In re Eskay

• Decision Date: 03 September 1941
• Docket Number: No. 7754.,7754.
• Citation: 122 F.2d 819
• Parties: In re ESKAY.
• Court: U.S. Court of Appeals — Third Circuit

122 F.2d 819 (1941)

In re ESKAY.

No. 7754.

Circuit Court of Appeals, Third Circuit.

September 3, 1941.

Israel B. Greene, of Newark, N. J., for appellant.

Walter J. Bilder, of Newark, N. J. (Bilder, Bilder & Kaufman, of Newark, N. J., on the brief), for bankrupt estate.

Before CLARK, JONES, and GOODRICH, Circuit Judges.

CLARK, Circuit Judge.

Fifteen years ago the writer of this opinion, speaking then for this Court by assignment,¹ expressed our concern at the revelations of a record from New Jersey.² That record portrayed a condition in the administration of bankruptcy in that District of somewhat the unfortunate character afterwards so graphically described in the Donovan Report.³ It is therefore discouraging to have the record in the case at bar disclose very little, if any, improvement in that same field, a branch of the administration of justice all too prone to abuse.⁴ The appellant is a former employee of a bankrupt shirt⁵ corporation. He was called for examination under Section 21, sub. a.⁶ He was examined on four different days.⁷ Thereafter and as a result thereof the referee in bankruptcy filed a certificate,⁸ the pertinent part of which reads:

"I do hereby find and certify to the Judges that the said witness repeatedly and continually made answers to pertinent questions put to him which displayed a perfectly transparent case of intentional and willful evasion and refusal to make any explanation of the facts connected with said bankruptcy under the pretense of defective memory, and a manifest and deliberate determination to conceal all material facts within his knowledge; that during his examination he repeatedly and continually testified (as the reading of his testimony will show) in a vague, unsatisfactory, ambiguous, and contradictory manner, with the intention of obstructing the administration of justice and preventing the collection and distribution of the bankrupt's property and the discovery of the whereabouts of the same; that when he was asked regarding transactions directly within his knowledge, and facts which he must have known, he expressed ignorance or lack of recollection. * * *"

* * * * * * *

"I do hereby find and certify to the Judges that the witness' conduct shows beyond any doubt whatever that he is refusing to tell what he knows." Referee's Certificate, Appendix, pp. 5, 6.

In response to this Certificate, a judge of the District Court signed an order to show cause why the witness-appellant "should not be adjudged guilty of contempt."⁹ One week later, the same learned District Judge signed another order, which as we intend to refer to it later, we set forth in full in a footnote.¹⁰ The firm of attorneys designated therein represented the receiver and now represents the trustee, later appointed. Beginning on June 28, 1938, the learned District Judge signed thirty-three separate orders continuing the contempt proceedings, the last one entered February 26, 1940. On April 15, 1940, the respondent-appellant filed an answer. One year later another District Judge wrote an opinion,¹¹ entered an order,¹² and filed findings of fact and conclusions of law.¹³ Pertinent parts of the order read:

"* * * A summary hearing having thereafter been held before this Court at which the said Henry H. Eskay appeared in person and by attorney and the facts and law were argued, this Court now finds that the said Henry H. Eskay, after taking the oath, refused to be examined according to law in the matter of Winton Shirt Corporation, a corporation, bankrupt, and, therefore, it is, on this 9th day of April, 1941.

* * * * * *

"Ordered, that the said Henry H. Eskay shall appear before this Court, in the Federal Building, Federal Square, Newark, New Jersey, on Tuesday, the 15th day of April, 1941, at 10:00 o'clock in the forenoon or as soon thereafter as the court can attend thereto, at which time sentence will be imposed upon him." Order Adjudging Appellant in Contempt of Court, Appendix, p. 87.

Before any sentence was imposed and on April 22, 1941, notice of this appeal was filed and on the same day a supersedeas order and bond were entered.

