204 F. 709 | 5th Cir. | 1913
Lead Opinion
(after stating the facts as above).
In view of the brief and argument submitted in behalf of the petitioner, we deem it appropriate to say the doctrine announced by this court in Re Purvine, cited supra, has neither been modified nor changed. The same doctrine was subsequently announced and sanctioned by the Supreme Court of the United States in Mueller v. Nugent, 184 U. S. 1, 22 Sup. Ct. 269, 46 L. Ed. 405. There is no departure from this doctrine in Samel v. Dodd, cited supra. In the latter case it was held the court, finding in a summary proceeding that bankrupts had in their possession or under their control goods and merchandise, the property of their estate in bankruptcy, had not the power lawfully to order them to pay over the value of such goods and merchandise in money under penalty of commitment for contempt; that in such a proceeding the court was restricted to ordering a return of the goods and merchandise in specie or kind, and this only when it was made clear by proof that the bankrupts were in possession or control of them. '
The petition for a revision of the action of the judge will be denied.
PARDEE. Circuit Judge, concurs in the foregoing opinion and decision.
Concurrence Opinion
(concurring). Stuart, the petitioner, was appointed trustee of the estate of the bankrupt, C. W. Reynolds, and from an examination of the bankrupt and of his books was speedily convinced that the bankrupt ought to turn over to him as trustee $19,249.35 in goods or money. The trustee presented his petition to the referee in bankruptcy, praying for an order that the bankrupt be required forthwith to show cause why he should not turn over to his trustee “goods, wares, and merchandise, or other equivalent in money,, to the amount of $19,249.35,” or such portion as the court might find the bankrupt had in his possession. The bankrupt answered under oath, denying that he had in his possession or under his control any goods, or money for which the same had been sold, and denying the averment that he did not deliver to his trustee all the goods, wares, merchandise, and money belonging to his bankrupt estate. These pleadings, briefly stated, made the issue. The trustee admitted receiving “stock inventoried at $8,372.66” and book accounts for $845.26. C. W. Harden, a clerk of the United States marshal, qualified as an “expert” accountant, and presented statements which he testified gave the status of the bankrupt’s business as shown by his books, which statement closes with the ominous and convincing lines:
"Amount oí goods or money now wrongfully withheld from his trustee, ?19,2-i!),35.”
Notwithstanding the failure of the evidence to show whether it was goods or money that was “now wrongfully withheld," and the failure to show what kind of goods, and where they were, or where the alleged money was held or deposited, if it was money that was withheld, or that the bankrupt had actual possession, and notwithstanding the
“Under tlie decision in title case of Samel v. Dodd, 142 Fed. 71 [73 C. C. A. 254], rendered by our Circuit Court of Appeals, it is not within the power of the court to render a judgment for the. surrender of goods or their alternative value, and attach the bankrupt for contempt for failing to turn over the goods or the money; and although the proof may convince the court beyond all reasonable doubt that at one time the bankrupt had the goods or .money, the order must not be made unless upon clear and convincing proof that the bankrupt has the goods or the property in his possession at the time of the making of the order, and has the ability to comply with it.
“Under the influence of that decision the order of the referee must be reversed, and the court must decline to commit the bankrupt for contempt in failing to obey the order.”
The District Court thereupon made a decree reversing the referee’s order that the bankrupt should pay over the money or the goods. The trustee brings the case to this court by petition for revision, and it is alleged in the petition that the District Court erred in not attaching the bankrupt for contempt for failing to turn over the goods or money; and it is also alleged that:
“The goods, wares, and merchandise having been shown to have been in the possession of the bankrupt, and he not having explained or accounted for them, they were presumed to continue in his possession or under his control.”
•‘Contempt of court is a specific criminal offense. The imposition of the fine was a judgment in a criminal case.”
And it is an indictable offense to disobey a valid judicial order. 2 Bishop’s New Criminal Eaw, § 242 (3). In criminal cases, the presumption of innocence accompanies the accused throughout the trial and until there is a verdict or judgment of guilty (Underhill on Criminal- Evidence [2d Ed.] § 18); and there is no shifting of the burden of proof during the trial (Id. § 23). In civil cases, the burden of proof may shift during the trial. Lilienthal’s Tobacco v. United States, 97 U. S. 237, 24 L. Ed. 901. But, “strictly speaking, the burden of proof, as those words are understood in criminal law, is never upon the accused to establish his innocence or to disprove the facts necessary to establish the crime.” Davis v. United States, 160 U. S. 469, 487, 16 Sup. Ct. 353, 358 (40 L. Ed. 499).
