In re Oriel

• Decision Date: 01 March 1927
• Citation: 17 F.2d 800
• Parties: In re ORIEL et al.
• Court: U.S. District Court — Southern District of New York

17 F.2d 800 (1927)

In re ORIEL et al.

District Court, S. D. New York.

March 1, 1927.

Benjamin Siegel, of New York City, for receiver.

Hartman & Levy, of New York City (Hugo Levy, of New York City, of counsel), for bankrupts.

THACHER, District Judge.

In opposition to this motion each of the bankrupts submits an affidavit reiterating his statement, made under oath before the referee upon the turn-over proceeding, that he has not seen the books in question since February, 1926, more than six months prior to the petition in bankruptcy, and has turned over to the receiver all books in his possession relating to the bankrupt's business. In each affidavit there is a prayer that the court read the record made upon the turn-over proceedings, where it is claimed the proof was not sufficient to warrant the entry of the order. Each affidavit further states that the deponent has not the slightest intention of offending the court, and would readily and cheerfully obey its orders, if it were in his power to do so; it being insisted that the order to produce the books is a direction to do an impossible thing, and that, so far as the deponent knows, the books are not in existence, and he has no means of telling where they can be located, if they are in existence.

In a supplemental brief, counsel for the bankrupts request consideration of the record in the turn-over proceeding de novo, contending that it does not there appear beyond reasonable doubt that the bankrupts had the books when it was found in that proceeding that they did have them and they were ordered to turn them over. Thus the question left open in Re J. H. Small Shoe Co., 16 F.(2d) 205, is squarely presented. Speaking of such a proceeding as this, the court, in an opinion by Learned Hand, C. J., there said:

"At best, he the respondent has only to two courses open to him. First, he may accept the order as correct when made, in which case he must show that he has, since its entry, disposed of the money then found to be in his hands or within his control. Whether the trustee still has the burden of proof we need not now say, but the duty of going forward is upon the respondent, and he can fulfill it only by accounting circumstantially for his disposition of the property.

"His other possible course depends upon the assumption that the measure of proof in contempt proceedings is criminal; i. e., beyond a reasonable doubt, a question on which we do not now pass. If so, he may argue that he was not shown beyond a reasonable doubt to have had possession of the property when the summary order was entered. This he cannot do without putting in evidence in the contempt proceedings the record in the summary proceedings, together with any other evidence not merely cumulative. If the criminal rule applies, the trustee would then have to satisfy the court beyond a reasonable doubt that the respondent had possession of the property at the time when the summary order was entered. In no event will it serve for the respondent to rest upon his oath that at the moment he is without means. Were it so, the whole summary proceedings would be the solemn fatuity, which they have been in this case up to the present time."

It will be noted that the question whether the second course is open to the respondent was not decided by the court. Nor is there any authority in this circuit for such practice. In re Stavrahn, 174 F. 330, 20 Ann. Cas. 888 (C. C. A. 2d), held that the summary order to surrender or pay made out a prima facie case. In re Weber Co., 200 F. 404 (C. C. A. 2d), repeated this, and went further, holding that the prima facie case was not answered by the respondent's bare denial that he could then comply with the order.

So far as the practice in this court is concerned, it was settled by In re Frankel (D. C.) 184 F. 539, where Judge Learned Hand, expressing serious doubt upon the merits of the summary order, nevertheless held it to be conclusive upon the question of the respondent's ability to comply with its terms at the time of its entry. In the course of his opinion he said it was the undoubted "practice in this district to treat such orders as conclusive estoppels upon the date of their entry, and to leave open to the respondent only the issue of showing what he has done with the money since that time." Although what was said by the same judge in the Small Shoe Company Case may perhaps seriously question the correctness of his prior decision in this court, the point, being reserved, cannot be said to have been decided, and the Frankel Case, although questioned, has not been overruled. Until it is, it should be followed in this court.

In reaching this conclusion I am impressed with the soundness of the decision in the Frankel Case, because it seems to be in accord with the practice of courts of equity, in cases of civil contempt, to enforce by coercive means, through the process of attachment, compliance with the affirmative commands of their decrees. The merits of the case in which an injunction is duly issued by a court of general jurisdiction is never open to inquiry in such proceedings. Howat v. Kansas, 258 U. S. 181, 42 S. Ct. 277, 66 L. Ed. 550; Huttig Sash., etc., Co. v. Fuelle (C. C.) 143 F. 363; U. S. v. Debs (C. C.) 64 F. 724; People v. Van Buren, 136 N. Y. 252, 32 N. E. 775, 20 L. R. A. 446; People v. Spalding, 2 Paige (N. Y.) 326; Hamlin v. N. Y. etc., Ry. Co., 170 Mass. 548, 49 N. E. 922; Russell v. East Anglian R. Co., 2 Macn. & G. 104; Woodward v. Lincoln, 3 Swanst. 626.

In this state, where the surrogates are given power by statute to enforce their orders by contempt proceedings, it is held in the Court of Appeals that, when process of contempt is employed to enforce compliance by an executor with a decree of distribution directing the payment of money, the investigation is limited to the service of the decree upon him and the facts of neglect constituting his violation of the decree. Matter of Snyder, 103 N. Y. 178, 8 N. E. 479. In all such cases the purpose of the proceeding is to coerce compliance with an order or decree entered after full hearing and careful determination, adjudicating rights existing between the parties to the litigation. Once those rights are determined by a court having jurisdiction, there can in equity be no withholding of the process of the court employed for their enforcement; and in answer to the process of attachment the respondent is never permitted to question upon the merits the order or decree which he has disobeyed. The commitment in such cases has been aptly said not to be distinguishable in substance from a capias ad satisfaciendum, founded on a judgment at law. Adams v. Adams, 80 N. J. Eq. 182, 83 A. 190, Ann. Cas. 1913E, 1083; Chase's Blackstone, 833.

Surely it cannot be said to be sufficient answer to such a writ to question the judgment at law or decree in equity as not supported by evidence excluding all reasonable doubt upon the issues upon the determination of which adjudication was had. The doctrine that an injunction duly issuing out of a court of general jurisdiction, with equity powers, upon pleadings properly invoking its action, and served upon persons made parties therein and within the jurisdiction, must be obeyed, and cannot be questioned in contempt proceedings, has been carried so far that the Supreme Court of the United States has said that, even if the court issuing the injunction erred in assuming the validity of a void law going to the merits of the case, the invalidity of the law will not be examined in proceedings to punish criminally the violation of the injunction. Howat v. Kansas...