U.S. v. Seiffert

• Decision Date: 04 October 1974
• Docket Number: No. 73-2148,73-2148
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Louis L. SEIFFERT, Jr., Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 974

501 F.2d 974

UNITED STATES of America, Plaintiff-Appellee, v. Louis L. SEIFFERT, Jr., Defendant-Appellant.

No. 73-2148.

United States Court of Appeals, Fifth Circuit.

Oct. 4, 1974.

David L. Perry, J. Robert McKissick, James DeAnda, Corpus Christi, Tex., for defendant-appellant.

James R. Gough, Mary L. Sinderson, Asst. U.S. Attys., Henry J. Novak, Jr., Houston, Tex., for plaintiff-appellee.

Before WISDOM and GOLDBERG, Circuit Judges, and LYNNE, District Judge.

WISDOM, Circuit Judge:

The defendant-appellant, Louis L. Seiffert, Jr., was chairman of the board of First State Bank of Aransas Pass, Texas, in 1969 when the bank failed and the Federal Deposit Insurance Corporation (FDIC) liquidated the bank's holdings. Seiffert filed voluntary petitions in bankruptcy for himself and three corporations which he controlled. On December 10, 1969, the first meeting of creditors was held before the referee in bankruptcy. The defendant testified at that meeting and on February 9, 1970, gave his deposition in connection with a claim by the FDIC on a fidelity bond. Shortly thereafter, he was indicted along with the ex-president of First State Bank, for misappropriating funds of a federally insured bank in violation of 18 U.S.C. 656. A jury found Seiffert guilty of the offenses charged in counts 2, 3 and 4 of the indictment; mistrial was entered as to counts 1 and 5. On September 30, 1971, the trial court sentenced him to imprisonment for three years on each of the three counts, the sentences to run consecutively.

On appeal, this Court reversed the defendant's conviction on the ground that the 1970 Amendment to section 7(a)(10) of the Bankruptcy Act, 11 U.S.C. 25(a) (10), ¹ the immunity provision of the statute, was applicable to the defendant. We held that the defendant was entitled to both use and derivative use immunity and remanded the case for an inquiry into the source of the evidence introduced by the Government at trial. United States v. Seiffert, 5 Cir. 1972, 463 F.2d 1089.

On remand, Seiffert contended that The Honorable Owen D. Cox, who had presided at his trial, should have granted his motion for a new trial based on the allegation that Judge Cox was disqualified in that he had attended the first meeting of creditors as a private practitioner representing two of the creditors, before his appointment as a federal district judge. Seiffert also argued that the immunity provision of the Bankruptcy Act, 11 U.S.C. 25(a)(10), applied to his deposition to certain financial and business records, and that the Government failed to establish a source independent of the immunized material for all the evidence it introduced at trial against him. On remand, Judge Cox denied the motion for a new trial but recused himself from presiding at the hearing on the source of the Government's evidence. The Honorable Carl O. Bue, who presided at that hearing, held that the Government had not used the bankrupt's testimony protected by 11 U.S.C. 25(a)(10). United States v. Seiffert, S.D.Tex.1973, 357 F.Supp. 801. We affirm.

I.

Disqualification of federal judges is governed by 28 U.S.C. 455:

Any justice or judge of the United States shall disqualify himself in any case in which he has a substantial interest, has been of counsel, is or has been a material witness, or is so related to or connected with any party or his attorney as to render it improper, in his opinion, for him to sit on the trial, appeal, or other proceeding therein.

'Congress made it expressly plain that it placed in the justice or judge the responsibility for making the determination 'in his opinion' that he should disqualify himself.' Kinnear-Weed Corp. v. Humble, 5 Cir. 1971, 441 F.2d 631, 635.

It is not contended that Judge Cox had a 'substantial interest', was 'of counsel' in the sense that he represented parties in the case before him, or that he had been a material witness. The sole question is whether he abused the discretion vested in him by the statute in his determination that his entering an appearance, as a practicing lawyer, at the first meeting of creditors in a voluntary bankruptcy proceedings was not 'so related to or connected with any party or his attorney as to render it improper' for him to sit in the bankrupt's subsequent criminal trial.

After the remand, at the hearing on the motion for a new trial, Judge Cox denied the motion and explained his minimal involvement in the bankruptcy proceedings. ² Even on the assumptions Judge Cox was willing to make for the purpose of considering the motion ³ (and nothing we say here is meant to imply that he had to make those assumptions), he concluded that a new trial should not be granted. He did recuse himself, however, from presiding over the inquiry into the source of the Government's evidence.

