Beauchamp v. United States, 7669.

• Decision Date: 08 April 1935
• Docket Number: No. 7669.,7669.
• Citation: 76 F.2d 663
• Parties: BEAUCHAMP v. UNITED STATES.
• Court: U.S. Court of Appeals — Ninth Circuit

76 F.2d 663 (1935)

BEAUCHAMP v. UNITED STATES.

No. 7669.

Circuit Court of Appeals, Ninth Circuit.

April 8, 1935.

Louis F. Labarere, John A. Cronin, and H. B. Cornell, all of Los Angeles, Cal., for appellant.

Peirson M. Hall, U. S. Atty., and Jack L. Powell, Asst. U. S. Atty., both of Los Angeles, Cal.

Before WILBUR and GARRECHT, Circuit Judges, and CAVANAH, District Judge.

GARRECHT, Circuit Judge.

Appellant herein for many years was engaged in conducting a general insurance business, principally in the city of Long Beach, Cal. By his individual efforts he had built up a large and, for a time, lucrative business. In 1932 he caused to be organized a corporation under the name of C. D. Beauchamp & Co., of which he owned all the shares except such as were necessary for other directors to qualify. Said corporation became the successor of, and continued to conduct, the said insurance business; appellant being in complete control thereof. On account of his illness, the business became involved in financial difficulties; a voluntary petition in bankruptcy was filed; and on July 1, 1932, the said corporation was duly adjudged a bankrupt and the matter referred to Rupert B. Turnbull, referee in bankruptcy, at Los Angeles, Cal., for administration, and one Ernest U. Schroeter was appointed receiver in bankruptcy. On July 7, 1932, said receiver filed with said referee a petition for an order to show cause for a temporary restraining order and permanent injunction, in which, among other things, it was alleged that in the assets of the said bankrupt corporation were certain records relating to the expiration of dates of policies; that the appellant was president of said bankrupt corporation and the sole owner of all the stock thereof; that prior to the adjudication of said corporation as a bankrupt its former place of business had been abandoned; that immediately following such abandonment an insurance business under the name of Beauchamp was opened in offices adjoining those formerly occupied by said bankrupt corporation; that, while said C. D. Beauchamp asserted that the said new business was being conducted by his sons, the petitioning receiver on information and belief alleged that the appellant and his associates were attempting to conduct in said new place of business the business formerly enjoyed by said bankrupt corporation, and was using therein information taken from the records of said company. It was further alleged that, in order to preserve the assets of the said bankrupt, it was necessary to enjoin John Doe Beauchamp and Richard Roe Beauchamp, sons of said appellant, from soliciting the patrons of the bankrupt.

Upon this petition an order to show cause issued, citing appellant and his sons, C. E. Beauchamp and Claron D. Beauchamp. On July 15, 1932, said respondents appeared before the referee; a hearing was had, and the referee found that appellant at all times since the incorporation of the bankrupt was the owner of all of the capital stock thereof, except the directors' qualifying shares; and that said corporation was at all times the alter ego of appellant. The proceedings as to the appellant, however, were dismissed on the statement of his counsel that he did not intend for the present to engage in any business. The referee further found that C. E. Beauchamp and Claron D. Beauchamp were the servants, agents, and employees of the said bankrupt corporation.

Thereupon the referee entered the following order:

"It Is Hereby Ordered That C. E. and Claron D. Beauchamp and the former employees and servants of said bankrupt be and they are hereby permanently enjoined and restrained from using the name of the bankrupt in the insurance business or otherwise, from using the letterheads, the printed, engraved, typewritten or other literature of the bankrupt, including the statement and letterheads; from using directly or indirectly or giving to another for use either from himself or other persons any list or compilation of the names and addresses of the patrons, former or present, or prospective patrons of the bankrupt for renewals or otherwise.

"That said C. E. and Claron D. Beauchamp and the former employees of said bankrupt are hereby further permanently enjoined and restrained from representing that they or either of them, are the successor in interest to the bankrupt or that they or either of them are entitled to take over or have been entitled to take over or have taken over the business of the bankrupt, or that money due bankrupt is payable to them as successors.

