In re Carley

• Decision Date: 23 February 1901
• Parties: In re CARLEY.
• Court: U.S. District Court — District of Kentucky

106 F. 862

In re CARLEY.

United States District Court, D. Kentucky.

February 23, 1901

A Gordon Murray, for creditors.

Harris & Marshall and Dodd & Dodd, for respondent.

EVANS District Judge.

Some months ago Francis D. Carley was adjudicated a bankrupt by the United States district court for the district of New Jersey, and under section 21a of the bankrupt act certain of his creditors have obtained an order for the examination of William E. Chess in this district 'concerning the acts, conduct or property of the bankrupt. ' A commission for that purpose was in process of execution before the Honorable Emmet Field, judge of the Jefferson circuit court, in this district; and the clerk of this court, pursuant to sections 868 and 869 of the Revised Statutes of the United States, had issued a subpoena requiring the attendance of the said Chess, and had, under the orders of the court, annexed thereto a requirement that he bring with him certain papers. During his examination under his attendance thus required, the witness refused to answer certain questions, and was ruled by an order of this court to show cause why he refused to answer the same or to give the information required in response thereto; the language of the rule in this connection being that he should show cause why he refused to answer certain questions, to wit:

'Q. Did you put in a single dollar into that firm? And also: Q. As a matter of fact, you did not put in a single dollar then did you? Also, in that you refuse to produce certain documents, to wit, a certain certificate for 990 shares of the capital stock of the Francis D. Carley & Co., a certain power of attorney alleged to have been given to the bankrupt and a certain agreement between himself and M. G. C. Carley, the bankrupt's wife, all of which more fully appears by the affidavit annexed hereto.'

To this rule the witness has filed a response showing cause, and the court is to consider whether the response is sufficient.

Speaking generally, I think the provisions of section 21a of the bankrupt act should be liberally construed, so as to enforce full and frank answers by witnesses who are being examined under its provisions as to the 'acts, conduct or property of the bankrupt'; the object being to secure information on those subjects for use in the administration of the bankrupt's estate. The statute was intended for beneficial purposes, and, in order to effect them, witnesses should fully disclose all their knowledge relative either to the acts, the conduct, or the property of the bankrupt. But the act does not demand such liberality of construction when it is sought to inquire into the acts, conduct, or property of any person other than the bankrupt himself. Indeed, the act does not authorize, in this mode of proceeding, any examination whatever into matters other than those specifically mentioned, which might, however, include cases where the acts, conduct, or property of the witness are so connected or interwoven with those of the bankrupt as to make them virtually the same, by reason of community of interest. The court of bankruptcy itself would have no jurisdiction under this form of proceeding otherwise to inquire into the acts, conduct, or property of any other person except the bankrupt; and this court, which is merely acting in aid of the bankrupt court in which the proceeding is pending, can have no more jurisdiction than that court. Nor can the jurisdiction or power of this court be expanded or influenced by the suspicions or beliefs of any agent or attorney of the creditors of the bankrupt as to what the witness might prove, or what the facts might be in respect to outside matters. The inquiry addressed to the witness must relate to the 'ACTS, CONDUCT OR PROPERTY OF THE BANKRupt,' as i have explained, in order to give this court any jurisdiction to compel answers to inquiries made of him. The trustee or creditors have the right, under the statute, by this inquisitorial proceeding, to acquire information as to the bankrupt's affairs; but they have not, and should not have, any such right as to the affairs of outside persons.

With the expression of these general views, we come to consider whether this witness was required to answer the questions actually propounded to him. The first two are in these words First, 'Did you put in a single dollar into the firm then?' and the second, 'As a matter of fact, you did not put in a single dollar then, did you? ' It is entirely manifest from reading them that these two questions relate exclusively and altogether to acts, not of the bankrupt, but of the witness alone; and...