oath that, it had ever received the money from the bankrupt as charged. Notwithstanding there was no issue of an adverse claim to the money tendered or joined the referee took occasion to say in his finding that appellant’s possession of the money was “without color or right.” It is true the appellant objected to the jurisdiction of the court below on the ground that it was a citizen of a state outside the jurisdiction of that court, and claimed for that reason only that it was not amenable to its process. The appellant, however, made a general appearance to the proceeding, filed an answer to the merits, and afterwards frequently recognized the jurisdiction of the court over it. On well-recognized principles of law it cannot now be heard to say that'the court had no personal jurisdiction over it. A hearing was had before the referee on the sole issue whether the appellant received money from the bankrupt as charged. By un-contradicted testimony the issue voluntarily joined by appellant was found against it. According to the pleadings and the proof the proceeding was one to secure a redelivery to the court of property formerly in its custody, and which it then had a right and duty to administer. The appellant in taking the money from the bankrupt after proceedings in bankruptcy had been instituted against him violated the spirit and purpose of the bankruptcy act by attempting to prevent the administration of the estate by the proper court after it had taken jurisdiction over it and had already taken the money in question into actual possession through its receiver. Not only so, but the officers of appellant in doing what they did, if the same was knowingly and fraudulently done, committed an offense denounced by section 29b, subd. 4, Bankr. Act July 1, 1898, c. 541, 30 Stat. 554 (U. S. Comp. St. 1901, p. 3433), which reads:

“A person shall be punished by Imprisonment for a period not to exceed two years upon conviction of the offense of having knowingly and fraudulently * * * received any material amount of property from a bankrupt after the filing of a petition, with intent to defeat this act.”

Appellant clearly had no such adverse claim or right to the money as exonerated it from liability to summary proceedings for its. restoration to the estate from which it had been improperly taken. White v. Schloerb, 178 U. S. 542, 20 Sup. Ct. 1007, 44 L. Ed. 1183; Bryan v. Bernheimer, 181 U. S. 188, 21 Sup. Ct. 557, 45 L. Ed. 814; Mueller v. Nugent, 184 U. S. 1, 22 Sup. Ct. 269, 46 L. Ed. 405; Metcalf v. Barker, 187 U. S. 165, 176, 23 Sup. Ct. 67, 47 L. Ed. 122. The contention now made to that effect is obviously an afterthought.

2. The claim that the referee had no power to entertain the proceeding in question, make an investigation, and report his result to the court for its action is without merit. By section 38 of the bankruptcy act of 1898 the referee is empowered to “perform such part of the duties, except as to questions arising out of the applications of bankrupts for compositions or discharges, as are by this act conferred on courts of bankruptcy, and as shall be prescribed by rules or orders of the courts of bankruptcy of their respective districts.” By general order No. 12 prescribed by the Supreme Court pursuant to the power conferred by the bankruptcy act upon it, after a case- has been referred to a referee, “all the proceedings, except such as are required by the act or by these general orders to be had before the judge, shall be had before the referee.” These provisions with the provision for review bj the judge on certificate from the referee as contemplated by section 39(6) and general order No. 27, not only conferred jurisdiction upon the referee to entertain the proceeding now under consideration, but afforded ample provision for review of his decision by the judge of the District Court from whose action alone an appeal to this court can be prosecuted. The jurisdiction of the referee in matters of this kind is fully recognized in Mueller v. Nugent, supra, and In re Rochford, 124 Fed. 182, 59 C. C. A. 388.

3. We think there was no error in not opening up the case for further hearing after it had been returned to the referee by the District Judge. Appellant had had its day in court on the only issue joined in the case. The referee had found by evidence which seems to admit of no contradiction, against the appellant on that issue. He had in explicit terms found that the appellant had received from the bankrupt after proceedings had been instituted against him the sum of $2,154.18 in money; but instead of making the usual and appropriate order for its repayment to the trustee by the appellant the referee undertook to enter and did enter a personal judgment for that amount. This the District Judge said in his opinion was unwarranted, and that “the judgment of the referee thus entered must be vacated and set aside.” He then caused to be entered an order as follows:

“That the judgment entered by the referee in favor of the trustee herein and against Knapp & Spencer Company be, and the samo is hereby, vacated and set aside, and said cause is remanded to the referee for further proceedings in accordance with law.”

The “judgment” referred to in the opinion and order of court was clearly that personal judgment against appellant for the recovery of the money improperly taken by it, and has no relation to the finding of fact on which it was predicated, concerning which no fault was found or error suggested by the judge. He had in his opinion said:

“If this order [referring to the order which should have been made by the referee] was not complied with it would be the basis for a proper and appropriate proceeding to recover said money.”

In view of the order as actually made by the District Judge considered by itself or as elucidated by the opinion, we think the remanding of the case was not for a further hearing of the issue of fact involved in it. The order was merely to set aside the unwarranted entry of judgment, and proceed according to law. That means, we think, to proceed to enter an order requiring appellant to pay the money found to have been unlawfully taken by it from the bankrupt subject to a possible rule for contempt in case of failure to comply with it. This was the interpretation placed upon the order by the referee, and we think he was right.

Conceding, however, that he might in his discretion on an appropriate showing, have permitted appellant to amend its answer and introduce new and relevant evidence, we are of opinion that no sufficient showing was made to warrant the exercise of discretion favorable to appellant in that particular. No proposed-amended answer was exhibited to the referee, and no other information was vouchsafed to him showing what new defense, if any, the appellant desired to make. Neither was there any showing that there were any facts newly discovered, material or otherwise, that appellant desired to bring forward. All the information which the motion and accompanying affidavits gave to the referee was that appellant desired to offer a large number of papers, contracts, and receipts which, with other testimony, would show facts claimed to constitute a defense. This was very general language, and gave no facts to show or ground to believe that appellant had a meritorious defense. The learned District Judge exercising supervising control over the referee approved his action, and we discover no reason for disturbing the conclusion reached by both of them on this matter which rests largely in discretion.

The decree below was for the right party, and is affirmed.