Free v. Shapiro

• Decision Date: 15 April 1925
• Docket Number: No. 2293.,2293.
• Citation: 5 F.2d 578
• Parties: FREE et al. v. SHAPIRO.
• Court: U.S. Court of Appeals — Fourth Circuit

5 F.2d 578 (1925)

FREE et al. v. SHAPIRO.

No. 2293.

Circuit Court of Appeals, Fourth Circuit.

April 15, 1925.

J. Wesley Crum, of Bamberg, S. C., for petitioners.

Bert D. Carter, of Bamberg, S. C., and John F. Williams, of Aiken, S. C. (Carter, Carter & Kearse, of Bamberg, S. C., and Williams, Croft & Busbee, of Aiken, S. C., on the brief), for respondent.

Before WOODS, WADDILL, and ROSE, Circuit Judges.

WOODS, Circuit Judge.

Milton Shapiro was adjudged bankrupt in January, 1923. On petition of certain creditors and the trustee, the referee made an order requiring the bankrupt to show cause why he should not be required to turn over to the trustee goods and money concealed by him. After full hearing of testimony and argument, the referee ordered the bankrupt to turn over $14,248.03 in money as the value of assets concealed. In the event of his failure to comply, the trustee was ordered to institute criminal proceedings against him under section 29 of the Bankruptcy Act (Comp. St. § 9613). In response to the petition for review by the District Court, the referee in certifying the proceedings made an elaborate and impressive report, in which he said he had reached his conclusion after allowing the bankrupt credit for every item about which there was any reasonable doubt. The District Judge reviewed the testimony and the report and reversed the finding of the referee.

The report of the referee was entitled to great weight because the witnesses, including the bankrupt, testified before him; but it was not conclusive on the District Court. On a petition to superintend and revise, the District Court's findings of fact are conclusive in this court when there is substantial conflict in the testimony. In such case we can reverse only for error in the application of law to the facts.

The view of the law applied by the District Court is thus stated in the opinion:

"The referee's report is very full and clear, and if this case were a case of an accounting by a trustee, or if it were a case in which the determination of the court should be arrived at by a preponderance of the evidence, I should in all probability sustain the report. But as I view it, the court should not in a case of this sort arrive at its conclusions of fact upon a preponderance of the testimony, but should be satisfied to a moral certainty. * * *

"There are various other items which were disallowed by the referee in the accounting which may have been properly disallowed, if it had been an accounting by a trustee; but when the disallowance of these items is made the basis for the conclusion that the bankrupt has been shown to have in his possession beyond a reasonable doubt property of the bankrupt, there is too much uncertainty about these items for me to find that they should have been disallowed. * * *

"The main difficulty, however, in the case lies not in the allowance or disallowance of any of these particular small items. The difficulty lies in the fact that the whole foundation for the conclusion reached is subject to too much doubt. The premises are not established beyond a reasonable doubt. For these reasons I cannot concur in the conclusion of the referee.

"It must be borne in mind that this is not a question arising upon objections to the bankrupt's discharge in bankruptcy. If this question should arise upon his application for a discharge and on objection by creditors, I should probably hold that he would not be entitled to a discharge upon the showing made. But I do not care to prejudge that question, and all that I say now is that that question is left open. The only question decided is that the evidence is insufficient at present to establish beyond a reasonable doubt to my satisfaction that the bankrupt has property in his possession which he should be required by an order of the court to turn over to his trustee to be followed in case of failure to comply by imprisonment for contempt.

"* * * In this circuit, whatever may be the rule elsewhere, there is no question that the proof must be beyond any reasonable doubt. Kirsner v. Taliaferro 202 F. 51, 120 C. C. A. 305 supra; In re Switzer (D. C.) 140 F. 976, supra."

By the weight of authority, in attachment for contempt for failure to turn over assets adjudged to be...