In re Geo. W. Cowen Co., Inc.
| Decision Date | 07 May 1923 |
| Docket Number | 3843. |
| Parties | In re GEO. W. COWEN CO., Inc. v. MAY (two cases). HENDERSON et al. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Rehearing Denied June 18, 1923.
A. A De Ligne and Archibald M. Johnson, both of San Francisco Cal., for appellants and petitioners.
Henry A. Jacobs, Henry G. W. Dinkelspiel, G. B. Blanckenburg, and Martin Dinkelspiel, all of San Francisco, Cal., for appellee and respondent.
Before GILBERT, MORROW, and RUDKIN, Circuit Judges.
This is a petition to revise an order of the court below, affirming an order of the referee, directing the respondents to pay over to the trustee in bankruptcy the sum of $12,883.81. The material facts are as follows:
Geo. W Cowen Company, Inc., made a general assignment for the benefit of creditors on the 15th day of September, 1920, naming the respondents as assignees. At that time the assignor was indebted to the Ft. Sutter National Bank in the sum of $15,000 on a promissory note, and carried a deposit account in the bank. The business of the assignor was continued by the assignees from the date of the assignment until the appointment of a bankruptcy receiver on November 4, 1920. The deposit account in the bank was changed from the name of the assignor to the names of the assignees, as trustees, and further deposits were made by the assignees from time to time in the conduct of the business. On the 12th day of October, 1920, an involuntary petition was filed against the assignor. This was followed by adjudication and reference on November 3d, and by the appointment of a receiver on November 4th. On the 28th day of February, 1921, the trustee petitioned the bankruptcy court for an order requiring the respondents, as assignees, to account for and pay over all moneys received by them from the date of the assignment up to the date of the appointment of the receiver. Proceedings on this petition resulted in the orders now complained of.
The amount named in the orders is the exact amount that would have stood in the names of the assignees in the deposit account in the Ft. Sutter National Bank, if no diversion had been made therefrom; but on September 30, 1920, a debit of $4,516.40 was made against the deposit account by the bank, and a like amount was credited as a payment on the $15,000 note of the bankrupt held by the bank. On various dates between October 13th and October 25th, other debits were made against the deposit account in like manner, and the amounts credited on the note of the bankrupt as before. By this means the deposit account was practically, if not entirely, depleted. All these transfers were made by direction of the respondent Henderson, who was president of the bank as well as one of the assignees.
The answer of the respondents avers that the bank asserts the right to hold the deposit account and apply it as a partial set-off against the note of the bankrupt, that the claim of the bank is made in good faith, and that the respondents are without lawful right or power to retake the money or comply with the order if made.
When a debtor who has made a general assignment for the benefit of his creditors is adjudged a bankrupt, within four months thereafter the court of bankruptcy has jurisdiction in a summary proceeding to make an order requiring the assignee to submit his accounts and turn over to the trustee in bankruptcy all money and property in his hands.
'This power, however, is far-reaching and drastic, and must be exercised with cautious discretion. If the bankrupt denies that he has possession or control of the property, or if a third person in possession thereof claims to hold it, not as the agent or representative of the bankrupt, but by title adverse to him, and there is no evidence to indisputably show that such denial or claim is false or fraudulent, and that the case is one of simple concealment or refusal on the part of the bankrupt, or the one in possession, to deliver up the property as ordered, it would be an unwarranted stretch of power on the part of the court to resort to a summary proceeding for contempt for the enforcement of its order. It the absence of fraud or concealment, the bankrupt court can only order the delivery of property to the trustee which the bankrupt is physically able to deliver up, having the same in his possession or control. If it shall appear that he is not physically able to deliver the property required by the order, then, confessedly, proceedings for contempt, by fine and imprisonment would result in nothing, certainly not in a compliance with the order. The contempt in this case could only be purged by a reiteration of the physical impossibility to comply with...
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May v. Henderson
...of the Court. This is a writ of certiorari to the Circuit Court of Appeals for the Ninth Circuit to review its action (reported as Henderson v. May, 289 F. 192) on a petition to revise an order of the District Court confirming the order of a referee in bankruptcy, summarily directing the re......
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Boyle v. Gray, 2198
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