In contempt cases, and especially in those which involve the charge
The proceeding, in its primary stages, is sometimes likened to a civil execution; but the trial of the issue on the question of guilt is essentially a criminal proceeding.
The numerous recent cases that hold that the guilt of an accused charged with contempt must be proved, not by a preponderance of evidence, but beyond a reasonable doubt, show an application of the rules of evidence as they are applied in criminal cases.
3. But the counsel seek also to apply a rule that is in fact applicable to a class of criminal cases — that “the recent possession of stolen property casts- upon the possessor a suspicion of guilt from which he should free himself.” The argument, in effect, is that the recent unexplained possession of stolen ^goods would be sufficient to adjudge the possessor guilty of larceny, unless he rebutted the inference, and that therefore, by “analogy,” the recent possession of the goods by the bankrupt is sufficient, unexplained, to show that he still has them, and therefore sufficient to prove, as required by law, that' he is in contempt in failing to produce them. But the possession of stolen property, however recent and unexplained, creates no presumption of law that the possessor committed the larceny, and instructions to that effect, “casting the burden of proving the innocent character of the possession upon the accused,” are erroneous. Underhill on Criminal Evidence (2d Ed.) § 299, and cases there cited. Such possession, in connection with proof of the larceny, is, of course, legal evidence from which the jury may infer guilt. But there is no analogy between the larceny case and the contempt case. The possession in the former case is evidence against ■the possessor only when the corpus delicti is proved. The inference against him is based on the fact that the property has been proved to have been stolen, and such possession, though it does not change the burden of proof, casts suspicion on the possessor. But the property that the respondent is charged with withholding has not been stolen. His possession is assumed to have been acquired so as to vest title in him. His former possession of it casts no suspicion on him. There is no analogy between the instant case and larceny cases that relieved the trustee from proving affirmatively and as required by law that the respondent presently had'in his possession the property in question, and was therefore able to obey the referee’s order. The fact that the property passed into the possession of the bankrupt is, of course, one step in the effort to prove that he still has it. But if the property consists of $20,000 worth of “goods, wares, and merchandise,” as indicated in one of the alternative recitals of the referee’s order, this proceeding, of itself, is sufficient to show that he has not in his actual possession goods of such bulk and value; for, if he so held them,.they would be taken from him by writ. If, when the referee’s report and
In such cases, the rule undoubtedly goes to this extent, to quote the words of an author, which he sustains by many citations of authority:
“It mruivos something like incontestable evidence, or evidence beyond ii reasonable doubt, to overcome the denial.” 1 Remington on Bankruptcy, § ism.
The power of the United States courts to imprison for the nonpayment of money judgments is controlled by the Constitution and laws of the state. In re Lacov, 142 Fed. 960, 74 C. C. A. 130; Mallory Mfg. Co. v. Fox (C. C.) 20 Fed. 409; Low v. Durfee (C. C.) 5 Fed. 256; In re Atlantic Mutual Life Ins. Co., 9 Ben. 337, Fed. Cas. No. 629; The Blanche Page, 16 Blatchf. 1, Fed. Cas. No. 1,524 (by Blatchford, Circuit Judge); Catherwood v. Gapete, 2 Curt. 94, Fed. Cas. No. 2,513 (by Curtis, Circuit Justice); R. S. U. S. § 990 (U. S. Comp. St. 1901, p. 709).
It is true that if Reynolds had had the goods in his actual possession, so that he had the ability to deliver them to the trustee, on his refusal to obey the order requiring him to do so, he could be imprisoned for contempt, and his confinement would not be imprisonment for debt. Samel v. Dodd, supra. But when the record shows that he had not such possession or ability, he cannot be legally punished for contempt. In re Chiles, 22 Wall. 157, 22 L. Ed. 819; Samel v. Dodd, supra. If, notwithstanding his inability, the court, under the guise o’f punishing the contempt, but for the purpose of forcing him to pay such sum into court or to his creditors as he may obtain, regardless of whether or not it is a part of the bankrupt estate in his present possession, it has been said, in cases arising under the bankruptcy law, to be a violation of constitutional provisions against imprisonment for debt. In Samel v. Dodd, Judge Maxey, speaking for this court, said:
“Such procedure would approach dangerously near the line, if it did not overstep it, of imprisonment for debt.”
Judge Hammond said, in Re Adler (D. C.) 129 Fed. 502, 504, that an enforcement of the bankruptcy law that would permit such procedure “would be only to revive the long since abolished process of imprisonment .for debt, which is both obsolete and unconstitutional.”