The only suggestion of prejudice that Seiffert attributes to Judge Cox is stated in the appellant's brief as follows:

Here we are faced with the situation of the trial judge being present when the testimony was given by (the appellant at the first meeting), observing his demeanor and forming an opinion as to the efficacy, sincerity, candidness, and even the veracity of the testimony-- not in the proper confines of a court of law in his role as a disinterested, impartial United States District Judge, but as a partisan advocate representing clients whose interests are on conflict with those of the appellant-bankrupt. To expect or require anyone to put aside these intangible impressions at a future date and assume a completely disinterested role asks too much.

The appellant's own characterization of any impressions Judge Cox might have carried away as 'intangible' is apt. We have examined the transcript of the first meeting of creditors. Judge Cox did not participate in the questioning, very little of which appears related in any way to the two transactions in which the two clients he was representing were involved. He stated that he could not remember whether he had attended the afternoon session at all, and that at the trial he had no recollection even of having participated in the first meeting or any of the testimony that was given during the meeting. We are left with the assertion that Judge Cox might have acquired 'intangible impressions' of the appellant's demeanor in his testimony at the first meeting relating to matters which at best related indirectly to the transactions that were the subject matter of the indictment under which he was tried. Mere prior knowledge of some facts concerning a litigant (which Judge Cox denied having) is not in itself necessarily sufficient to require disqualification. cf. Roberson v. United States, 5 Cir. 1958, 249 F.2d 737, 741. And the impressions of the bankrupt's demeanor and candor at the first meeting he might have obtained (but denied recalling) do not constitute a connection or relationship to a party sufficient to make it improper to sit at the trial on the merits.

The American Bar Association's Code of Judicial Conduct, Canon 3(C)(1)(a), provides:

C. DISQUALIFICATION

(1) A judge should disqualify himself in a proceeding in which his impartiality might reasonably be questioned, including but not limited to instances where:

(a) he has a personal bias or prejudice concerning a party, or personal knowledge of disputed evidentiary facts concerning the proceedings; . . .

This canon expresses the principle Mr. Justice Frankfurter stated in Public Utilities Commission v. Pollock, 1952, 343 U.S. 451, 467, 72 S.Ct. 813, 823, 96 L.Ed.2d 1068: 'the administration of justice should reasonably appear to be disinterested as well as to be so in fact.' Even under the rigid standard, Judge Cox's impartiality in the appellant's case cannot reasonably be questioned. He had no knowledge of disputed evidentiary facts, and there was no reasonable basis for inferring that he was biased or prejudiced.

II.

The first meeting of creditors in the bankruptcy proceedings involved in this case was held December 10, 1969. On February 9, 1970, Seiffert appeared in the law offices of his own counsel, in Houston, Texas, and was deposed. Also present were counsel for some of his creditors, primarily those interested in the Federal Deposit Insurance Corporation bond claim: counsel for the FDIC, counsel for the Corpus Christi State National Bank, counsel for the Capital National Bank of Austin, counsel for Rallee Corporation and Weben Industries, counsel for the trustees in bankruptcy, and the liquidator for the FDIC assigned to administer the liquidation of the bank, which had failed in September of 1969. There is no indication anywhere in the record of this case that the bankrupt's appearance and testimony at this deposition of February 9, 1970, were otherwise than voluntary; the record does not show that he appeared under order of the court, and the Bankruptcy Act, 11 U.S.C. 44(b), specifically preserves the right to take depositions without order of the court, under the law relating to the taking of depositions in civil litigation generally.

At the time this deposition was taken, the Bankruptcy Act, 11 U.S.C. 25(a), provided, in part:

The bankrupt shall . . . (10) at the first meeting of his creditors, at the hearing upon objections, if any, to his discharge and at such other times as the court shall order, submit to an examination concerning the conducting of his business, the cause of his bankruptcy, his dealings with his creditors and other persons, the amount, kind, and whereabouts of his property, and, in addition, all matters which may affect the administration and settlement of his estate or the granting of his discharge; but no testimony given by him shall be offered in evidence against him in any criminal proceeding, except such testimony as may be given by him in the hearing upon objections to his discharge . . ..

In October 1970, the italicized portion of the excerpt of 11 U.S.C. 25(a) quoted above was amended to provide:

. . . but no testimony, or any...