The record discloses no reason for the failure to sentence. One can perhaps hazard the guess that it was because of a misunderstanding of the law. We quite agree with the learned District Judge that the contempt is a criminal one. We cannot pretend satisfaction with the state of the authorities re the distinction between criminal and civil contempt. That distinction is important because it may determine the contemnor's liability to removal for trial,¹⁴ his right to a pardon by the chief executive,¹⁵ the type of penalty imposed,¹⁶ the availability of certain defenses,¹⁷ the applicable Statute of Limitations,¹⁸ and, as here, the method of review.¹⁹ Where the contempt has not been committed in the presence of the court and evidence must be taken to establish the contempt, the court's summary powers have been curtailed to the extent that the accused must be presumed to be innocent,²⁰ need not testify against himself²¹ and must be found guilty beyond a reasonable doubt.²²

A former professor in the Yale Law School has poured cold water on the whole idea, saying:

"Few legal distinctions are emptier than that — except of procedural technicality. * * *

"Courts punish for contempt sparingly. Their main use of the power is an in terrorem use — preventive, not punitive; and on the rare occasions when something that looks like a moderate punishment is summarily imposed, the remedial or preventive aspect usually outweighs the punitive. And in the still rarer instances of clearly punitive summary sentences for serious contempts, the qualms of disinterested observers are strong evidence of the occurrence of an abnormality approaching enormity." Nelles, The Summary Power to Punish for Contempt, 31 Columbia Law Review 956, 960, 963.

And the Supreme Court of Massachusetts has described the distinction as resting "in shadow."²³ So courts have determined the nature of contempt proceedings by resort to various formalities such as the method of initiating prosecutions,²⁴ the title of the proceedings,²⁵ the nature of the relief sought,²⁶ the fact that the contemnor has or has not testified,²⁷ the person who has conducted the prosecution²⁸ and the party to whom the fine has been ordered paid.²⁹

One result of this judicial unpredictability has been to defeat the object of the tests, namely, to inform the accused at the outset with which form of contempt he is charged. In the principal case, we are lacking only one of the formalities inclining toward criminal contempt. That lack seems to have been also due to a legal misconception. It has been found proper for the court to have its own dignity upheld by litigant's counsel. The incentive to discover injury³⁰ seems to outweigh the theoretical impartiality of the public prosecutor.³¹ There has been this qualification, however. In line with the purpose of advising the respondent, Judge Learned Hand said:

"The first are easily ascertainable; they will be openly prosecuted by the district attorney; it would not seem to be of consequence how they are entitled when that is true. In the second the court may proceed sua sponte without the assistance of any attorney, as in the case of disorder in the courtroom; there can be little doubt about the kind of proceeding when that is done. But the judge may prefer to use the attorney of a party, who will indeed ordinarily be his only means of information when the contempt is not in his presence. There is no reason why he should not do so, and every reason why he should; but obviously the situation may in that event be equivocal, for the respondent will often find it hard to tell whether the prosecution is not a remedial move in the suit, undertaken on behalf of the client. This can be made plain if the judge enters an order in limine, directing the attorney to prosecute the respondent criminally on behalf of the court, and if the papers supporting the process contain a copy of this order or allege its contents correctly. We think that unless this is done the prosecution must be deemed to be civil and will support no other than a remedial punishment." McCann v. New York Stock Exchange, 2 Cir., 80 F.2d 211, 214, 215.

The order of the learned District Judge, which we have quoted in footnote 10, shows no effort to comply with what we believe to be the sound principle as laid down by Judge Hand above.³²

Balanced against this one lack, we find the kind of act contemned a powerful argument in favor of a criminal contempt. The statute under which this proceeding is brought gives the District Court power to punish for what happened "before a referee."³³ It might be argued, perhaps, that such power was inherent without legislative sanction. The court of bankruptcy might be said to include its subordinate officials and so to embrace them within its aura of exposure to affront. It is not necessary to go that far however. The statute has the sentence "refuse to be examined according to law."³⁴ It is clear that response to examination by false swearing is in violation of, rather than in accord with, law. The cases are unanimous in holding absence of veracity punishable in contempt.³⁵

Those cases seem to exhibit some failure to correlate the nature of false swearing in its relation to the two kinds of contempt. The civil type is coercive and looks to the future.³⁶ The contemnor, in the ancient phrase, carries the keys of the jail in his pocket. Criminal contempt punishes the past act and affords no locus pænitentiæ. Logically, if a court can determine the false in order to punish, it can determine the true in order to free. As a matter of policy, this is not quite so. The original offense is committed with no compulsion but the offender's conscience. The purging is done to satisfy the judge and so perhaps tempts the tribunal to determine in the light of practicalities rather than abstractions. This...