In re Epstein

• Decision Date: 14 July 1913
• Docket Number: 4,165.
• Citation: 206 F. 568
• Parties: In re EPSTEIN.
• Court: U.S. District Court — Eastern District of Pennsylvania

206 F. 568

In re EPSTEIN.

No. 4,165.

United States District Court, E.D. Pennsylvania.

July 14, 1913

George P. Rich and Wessel & Aarons, all of Philadelphia, Pa., for trustee.

Alexander J. Brian and Levi & Mandel, all of Philadelphia, Pa., for bankrupt.

J. B McPHERSON, Circuit Judge.

Whatever opinion may be entertained in some other circuits about the proper method of inquiring into a bankrupt's failure to account for assets, and the proper method of punishing such failure, the practice in the Third circuit seems to be logical and to have the advantage of attending to one subject at a time. It may be as well to state it in outline When the charge is made that assets have apparently not been accounted for, the referee hears and decides the dispute in the first instance. The point of time to which the inquiry is directed is the date of bankruptcy, and the precise question is whether the bankrupt was then in possession or control of money or of goods that apparently should have come into the hands of the trustee. Being fundamental, this question needs to be examined first of all, but it neither involves the bankrupt's present ability to turn over, nor raises the question whether he should be punished for contempt-- except of course, as the complexity of human affairs may compel an occasional approach to these allied subjects. The two questions last referred to, therefore, do not need consideration at the first stage of the investigation. If the assets that presumably should have been in the bankrupt's possession or control at the time of bankruptcy have not been accounted for, the referee may, and probably will, draw the natural inference, and direct the bankrupt to pay the money or deliver the goods, as the case may be. If this order becomes final, either by failure to have it reviewed or by affirmance in the District Court, a definite step has been taken; the proper tribunal has settled beyond future controversy that the assets described were in the bankrupt's possession or control at the time of bankruptcy.

Then comes the next question: Are they still there? Or what has become of them? This is evidently a distinct subject, which should not be confused with the other, but should be separately treated. It will need no attention, unless the bankrupt should fail to comply with the order to hand over but failure to comply makes him presumptively liable to punishment for contempt. But only presumptively; he may have a complete answer to any attempt to punish, and in any event he cannot be punished until he has been heard. In such a hearing the inquiry is directed to the bankrupt's present ability to pay the money or deliver the goods, and unquestionably he makes a sufficient answer if he shows that he is physically unable to obey the order. If it be true that he does not...