In re D. Levy & Co.

• Citation: 142 F. 442
• Decision Date: 22 November 1905
• Docket Number: 26
• Parties: In re D. LEVY CO.
• Court: U.S. Court of Appeals — Second Circuit

142 F. 442

In re D. LEVY CO.

No. 26

United States Court of Appeals, Second Circuit.

November 22, 1905

S. F Kneeland, for petitioner.

E. J Myers, for respondent.

Before LACOMBE, TOWNSEND, and COXE, Circuit Judges.

TOWNSEND Circuit Judge.

Petition to review order adjudging bankrupt in contempt. The petitioner, David Levy, was adjudicated a bankrupt upon an involuntary petition against him and David Lachman individually, and as members of the firm of D. Levy & Co. In the course of the proceedings an order was made by the referee that the petitioner pay over to the trustee the sum of $800. The correctness of the order as to this amount is not disputed. On the hearing before the referee, it appeared from the books of the bankrupts that between January 1 and October 12, 1903, the time of the filing of the petition, the bankrupts had purchased merchandise amounting to the sum of $88,953.52, and that their sales during said period amounted to $70,031.65. According to this account there should have been on hand at the time of the filing of the petition a balance in goods or cash of $18,921.87. At the time of taking possession the value of the goods on hand, as stated by the bankrupts, amounted to only $6,000, thus leaving goods of the value of $12,921.87 unaccounted for. The referee declined to order this amount paid over to the trustee, on the ground that the evidence did not sufficiently establish that the goods or their proceeds were in the possession of the bankrupts at the time of filing the petition, and held that the showing on the books, at most, raised an inference that the property was in the hands of the bankrupts. On appeal from the order of the referee the District Court held as follows:

'The question is whether it is sufficient for the bankrupts to state that they have not the property. If they have not the property, they should tell what they did with it. If they cannot do this, the court would be justified in finding that they still had it. Their books, kept for the very purpose of showing what they have or have not, state that they have this balance. The record is their own. If it is not complete, let them complete it. Their own written books, to the effect that they have $12,921.87, is better than their generalization that they have none of it. If it were sufficient for a bankrupt to deny generally, in the face of his own books, the suppression of assets would be unimpeded. Another opportunity should be given the bankrupts to make the necessary explanation, and point out with some approximate accuracy the disposition of so large an amount of goods within so short a space of time.'

The motion to compel the bankrupts to pay over said money was thereupon referred back to the referee, 'to enable the bankrupts to account for and explain the deficiency of the sum of $12,921.87. ' On said hearing, counsel for the bankrupts made the following statement:

'I desire to state frankly that I do not know that I would be able to explain the books if my clients were here, but shall attempt to do so if I can get them; but I claim that there is not sufficient evidence furnished to warrant the referee in holding that any particular property, either in goods or cash, is now in the hands of these bankrupts, or either of them, and in their control.'

The referee thereupon held that, as the bankrupts had failed to make any explanation of what they had done with the property if it were not still in their possession, the conclusion was inevitable that they had no explanation or account to give, and that said property was still in their hands, and he ordered them to deliver said property, or its value, to the trustee.

The petition herein seeks to...