In Re Barton Bros. (D. C.) 149 Fed. 620, 621, Judge Rogers said:
“If the court were to mate the order for them to pay over when they were without the means of pas'ing over, the court would then be requiring them to do an impossible thing, and the effect of such an order would be equivalent to imprisonment for debt.”
And in Boyd v. Glucklich, 116 Fed. 131, 136, 53 C. C. A. 451, 456, Judge Caldwell, speaking for the court, said of such procedure:
“Plainly that would be imprisonment for debt, and the order is not relieved of that illegal and odious quality by calling it ‘imprisonment for contempt.’ The court that makes such an order is in contempt of the law and Constitution, and not the bankrupt in contempt of the court.”
In a notable opinion, the Alabama Supreme Court declared, by Justice Somerville, Justice Stone concurring, that a statute authorizing the imprisonment of a debtor for contempt, who failed to comply with a court’s order to deliver property into court to satisfy, a debt, was unconstitutional, because it authorized imprisonment for debt. Ex parte Hardy, 68 Ala. 303. Chief Justice Brickell dissented, and counsel for the petitioner quote and rely on the dissenting opinion, which is one of marked ability. After an exhaustive discussion of the question, the Chief Justice concludes with these lines, which he puts in italics:
“Then the imprisonment is not for debt, but for the neglect and refusal to perform a moral and legal duty, performance resting in his ability.”
Mark the last five words. If the Chief Justice had construed the statute as authorizing the imprisonment when performance did not rest in the ability of the contemnor, he, too, would have held it uncon-sl itutional.
“The filing of the petition [in bankruptcy] is a caveat to all the world, and in effect an attachment and injunction”
—an observation that has since been limited and confined to the facts of that case. York Mfg. Co. v. Cassell, 201 U. S. 344, 353, 26 Sup. Ct. 481, 484 (50 L. Ed. 782); Acme Harvester Co. v. Beekman Lumber Co., 222 U. S. 300, 306, 32 Sup. Ct. 96, 56 L. Ed. 208. W. T. Nugent, the bankrupt’s son, admitting that he had the money in hand and was able to comply with the order, was, of course, subject to- be punished for failure to do so. The case has no application whatever to a proceeding against the bankrupt in reference to property which is not then in his actual possession. Its want of application as an authority in such cases is pointed out by Judge Gray in American Trust Co. v. Wallis, 126 Fed. 464, 61 C. C. A. 342, where it is said that:
‘•The Supreme Court carefully excluded any ground for an inference that the District Court had power to make an order upon a bankrupt for the delivery of property admittedly not in his possession or control.”
When the contemnor is ordered to do the impossible, 'and this appears from the record, his commitment for failure to obey is arbitrary and illegal; and the order has no justification as a contempt proceeding. And, as it has no purpose except to force by imprisonment the payment of money on debts, it is difficult to see why it is not aptly called imprisonment for debt. When the imprisonment occurs under such circumstances, no matter what may he said to the contrary, it remains a fact that the debtor is arrested and imprisoned to force the payment of a debt in whole or in part.
It is evidently the opinion of counsel, who have given the matter such studious attention, that the action of the District Court is sustained by the former case, but is in conflict with the latter.
The proceedings to commit Purvine for contempt were prosecuted by 3 creditors. The record discloses 35 creditors, whose aggregate claims amounted to $4,648.94. If the construction of the record by the majority opinion in the Purvine Case was correct — that the District Court had determined that the contemnor had in his immediate personal possession and control $7,400 — what would the record have subsequently shown? Purvine was condeinned to imprisonment “until he * * * shall pay to O. B. Colquitt, trustee aforesaid, * * * the sum of $7,400,” a sum largely in excess of the apparent indebtedness of the bankrupt. If the order had been made to vindicate the authority of the court, and was really based on a finding that he had that sum in possession, he would have been held till he complied with the order, or, at least, till he paid into court the amount of the bankrupt’s indebtedness and costs. The court would have required the sum to be paid be fore the contemnor was released. On the other hand, if the creditors were using the contempt process to force Pur-vine to pay such sum as he could raise, then it would be expected that he would not be held longer than it was necessary to make him surrender such funds as he had "or could procure. Here is what the record shows: On August 29th, the trustee reported that he had received $43.22 to pay two small claims, and that he had been furnished receipts which indicated that the other creditors had been paid. He attaches an exhibit, which shows the payment to creditors of sums amounting in the aggregate to $1,465.39. He also reported that E. R. Bumpas had paid to him $100, to be applied to the trustee’s fees. The record also shows the payment of $138.75, additional costs of clerk and referee, making a total of $1,747.36, which, so far as the record shows, was all that Purvine was required to pay to obtain his release.
