Elliott Co v. Ferdinand Toeppner

• Court: U.S. Supreme Court
• Writing for the Court: Fuller
• Citation: Elliott Co v. Ferdinand Toeppner, 187 U.S. 327, 23 S.Ct. 133, 47 L.Ed. 200 (1902)
• Decision Date: 08 December 1902
• Docket Number: No. 85,85
• Parties: C. ELLIOTT & CO. et al., Appts. , v. FERDINAND TOEPPNER

187 U.S. 327

23 S.Ct. 133

47 L.Ed. 200

C. ELLIOTT & CO. et al., Appts.,

v FERDINAND TOEPPNER.

No. 85.

Submitted November 12, 1902.

Decided December 8, 1902.

Elliott and others filed their petition for the adjudication of Ferdinand Toeppner as a bankrupt, in the district court of the United States for the eastern district of Michigan, which averred that Toeppner was insolvent, and that he had committed certain enumerated acts of bankruptcy under subdivisions (1), (2), and (3) of § 3a of the bankruptcy act. Toeppner answered, denying that he was insolvent at the time the petition was filed, and denying insolvency at the time of the commission of the acts charged under subdivisions (2) and (3); and at the same time filed in writing his demand for a jury trial. The issues were tried before a jury, who returned a verdict of not guilty. A motion for new trial was made and overruled, and the court entered judgment adjudging that Toeppner was not a bankrupt, and dismissing the petition. From this judgment petitioners prayed an appeal to the circuit court of appeals accompanied with an assignment of errors. No bill of exceptions was asked or taken, and no writ of error was asked or allowed.

The appeal was allowed and duly perfected by giving the bond required, and a transcript of the record was filed in the circuit court of appeals for the sixth circuit, which included, in addition to the proceedings before stated, what purported to be the evidence heard by the jury; exceptions reserved to evidence admitted or excluded; the charge of the court, and exceptions; and instructions asked and refused, and exceptions.

The errors assigned related exclusively to errors alleged to have been committed during the trial, before the jury, of the issues submitted.

By the certificate to the transcript by the clerk of the district court, and under its seal, it was certified that 'the above and foregoing is a full and true transcript of the record in the matter above entitled; that I have carefully compared the same with the original records and files of said matter in my office, and find the same to be a true transcript of the said originals and of the whole thereof, together with the original exhibits produced on the trial of said matter.'

After the transcript had been filed Toeppner moved the circuit court of appeals to dismiss the appeal, and to strike from the transcript so much as purported to set out the proceedings on the jury trial of the issues submitted to the jury. The motions coming on to be argued, the court, being in doubt, certified a statement of the foregoing facts to this court, together with the following question:

'Has this court, under the appeal granted from the judgment refusing to adjudicate Ferdinand Toeppner a bankrupt, authority to re-examine the proceedings upon the jury trial, and remand for a new trial if it shall appear from the transcript, as certified to us, that there was error in instructions given or refused, or in the admission or rejection of evidence?'

No brief was filed for appellants.

Messrs. Michael Brennan and Adolph Sloman for appellee.

Mr. Justice Fuller delivered the opinion of the court:

The judgment of the district court was a final judgment that Toeppner was not a bankrupt, and that the petition be dismissed. The question is whether the judgment could be otherwise revised than on writ of error, for if a writ of error should have been brought, then the circuit court of appeals had no authority to re-examine the proceedings on the jury trial, on appeal, or to remand for a new trial because of error in instructions given or refused, or in the admission or rejection of evidence, exceptions not having been preserved by a bill of exceptions.

Section 18d of the bankruptcy act provides: 'If the bankrupt, or any of his creditors, shall appear within the time limited, and controvert the facts alleged in the petition, the judge shall determine, as soon as may be, the issues presented by the pleadings, without the intervention of a jury, except in cases where a jury trial is given by this act, and make the adjudication or dismiss the petition.' [30 Stat. at L. 551, chap. 541, U. S. Comp. Stat. 1901, p. 3429.]

By § 1 of the act 'a person shall be deemed insolvent within the provisions of this act whenever the aggregate of his property, exclusive of any property which he may have conveyed, transferred, concealed, or removed, or permitted to be concealed or removed, with intent to defraud, hinder, or delay his creditors, shall not, at a fair valuation, be sufficient in amount to pay his debts.'

By subdivision (1) of § 3 an act of bankruptcy is committed when a person has 'conveyed, transferred, concealed, or removed, or permitted to be concealed or removed, any part of his property with intent to hinder, delay, or defraud his creditors, or any of them;' but by clause c 'it shall be a complete defense to any proceedings in bankruptcy instituted under the 1st subdivision of this section to allege and prove that the party proceeded against was not insolvent as defined in this act at the time of the filing the petition against him.' George M. West Co. v. Lea Bros. 174 U. S. 590, 43 L. ed. 1098, 19 Sup. Ct. Rep. 836.

Under subdivisions (2) and (3) insolvency must exist at the time of the commission of the acts specified.

In this case, so far as acts of bankruptcy under subdivision (1) were charged, insolvency at the time of the filing of the petition was denied, and so far as acts of benkruptcy under subdivisions (2) and (3) were charged, insolvency at the time the acts were committed was denied.

The burden of proving solvency in proceedings under the 1st subdivision was on the alleged bankrupt by clause c, and on the petitioning creditors in proceedings under the 2d and 3d subdivisions, unless in the contingency named in clause d.

The issues presented by the pleadings were clearly defined, and Toeppner made written application for a trial by jury, to which he was entitled by § 19, which reads:

'Sec. 19. Jury Trials.—a. A person against whom an involuntary petition has been filed shall be entitled to have a trial by jury, in respect to the question of his insolvency, except as herein otherwise provided, and any act of bankruptcy alleged in such petition to have been committed, upon filing a written application therefor at or before the time within which an answer may be filed. If such application is not filed within such time, a trial by jury shall be deemed to have been waived.

'b. If a jury is not in attendance upon the court, one may be specially summoned for the trial, or the case may be postponed, or, if the case is pending in one of the district courts within the jurisdiction of a circuit court of the United States, it may be certified for trial to the circuit court sitting at the same place, or by consent of parties when sitting at any other place in the same district, if such circuit court has or is to have a jury first in attendance.

'c. The right to submit matters in controversy, or an alleged offense under this act, to a jury shall be determined and enjoyed, except as provided by this act, according to the United States laws now in force, or such as may be hereafter enacted, in relation to trials by jury.'

The right to a trial by jury on written application thus given is absolute, and cannot be withheld at the discretion of the court. In that respect it differs from the trial of an issue out of chancery, which the court of equity is not bound to grant, nor bound by the verdict if such trial be granted. The court cannot, as the chancellor may, enter judgment contrary to the verdict, but the verdict may be set aside or the judgment may be reversed for error of law as in common-law cases.

Section 566 of the Revised Statutes [U. S. Comp. Stat. 1901, p. 461], Provides that 'the trial of issues of fact in the district courts, in all causes except cases in equity and cases of admiralty and maritime jurisdiction, and except as otherwise provided in proceeding in bankruptcy, shall be by jury.'

The district courts as courts of bankruptcy are invested with 'such jurisdiction at law and in equity as will enable them to exercise original jurisdiction in bankruptcy proceedings' in the particulars named, it being provided that the specification of certain powers should not deprive them of powers they would possess but for the enumeration. The proceedings in administration of the estate are equitable in their nature, but the bank- ruptcy courts act under specific statutory authority, and when on an issue of fact as to the existence of ground for adjudication a jury trial is...