Robbins v. Gottbetter
| Decision Date | 03 April 1943 |
| Docket Number | No. 219.,219. |
| Parties | ROBBINS v. GOTTBETTER. |
| Court | U.S. Court of Appeals — Second Circuit |
Stephen Marlowe, of New York City, for appellant.
T. Stanley Bloch, of New York City, for appellee.
Before L. HAND, AUGUSTUS N. HAND, and FRANK, Circuit Judges.
This case comes up on an appeal from an order directing the bankrupt's president to pay to the trustee — "turn over" — the sum of $2500, found to have been withdrawn by him from the bankrupt's assets during its short life which covered only the months of August, September and October, and the first week of November, 1940. The proceeding took the usual form in cases where the trustee does not trace specific assets into the respondent's hands, but proceeds by an analysis of the bankrupt's books. The respondent, for whom the bankrupt was merely a corporate form, failed to give any adequate explanation of the disappearance of more than $2500. He did not challenge the bankrupt's books, and agreed that it started business with an inventory of $5275. He could not, and did not, dispute that there had been spent in the purchase of goods and labor and in the overhead and selling costs, a total of $20,959.19. Nor did he dispute that the sales had netted $10,780.51. That left a difference of $10,178.68 to be accounted for. If we accept the respondent's figure — $1800 — as the value of the goods left on hand at the close of business instead of what they brought at the receiver's sale — $332.60 — there was a deficiency of $8378, which would necessarily mean that the sales had been made far below their cost. However, the trustee's accountant excluded overhead and selling costs, and so shall we, though it is not very apparent why that should be done. After deducting these he found that at the end of the business there should have been an inventory of $4237.04, assuming that sales were without profit or loss. He had however reckoned the goods on hand at bankruptcy at only $332.60; but, even if that figure be changed to $1800, the deficiency was still more than $2700. Unless the respondent lost $2700 in selling about $11,000 of goods, to say nothing of about $5600 overhead and selling cost, he must have concealed that much of the bankrupt's property.
Upon his examination under § 21, sub.a, Bankr.Act, 11 U.S.C.A. § 44, sub.a, he had sworn that he never took any orders at a loss; and on the hearing he tried to explain this by saying that he lost very heavily in filling his orders, because the material entering into the blinds which he made cost more than he had expected, and because he had been much interfered with by his labor union. However, both these supposed sources of loss had developed by the end of August, and yet he continued for the next two months to take orders, and not to take them at a loss. The explanation was fabricated; at least we should not be justified in reversing a referee who, having seen him, refused to accept it. We agree that there was "clear and convincing" evidence that he had made away with at least $2500 of the bankrupt's goods.
Whatever was done, was, however, done before November 7th, 1940, and, as we have said, the referee's order was entered in April, 1942, about eighteen months later. If the order was to be valid, the referee had to find, as he did, that the respondent still had the money in his possession and could therefore comply with the order. The trustee did not prove, and of course could not prove, anything of the kind; he, the referee and the district judge all relied upon a presumption that in the absence of evidence that the respondent had spent the money, or had...
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