How he obtained this sum does not appear, but the record shows that Purvine had claimed as exempt personal property of the value of $1,695.
“It having been made to appear to the court that the creditors of A. S. Purvine, bankrupt, have released their claims against the said A. S. Purvine and his estate, and it further having been made to appear that provision has been made for the payment of all the expenses connected with the administration of the trust estate, it is therefore:
“Ordered, that said A. S. Purvine, heretofore committed by an order of this court for contempt, be, and he is hereby, released and discharged from further custody.
“It is further ordered that the attorneys for the petitioning creditors in the matter of A. S. Purvine, bankrupt, file their accounts for services rendered with the referee, and that the petitioning creditors also file their accounts for moneys advanced by them with the referee, for action thereon by him.”
It thus appears that Purvine was not released because he obeyed the order of the court, for the failure to obey which he was committed. This last order shows, in effect, that it was not possible for him to obey it. If it had been shown that he really had in his personal possession $7,400, the prosecutors would not have been satisfied with a payment of only $1,747.36.
If the court had found that Purvine had in his possession a sum so much larger than his apparent indebtedness, it would not have ordered him to pay into court more than enough to pay the debts and costs.
No one questions the authority of the District Judge to make the order discharging Purvine, and it is quoted only to show the purpose of the imprisonment. But there is no authority in a District Court to imprison a bankrupt till he satisfies the claims of officers for costs and pays the creditors such sum as will cause them to agree to his release.
7. The case of Samel v. Dodd, supra, originated in the United States District Court for the Northern District .of Georgia, and was decided in that court by the judge who wrote the opinion of the court in Re Purvine. An elaborate opinion was filed by him in the District Court, which is printed in the record here, but not reported. The judge found that amounts aggregating $16,417.83 were withdrawn by the bankrupts from their business between January 1, 1904, and May 30, 1904, the day of the beginning of the proceedings in bankruptcy. The bankrupts were required to account for this sum. The judge said:
“If tbe bigbest amount mentioned in tbe evidence, however, as going into the possession of J. Saul & Co., should be taken as tbe truth of tbe matter, it would still leave $2,417.83 unaccounted for in any way. This, I am satisfied, the bankrupts are able to turn over at this time.”
The usual orders of commitment for contempt were made, and the case was brought to this court.
The finding that the bankrupts were able to turn over the $2,417.83 at that time was not permitted to sustain the order.. Taking the whole decree of commitment and the opinion, it was apparent that it was not shown that it had been found that the bankrupts were presently in possession of the sum in question. Judge Maxey’s opinion, in reversal of the District Court, demonstrates by its result that the theory of peti
The Cases of Purvine and Samel v. Dodd, though differing, of course, in detail as to facts, involved the same principle. ’ In each case the property or fund was traced to the recent possession of the bankrupt, and there the proof ended. In each case the District Court, in effect, held that the burden was on the bankrupt to account for the thing received by him. And in each case the bankrupt was committed for not making a satisfactory explanation. There the similarity ends. On petitions for revision, the Purvine Case was affirmed, and Samel v. Dodd was reversed. In the lower courts, both cases would support the petitioner’s contention in the instant case as to’ the shifting of the burden of proof. But that theory has no support in this court in J udge Maxey’s opinion in Samel v. Dodd.
“If the rule he adopted, announced in some eases, that where a bankrupt, shortly before his failure, has on hand a large stock of merchandise, and, when proceedings in bankruptcy are instituted, he is found to have but a small amount of goods, the stock being depleted to such an extent that it could not have occurred' in the ordinary course of business, and there are circumstances to indicate that the goods have been purposely and fraudulently removed, so as to prevent their going into the hands of the trustee in bankruptcy, that then the court may require the bankrupt to produce the goods or give some reasonable explanation of their disappearance, and on his failure so to do may hold him for contempt, then a case is made out by the record here.”
That rule, instead of requiring proof of the contemnor’s present possession beyond a reasonable doubt, would shift the burden of proof, and condemn the accused for his failure to produce evidence to show his innocence. Judge Newman refused to enforce such rule, on the authority of Samel v. Dodd, supra, and discharged the accused.
The fact that the bankrupt has fraudulently removed goods or has committed some crime in relation to them may subject him to penalties or to imprisonment for the offense; but it is not the subject of a contempt proceeding for the failure to surrender property not in his possession. He may have given the goods away, or destroyed them, or burnt them to get insurance. Such facts may excite indignation, hut they are not to be considered in this proceeding. Such crime, instead of supporting the contempt process, may defeat it, because it may show inability to comply with the order.
