Arthur Mueller v. William Nugent

Citation22 S.Ct. 269,184 U.S. 1,46 L.Ed. 405
Decision Date20 January 1902
Docket NumberNo. 257,257
PartiesARTHUR E. MUELLER, Trustee in Bankruptcy of Edward B. Nugent, Bankrupt, Petitioner , v. WILLIAM T. NUGENT
CourtUnited States Supreme Court

Messrs. William M. Watts and John Richard Watts for petitioner.

Mr. W. M. Smith submitted the case for respondent, and Messrs. Fred Forcht, Jr., Zach Phelps, and H. M. Lane were with him on the brief.

Statement by Mr. Chief Justice Fuller:

Edward B. Nugent was adjudicated a bankrupt March 23, 1900, on the petition of the Wayne Knitting Mills and others, his creditors, filed in the district court of the United States for the district of Kentucky, February 19, 1900, and the matter was referred to a referee. Arthur E. Mueller was appointed trustee of the bankrupt's estate, and on the 7th of April he obtained an order from the referee requiring the bankrupt to show cause why he should not pay over the sum of $14,233.45, made up of two items of $4,133.45 and $10,100. The response of the bankrupt was held insufficient; he was ordered to pay over; on failure to do so, was adjudged guilty of contempt, and the matter was reported to the court by the referee, with a recommendation that he be committed. On the suggestion that approaching senile imbecility made the bankrupt an unfit subject of punishment, the court discharged him, without prejudice to a renewal of the matter before the referee if subsequent developments rendered it proper.

April 13, 1900, the trustee filed his petition praying that an injunction might be issued against William T. Nugent, restraining him from disposing of the sum of $14,435.45, or any part thereof, belonging to the estate of the bankrupt, and for an order requiring him to pay the money to the trustee. This petition stated that William T. Nugent was in hiding. The referee granted the injunction, and entered an order that said William T. Nugent show cause within five days from service thereof why he should not be required to pay over.

A copy of this order was served on William T. Nugent, October 8, 1900, and on October 13 he appeared in person and by counsel, and filed a response to the rule. In this respondent set forth that 'neither the court or the referee in bankruptcy herein has any jurisdiction either of this respondent or the matter involved, to make any order or to require this respondent to answer thereto, because he says that said records herein show that if respondent received said money or any part thereof, it was before the petition in bankruptcy was filed; and in that event neither the court or the referee in bankruptcy can proceed against this respondent as herein attempted by order or rule to pay, and he now hereby asks that this be taken as his response herein, and that said order be set aside and vacated. He says that at no time since the filing of the petition in bankruptcy herein has he received said $14,435.45, or any part thereof.'

For further response he said that he had been indicted in the district court for receiving said $14,435.45, after the filing of the petition, and with retaining the same, and aiding and abetting in the retention thereof, both after the filing and the adjudication, for the purpose of defeating the bankrupt law, and that he ought not to be required to respond, and his response would tend to incriminate him.

The matter came on for hearing October 16, it being stipulated, without prejudice to the objection to the jurisdiction, that the depositions of Edward B. Nugent and others named (not including William T. Nugent), theretofore taken in the cause, might be read. The referee summarized the evidence, as appears from his certificate, thus:

'The testimony shows, and I so find, that on the 9th day of February, 1900, the bankrupt, Edward B. Nugent, borrowed from George L. Erbach and Frank Hohmann, executors, the sum of $4,500, and as security therefor executed a mortgage upon the house and lot of land owned by said Edward B. Nugent, in the city of Louisville; that after paying the taxes and expenses of procuring the loan there remained from said sum so borrowed the sum of $4,133.45; that on said day the said balance of $4,133.45 was delivered to said W. T. Nugent as the agent of the bankrupt, and the said amount has not been accounted for to the trustee in bankruptcy herein.

