Epstein v. Steinfeld

• Decision Date: 02 January 1914
• Docket Number: 1769.
• Parties: EPSTEIN v. STEINFELD.
• Court: U.S. Court of Appeals — Third Circuit

210 F. 236

EPSTEIN v. STEINFELD.

No. 1769.

United States Court of Appeals, Third Circuit.

January 2, 1914

Julius C. Levi and Alexander J. Brian, both of Philadelphia, Pa for appellant.

Henry N. Wessel and George P. Rich, both of Philadelphia, Pa., for appellee.

Before GRAY and BUFFINGTON, Circuit Judges, and YOUNG, District Judge.

YOUNG District Judge.

This is an appeal from an order of the District Court in bankruptcy in the matter of Abraham Epstein, bankrupt. The order appealed from is as follows:

'And now, to wit, July 21, 1913, in accordance with the opinion and order of court filed July 14, 1913, it is hereby ordered that the said A. Epstein, the bankrupt, do deliver to Abraham Steinfeld, trustee of the estate of A. Epstein 3,061 dozen waists, 8,013 7/8 yards and 10,750 5/12 dozen trimmings, on or before July 25, 1913, which property the said bankrupt had in his possession at the time of the filing of the petition against him, and which he withheld from his said trustee.'

Referring to the opinion of the learned judge of the District Court we find the following:

'In the present controversy (which is only in the first stage), I have considered the evidence, and approve the findings and order of the referee. But I think it desirable to modify the order slightly by striking out the words, 'of the value of $28,686.34,' and by striking out also the words, 'and still withholds.'

And, as it is also desirable to fix another time withinwhich the order is to be obeyed, I substitute July 25, 1913, for 'forthwith.' Thus modified, the order is affirmed.'

The findings of the referee were made by him after he had taken a large amount of conflicting testimony covering every phase of the alleged withholding of property by the bankrupt, and when he had the opportunity to and did see the witnesses who testified. His findings, as has been decided over and over again, ought not to be disturbed except where it is demonstrated that a plain mistake has been made. This rule is so forcibly stated in Ohio Valley Bank Co. v. Mack, 163 F. 155, 89 C.C.A. 605, 24 L.R.A. (N.S.) 184, by Judge Lurton, that we quote it at some length:

'No arbitrary rule can be laid down for determining the weight which should be attached to a finding of fact by a bankrupt referee. His position and duties are analogous, however, to those of a special master directed to take evidence and report his conclusions, and the rule applicable to a review of a referee's findings of fact must be substantially that applicable to a master's report. Tilghman v. Proctor, 125 U.S. 137, 8 Sup.Ct. 894, 31 L.Ed. 664; Davis v. Schwartz, 155 U.S. 631, 15 Sup.Ct. 237, 39 L.Ed. 289; Emil Kiewert & Co. v. Juneau, 78 F. 708, 24 C.C.A. 294; Tug River Co. v. Brigel, 86 F. 818, 30 C.C.A. 415. Much in both cases must depend upon the character of the finding. If it be a deduction from established fact, the finding would not carry any great weight, for the judge, having the same facts, may as well draw inferences or deduce a conclusion as the referee. But, if the finding is based upon conflicting evidence involving questions of credibility, and the referee has heard the witnesses, much greater weight naturally attaches to his conclusion, and the weight of authority is that the district judge, while scrutinizing with care his conclusions upon review, should not disturb his findings unless there is most cogent evidence of a mistake and miscarriage of justice. Loveland on Bankruptcy, Sec. 32a; In re Swift (D.C.) 118 F. 348; In re Rider (D.C.) 96 F. 811; In re Waxelbaum (D.C.) 101 F. 228; In re Stout (D.C.) 109 F. 794; In re Miner (D.C.) 117 F. 953. In this case the conclusions of the referee necessarily involved the credibility of the witnesses who testified to the bona fides of the claim preferred by Charles Mack, Sr. The conclusion he reached in favor of the validity of his debt has also passed the scrutiny of the district judge. Under such circumstances, this court is not warranted in overturning the conclusions of two courts upon anything less than a demonstration of plain mistake.'

It is the rule which has obtained in this circuit, and we again affirm it in order that it may be regarded as settled beyond controversy. The learned judge of the District Court had all the evidence and the findings of the referee before him and he has approved them. We have thus the conclusions of two courts, and they ought not to be disturbed except for a plain mistake which would result in the defeat of justice. We have carefully and thoroughly examined the evidence in this case to determine whether or not the findings of the referee are demonstrated to be clearly erroneous. The evidence which must be considered as the basis of the findings is that of an expert accountant. This accountant had all the books of the bankrupt, which appear to have been regularly kept, and which were stated by the bankrupt under oath to be correct, and he had a statement of assets and liabilities sworn to by the bankrupt...