In re Oriel

• Decision Date: 09 January 1928
• Docket Number: No. 72.,72.
• Citation: 23 F.2d 409
• Parties: In re ORIEL et al.
• Court: U.S. Court of Appeals — Second Circuit

23 F.2d 409 (1928)

In re ORIEL et al.

No. 72.

Circuit Court of Appeals, Second Circuit.

January 9, 1928.

Hartman & Levy, of New York City (Hugo Levy, of New York City, of counsel), for appellants.

Benjamin Siegel, of New York City, for respondent receiver and trustee.

Before MANTON, L. HAND, and SWAN, Circuit Judges.

MANTON, Circuit Judge.

On October 22, 1926, an order was entered directing the appellants to turn over to the receiver, within three days, the books of account used by the bankrupts during the year 1925. No appeal was taken from this order, and thereafter the present motion was made to punish them for contempt for failure to obey. An order has been entered below, "committing them to jail, to be confined and detained for their alleged contempt in failing to comply with the terms of the order." The books directed to be turned over were (a) customers' and creditors' ledger; (b) purchase book and journal; (c) cash book; and (d) time book. They were petitioned in bankruptcy in August, 1926. The order to turn over the books was granted October 22, 1926, and the order appealed from was entered March 8, 1927. The excuse offered for failure to comply with the order is that they have no ability to do so, as the books are not in their possession, and have not been in their possession since they moved from the premises occupied by them prior to the filing of the petition in bankruptcy. This, they say, was the last time they saw the books.

On this appeal it is argued that the court erroneously declined to inquire into the merits of the turnover order, or the weight of the excuse offered before the present order committing them for contempt was entered. The District Court held that the motion to punish for contempt was a civil proceeding — a part of the turnover proceeding — and that the only inquiry open to the court was whether or not the order to turn over the books had been complied with. It was held that the order directing the books to be turned over could not now be attacked upon this motion to punish for contempt, and that therefore the excuse of inability to comply with the order, which was considered when the turnover order was entered, could not be reconsidered on the present application. When the turnover order was made, the court discredited the excuse of inability to comply, because the books were either lost or mislaid, and therefore not in the possession of the appellants.

The findings of fact by the trial court have the force and effect of findings of fact by a jury, in an application such as this for a review of a contempt order. Bessette v. W. B. Conkey Co., 194 U. S. 324, 24 S. Ct. 665, 48 L. Ed. 997; Davidson v. Wilson (C. C. A.) 286 F. 108; Binkley v. United States (C. C. A.) 288 F. 244. The findings of the referee below, affirmed by the District Court, discrediting the excuse offered here after having heard conflicting evidence, requires our accepting the conclusions reached. Matter of Kaplan Bros. (C. C. A.) 213 F. 753; Epstein v. Steinfeld (C. C. A.) 210 F. 236; Re Schulman (C. C. A.) 177 F. 191. This court said in Re Schulman, supra:

"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. * * * An appellate court may be unable to detect, under such conditions, the false from the true, the honest from the fraudulent; but any intelligent person, after observing the witness for hours on the stand, could not be deceived as to his purpose."

The affidavit submitted in opposition to the motion resulting in the order appealed from merely states a willingness, and, indeed, a cheerfulness, to obey the order of the court, but an insistence that the order cannot be obeyed in producing the books, as it is impossible for the bankrupt so to do, and, based upon this, the appellants ask the court to consider the turnover proceedings de novo.

It is urged that the question left open in Re J. H. Small Shoe Co., 16 F.(2d) 205, by this court, is presented here, and should be exercised in favor of the appellants' contentions. There this court referred to two courses open to a person sought to be held in contempt: First, obedience to the order or excuse therefrom by showing, with the burden of proof upon him, that he cannot fulfill it, and showing other lawful disposition of the property; and, second, another course depending upon the summation "that the measure of proof in contempt proceedings is criminal, i. e., beyond a reasonable doubt, a question on which we do not pass." We did not there deem it necessary to pass upon the measure of proof in contempt proceedings or whether they should be regarded as criminal proceedings. We said in Re Plaza Shoe Co., 15 F. (2d) 278, that such summary proceeding is civil and should be controlled by the usual rules in civil cases. In that case, which was a turnover proceeding, we held that the rule of proof was, as announced in Free v. Shapiro (C. C. A.) 5 F.(2d) 578, to be, that the burden of proving that the bankrupt had withheld assets must be established beyond a clear preponderance of evidence, and not beyond a reasonable doubt. No greater degree of proof is required in other proceedings even necessarily involving intentional fraud. No sound reason can be given for making an exception against creditors in a proceeding of this sort in a bankruptcy court, and, as said in Free v. Shapiro, supra, "to impose on creditors in a proceeding of this kind the exceptional burden of proof beyond reasonable doubt of the charge against the bankrupt of withholding assets would facilitate and encourage fraudulent bankruptcies, already so prevalent." A contempt proceeding contemplates the enforcement of the process and orders of court, a disobedience of which is referred to as a civil contempt. But acts which hinder the administration of justice, such as disturbing the proceedings of the court while it is sitting, or libeling a judge, or publishing comments on a pending case, are criminal contempts. A civil contempt is a wrong for which the law awards reparation to the injured party, though nominally a contempt of court. It is a matter of a wrong of a private nature and between private litigants. The punishment is a form of execution for enforcing the right of a suitor. In Gompers v. Buck's Stove & Range Co., 221 U. S. 418, 31 S. Ct. 492, 55 L. Ed. 797, 34 L. R. A. (N. S.) 874, the Supreme Court said:

"* * * Imprisonment for civil contempt is ordered where the defendant has refused to do an affirmative act required by the provisions of an order which, either in form or substance, was mandatory in its character. Imprisonment in such cases is not inflicted as a punishment, but is intended to be remedial by coercing the defendant to do what he had refused to do. The decree in such cases is that the defendant stand committed unless and until he performs the affirmative act required by the court's order. For example: If a defendant should refuse to pay alimony, or to surrender property ordered to be turned over to a receiver, or to make a conveyance required by a decree for specific performance, he could be committed until he complied with the order. Unless these were special elements of contumacy, the refusal to pay or to comply with the order is treated as being rather in resistance to the opposite party than in contempt of the court. The order for imprisonment in this class of cases, therefore, is not to vindicate the authority of the law, but is remedial, and is intended to coerce the defendant to do the thing required by the order for the benefit of the complainant. If imprisoned, as aptly said in Re Nevitt C. C. A. 117 F. 451, `he carries the keys of his prison in his own pocket.' He can end the sentence and discharge himself at any moment, by doing what he had previously refused to do."

We held in Re Kahn (C. C. A.) 204 F. 581, and United States ex rel. Paleais v. Moore (C. C. A.) 294 F. 852, that the rule is applicable in civil causes arising in bankruptcy proceedings. The Supreme Court, in Michaelson v. United States, 266 U. S. 42, 45 S. Ct. 18...