'I further certify that on the 19th day of February, 1900, before the hour of 2 o'clock P. M., being more than three hours before the petition praying for an adjudication of said Edward B. Nugent as bankrupt was filed in the clerk's office of said court, the stock of merchandise belonging to the bankrupt was sold to one Hermann Straus for the sum of $12,000, and on said 19th days of February, 1900, and before the hour of 2 o'clock P. M., the said $12,000 was paid to said bankrupt by said Hermann Straus, in the form of a check on the German Bank of Louisville, Ky.; that said bankrupt indorsed his name across the said check and delivered the same to said W. T. Nugent, his son, as his agent; that said W. T. Nugent received the cash upon said check on that day before the hour of 2 o'clock P. M., and paid therefrom the sum of $1,900 for rental on the building where said stock was located and the expenses of making the sale, leaving the sum of $10,100, which then and there still remained in the hands of said W. T. Nugent as the agent of said bankrupt.

'I further find that both of said balances, to wit, $4,133.45 and $10,100, belonged to the said bankrupt, and became and still are the property of Arthur E. Mueller, trustee in bankruptcy in this cause, and that said W. T. Nugent holds the same as agent or bailee only, and that he has not accounted for any part of said sums.'

The referee entered an order on the same day, October 16, 1900, omitting preliminary recitals, as follows:

'And after hearing counsel, now therefore it is ordered and adjudged that the said response to the rule aforesaid be and the same is hereby held insufficient; and it appearing from the evidence in this cause that there came to the hands of W. T. Nugent $4,133.45, being the net proceeds realized from the mortgage executed by the bankrupt upon his house and lot in the city of Louisville, and that there also came to the hands of said W. T. Nugent the further sum of $10,100, being the net proceeds from the sale of the stock of merchandise sold to Hermann Straus, the first of said sums having come to the hands of said W. T. Nugent as the agent of the bankrupt on February 9th, 1900, and the second sum, to wit, $10,100, having come to the hands of the said W. T. Nugent as the agent of the bankrupt on February 19th, 1900, before the hour of 2 o'clock P. M., on said day,—and it further appearing that the petition of the Wayne Knitting Mills and others, praying that the said Edward B. Nugent may be adjudged a bankrupt, was filed in the office of the clerk of the above-styled court on February 19th, 1900, at 5 o'clock P. M., and it appearing that said W. T. Nugent has failed to pay over said sums, or any part thereof, to the trustee in bankruptcy herein, and that said sums are the property of the bankrupt, Edward B. Nugent, and belong to said trustee as part of said estate, it is ordered that said rule be and the same is hereby made absolute to the amount of said two sums aggregating the sum of $14,233.45.

'It is further ordered that said W. T. Nugent be and he is hereby required to pay to Arthur E. Mueller, trustee in bankruptcy in this cause, on or before 9.30 o'clock A. M., on October 17th, 1900, the said aggregate sum of $14,233.45.'

Thereupon, October 17, William T. Nugent filed his petition that the order of October 16 might be reviewed by the District Judge, and the referee made his certificate of the proceedings and the foregoing summary of the evidence, the depositions put in before him being returned therewith, concluding: 'And the said question, to wit, the validity of the said order of October 16th, 1900, above set forth in full, is certified to the judge for his opinion thereon.'

The referee also reported that William T. Nugent had failed to comply with the order in whole or in part; that he was in contempt of court; and recommended 'that he be punished for contempt, and committed to prison until he shall have paid to the said trustee the said sum of $14,233.45.'

The record of the district court shows that on the 1st day of November the cause came on to be heard on the petition of William T. Nugent for a review of the order of court entered by the referee requiring said Nugent to pay over, and the certification of the referee, and his recommendation that said Nugent be punished for contempt, and that the court, being fully advised, delivered a written opinion, which was ordered filed, whereupon William T. Nugent moved the court to postpone the entry of judgment until November 3, and it was so ordered.

The district judge stated the facts at length; pointed out that the response was put upon two grounds; namely, that the court and referee were without jurisdiction, and that respondent had been indicted; held that as to the indictment it was not an indictment for disobedience to the order, but under § 29 of the bankrupt act; that exculpation could not criminate; that he could have denied receiving or concealing the money, or paid it into court, but he had done neither; that he had the money, and that it belonged to the estate; that the response really rested on the denial of jurisdiction; and that the referee had the power to order the money to be surrendered. The matter was summed upon these words:

'The respondent has the money in his hands as agent or bailee only. His possession is that of his principal. His principal was his father up to a certain stage of these proceedings, but whether up to the filing of the petition or up to the adjudication we need not stop to inquire, as it is immaterial in this case. At one or the other of those times his principal, by operation...

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