In re Nugent

• Decision Date: 08 January 1901
• Docket Number: 920.
• Citation: 105 F. 581
• Parties: In re NUGENT. v. NUGENT. MUELLER
• Court: U.S. Court of Appeals — Sixth Circuit

105 F. 581

In re NUGENT.

MUELLER v. NUGENT.

No. 920.

United States Court of Appeals, Sixth Circuit.

January 8, 1901

W. W Smith, for petitioner.

W. W Watts, for trustee.

Before LURTON, DAY, and SEVERENS, Circuit Judges.

SEVERENS Circuit Judge.

On the 23d day of March, 1900, E. B. Nugent was adjudicated a bankrupt upon the petition of the Wayne Knitting Mills and others, his creditors, filed February 19, 1900, and the matter was referred to a referee. Shortly thereafter Arthur E. Mueller was appointed trustee of the bankrupt's estate. On the 7th of April following, the trustee obtained an order upon the bankrupt from the referee requiring him to show cause why he should not be required to pay over to the trustee two sums,-- one of $4,133.45, which it was alleged the bankrupt had received upon a mortgage of his house and lot in Louisville, and another of $10,100, alleged to have been received by him upon the sale of a stock of goods which he had been doing business in that city. In the bankrupt's response he stated that the moneys were in the hands of his son, W. T. Nugent, and that it was impossible for him (the bankrupt) to pay the money to the trustee. Upon the hearing this response was held by the referee to be insufficient, and the bankrupt was ordered to pay the funds mentioned into the hands of the trustee. Upon the bankrupt's failure to do this, he was adjudged guilty of contempt by the referee, and the matter was reported to the court, with a recommendation that the bankrupt be committed for his contempt. Upon a suggestion that the bankrupt was of unsound mind and approaching senile imbecility, the court declined to make the order and discharged him. On the 13th day of April, 1900, the trustee presented to the referee a petition for an order to show cause against William T Nugent, the present petitioner for review. In that petition the trustee alleged that the bankrupt pretended that the proceeds of the mortgage and stock of goods were in the possession of William T. Nugent, who had been ordered to appear and testify; that the latter concealed himself, and could not be found by the marshal. It was further stated that it was 'shown by the evidence herein' that the said William T. Nugent was authorized by the bankrupt to receive the said moneys, and that the bankrupt pretended that the money was intended to be used in the payment of creditors and starting another business elsewhere. The trustee further stated in his said petition that he did not know whether the money was in the hands or under the control of E. B. Nugent or William T. Nugent, but he was fearful it would be dissipated unless an injunction should be issued against William T. Nugent, restraining him from disposing of any part thereof, and an order made that he pay the said moneys into the hands of the trustee; that, as the trustee believed, the said moneys were part of the estate of the bankrupt, and that, if they came into the hands of said William T. Nugent at all, they did not come to him 'as a common or simple debtor,' 'but that said sum is a fund belonging to this estate, and should be in the hands' of the trustee. Whereupon the trustee prayed that an order for an injunction restraining William T. Nugent 'from disposing of said moneys, may be made, and further ordering him to pay all thereof, or such as he may have in his hands, to the trustee. ' Thereupon, without notice to the respondent, the referee forthwith made an order for the injunction as prayed, and further commanding him within five days after service of the order to show cause why he should not be required to pay said sum of money to the trustee. Neither the petition nor the order stated when the moneys came to the hands of the respondent, or under what circumstances. A copy of the order was served upon the respondent on October 8th, and on the 13th a hearing was had thereon before the referee. Shortly before that date an indictment had been found by the grand jury in the United States district court for the district of Kentucky against William T. Nugent, charging him with having unlawfully and fraudulently received $10,000 and other moneys of the bankrupt with the intent to defeat the provisions of the bankrupt act. On the above-mentioned hearing before the referee on October 13th the said William T. Nugent filed a response, in which he alleged that he had at no time since the filing of the petition in bankruptcy received the moneys with which he was charged, or any part thereof, and excused himself from further answering by reason of the above-mentioned pending indictment, and the tendency of his answer to criminate himself. He further, in his said response, denied the jurisdiction of the referee to make the order on which the referee was proceeding. The referee proceeded to take testimony upon the matter of the order, and, on a subsequent day to which the proceedings were adjourned, adjudged that the response to the order was insufficient, and that the said moneys were the proceeds of the mortgage of the house and lot, and of the sale of the stock of merchandise, the property of the bankrupt, and were received by the said William T. Nugent, as the agent of the bankrupt, on February 19th, before the hour of 2 o'clock p.m.; that the petition in bankruptcy was filed at 5 o'clock p.m. of the same day; and that, as it further appeared that he had not paid over said moneys to the trustee, the order should be made absolute. It was thereupon further ordered that the respondent pay the moneys to the trustee before 9:30 o'clock a.m. of the next day. The respondent having failed to comply with this order, the referee adjudged him in contempt, and reported the matter to the court, with a recommendation that he be committed to prison until he should pay the moneys to the trustee. The respondent prayed for a review by the district judge of the order requiring him to pay the moneys to the trustee, and the referee certified the proceedings to the district judge. The matter came on for hearing before the judge upon the report and certificate of the referee, and on November 1, 1900, the judge announced an opinion that the proceedings of the referee should be sustained, and his recommendation of...