"It Is Further Ordered that C. E. and Claron D. Beauchamp and the former employees and servants of said bankrupt be and they and each of them are hereby restrained from divulging the confidential knowledge gained in the course of their employment with C. D. Beauchamp & Company, Inc., or from using such information to the prejudice of the bankrupt.

"It Is Further Ordered that C. E. Beauchamp, Claron D. Beauchamp and the former employees of said bankrupt be and they are hereby enjoined from using the telephone number of the bankrupt, viz., 'Long Beach 64743' or from holding themselves out as being entitled to use the same as the telephone number at the place of business of them or either of them.

"Dated August 1, 1932."

On the 29th day of July, 1932, the said Ernest U. Schroeter, receiver of said bankrupt corporation's estate, filed a return of a proposed sale of the assets of the business of said bankrupt, as a going concern, by which petition it was disclosed that a sale was proposed to be made to one M. C. Richards, of Long Beach, Cal., for the sum of $12,500, subject to the confirmation by the court, and by which it was intended to sell all of the right, title, and interest of the estate of C. D. Beauchamp & Co., a corporation, bankrupt, and of the trustee in bankruptcy, in and to the right to use the name of the bankrupt's insurance business, and the right to solicit the renewals of such insurance business, all of the insurance records, list of clients and customers, card index lists, and such other lists of the customers and clients of the bankrupt's insurance business, all office furniture, furnishings, files and equipment, all office supplies and stationery, the right to use the former telephone number of the bankrupt, and all other personal property of the bankrupt's estate of every kind and nature whatsoever, saving and excepting the cash on hand in the hands of the said trustee, and saving all accounts receivable belonging to the said bankrupt's estate. The said purchase price of $12,500 was to be paid by the said M. C. Richards in installments of $3,000 cash upon the confirmation of the proposed sale, and twenty-three equal installments of $400, payable on the 13th day of each and every calendar month, and a final payment of $300 to be paid on August 15, 1934.

An order confirming the sale of the assets and business of the said bankrupt to M. C. Richards was made on the 16th day of August, 1932.

In the latter part of January, 1933, the said C. D. Beauchamp, appellant herein, announced by written notices his intention to re-enter the insurance business and open a general insurance agency at 15 Locust avenue, Long Beach, Cal., on or about the 1st day of February, 1933. Pursuant to said notice, the said C. D. Beauchamp, appellant herein, did enter into the general insurance business, and ever since said date has been, and now is, conducting an insurance business in the said city of Long Beach, Cal. On the 15th day of August, 1933, an information charging criminal contempt against said C. D. Beauchamp, appellant herein, was filed, and an order to show cause issued thereon, which was served upon him. The basis of this criminal information for contempt is the alleged violation of the said permanent injunction, issued by the said Referee Turnbull heretofore referred to in this statement of facts.

After setting forth a great deal of the history of the proceedings in connection with this bankruptcy matter, the information proceeds to charge in effect that immediately after the said announcement by said C. D. Beauchamp, appellant herein, of his intention to re-engage in the insurance business on or about February 1st, 1933, he, "with the knowledge of the issuance and serving upon him of the injunction, and with knowledge of his position with respect to the bankrupt corporation, he having been the president thereof and the owner and/or in control of all of the stock of the said bankrupt corporation prior to its failure, proceeded to appropriate to his own use and for his own financial benefit the business and good will theretofore his property and the property of the bankrupt corporation and which had been so sold to the said M. C. Richards; that the said C. D. Beauchamp, knowing the said business and good will thereof had been sold by the Trustee in Bankruptcy for a substantial sum of money, and that said sale had been approved by the court, deliberately, wilfully and purposely proceeded in a course of conduct to appropriate the same and, among other things, as a means to accomplish the said result, did the following specific things. * * *"

Among the specific things set forth in the information, as constituting this endeavor or effort to appropriate the business of the bankrupt, are the following: (1) The writing of a certain letter to the board of education of the city of Long Beach, of the Long Beach school district, a former customer of the bankrupt corporation, soliciting a renewal of its business; (2) the solicitation of the...