In re Dickens (D. C.) 175 Fed. 808, by Judge Toulmin, and In re Mize (D. C.) 172 Fed. 945, by Judge Grubb, are cases in which the rules announced in Samel v. Dodd are aptly applied.
For these reasons, it would not seem advisable to comply with the request of counsel, so earnestly sustained by argument, to modify or limit Judge Maxey’s opinion, speaking for the court, in Samel v. Dodd, supra, and to return to the doctrine announced in the Purvine Case.
Section 29b (1) provides for the punishment, by imprisonment not to exceed two years, of the offense of having knowingly and fraudulently “concealed while a bankrupt, or after his discharge, from his trustee any of the property belonging to his estate in bankruptcy.” These two parts of the act should be construed so as to give both a field of operation and to conform to the legislative intention.
Section 41a (1) applies to the refusal of the bankrupt to surrender property in obedience to the order of the court, the' same being in his present.possession. It is equally applicable to a third person so holding property of the estate of the bankrupt, if such person had no such adverse claim as would require plenary suit. Mueller v. Nugent, 184 U. S. 1, 22 Sup. Ct. 269, 46 L. Ed. 405.
Section 29b (1) applies to cases of the concealment of the assets from the trustee. In cases like the present, where, by examination of the books of the bankrupt, it is claimed that the bankrupt has not ac
Where the property is not found in the immediate possession and control of the bankrupt, but is concealed, if he is in default about it, a case is presented, if the evidence is sufficient, under section 29b (1). The same is true where property of the bankrupt estate is traced to the recent possession of the bankrupt, but is not shown to be presently in his possession. The doctrine of “presumption” and “shifting the burden of proof” to the bankrupt is not applicable to such cases. To '.hold otherwise makes section 29b (1) useless, and attributes to Congress the intention to permit, the charge of fraudulently concealing property of the bankrupt to be punished without indictment and jury trial.
“Tlie process of contempt is a severe remedy, and sliould not be resorted to where there is fair ground of doubt as to the wrongfulness of the defendant’s conduct.”
But counsel argue that “this suggestion brings small comfort to creditors,” and quote that “a criminal prosecution does not pay the claims of creditors.” But prosecution by indictment and trial by jury is the regular and constitutional mode of punishing a citizen for crime In the hurry of securing the collection of a debt due one man, we should not forget the rights of another. In the stress of the race for the dollar, the rights of the man himself should not be violated. The bankruptcy law is a boon to society, but it can be made a bane. There are some dishonest, fraudulent, and venal bankrupts. The act provides severe, but constitutional, means for dealing with them. There are many honest men, who, by incapacity or misfortune, have been stripped of vocation and property. The act was intended to give such men another chance. When they come to the court with idle hands and empty pockets, the court should protect them against baseless and oppressive accusations.
It is to the interest of the public that the courts should retain the power to punish for contempt. The District Courts, like this court, are the creatures of Congress, and their power is within legislative control. Rapalje on Contempt, § 11; Ex parte Robinson, 19 Wall. 505, 22 L. Ed. 205. The way to preserve it is not to abuse it.
The District Court was right in refusing to commit the accused, and the petition to revise should be denied.
Note by Shelby, Circuit Judge.
There are other fkcts connected with the decision of the Purvine Case, 96 Fed. 192, 37 C. C. A. 446, which, in view of the' argument of counsel urging this court to “return to the doctrine” of that case, the writer thinks should be stated here:
The briefs and record of that case were first presented at Dallas, Tex., to Hon. A. P. McCormick, United States Circuit Judge. He advised the attorney representing the petitioner that the petition should be presented to the court, and it was submitted to the court at Atlanta, Ga., on the record and briefs and without oral argument. Judge McCormick not being present, Hon. William T. Newman, United States District Judge, was designated to sit in his place. After the case was decided and the opinions announced, copies of them were sent to Judge McCormick, who had first examined the case, but, being absent, could not participate in the decision. In returning the opinions, he wrote as follows:
“Dallas, Texas, July 27, 1899.
"‘My Dear Judge:
“I thank you for sending me copies of opinions in the Purvine Case, which I have read with deep interest. The decision of the majority is a surprise to me. I cordially concur in the views you so clearly present and strongly support in your dissenting opinion. Complying with your request, I herewith return the opinions. Yours very truly,
“A. P. McCormick.
“Hon. D. D. Shelby, U. S. Circuit Judge,
“Huntsville, Alabama."