In re Rosser

• Decision Date: 02 April 1900
• Docket Number: 13.
• Citation: 101 F. 562
• Parties: In re ROSSER.
• Court: U.S. Court of Appeals — Eighth Circuit

101 F. 562

In re ROSSER.

No. 13.

United States Court of Appeals, Eighth Circuit.

April 2, 1900

This proceeding invokes a revision under subdivision 'b' of section 24 of the bankrupt act (30 Stat. 544, 553, c. 541) of the rulings upon questions of law of the United States district court in the matter of George P. Rosser, bankrupt. On April 7, 1899, the creditors of Rosser petitioned to have him adjudged a bankrupt, and their prayer was granted on May 11, 1899. At the request of the trustee appointed in this proceeding the referee in bankruptcy required the bankrupt Rosser, to submit to an examination under subdivision 9, Sec 7, and section 21, of the bankrupt act. At this examination his testimony and that of various other witnesses was taken but no notice was given to him that this examination or the testimony of the witnesses at this hearing would be used to obtain, or that any application would be made for, an order upon him to deliver or pay over $2,500, or any other sum, to the trustee as a part of the property of the bankrupt estate. On July 20, 1899, int the absence of any preceding notice to Rosser that such an order was contemplated, the referee ordered him to pay over to the trustee $2,500, which the referee found in said order that Rosser had received about March 17, 1899, and had failed and refused to account for or to schedule as a part of his estate. This order was served on Rosser on July 25, 1899, and on August 4, 1899, he answered that he was unable to obey said order, because he had no money with which to comply with it. On August 14, 1899, the trustee filed a petition in the district court in which he set forth the proceedings that have been recited, alleged that the bankrupt had refused to obey the order of the referee, and prayed that he might be adjudged in contempt of court, and be punished for such contempt. Notice of this petition and of the application for an adjudication upon it was duly given to the bankrupt, and he answered that he was never notified of the intention of the trustee to ask the referee to make the order upon him to pay over the $2,500 that he was never given an opportunity to show cause why said order should not be made, that it was made without giving him an opportunity to be heard in the premises, that he had not the present ability to comply with the order, and he prayed that the proceedings against him be dismissed, and that he be given an opportunity to take the testimony of witnesses for the purpose of showing that he was unable to comply with the order of the referee. The court denied his application to dismiss the proceedings, and to have have an opportunity to take the testimony of witnesses, but announced that it would give the bankrupt an opportunity to be cross-examined before the court upon any of the matters and things upon which he had been examined before the referee, and upon any other matters tending to show what had become of the $2,500 he had been ordered to surrender, or tending to show his inability to comply with the order of the referee. Thereupon the case was set down for hearing on August 26, 1899. On that day the bankrupt appeared, and filed an answer to the citation for contempt, in which he averred that he was unable to comply with the order of the referee or to pay over the $2,500, because he had not the money or any part of it in his possession, or under his control, and was unable to procure the same. He further averred in his answer that he borrowed the said sum of money on March 17, 1899, and that he had disposed of the same prior to the institution of the proceedings to have him adjudged a bankrupt, and had not then, or at the time of filing his answer, any control or ownership of said sum of money, or any part thereof, and that he was unable to inform the court of the disposition he had made of the money, because the disclosure of the facts in relation thereto would tend to incriminate him. After this answer was filed the bankrupt declined to be cross-examined, and thereupon the court adjudged that he was in contempt of court for refusing to obey the order of the referee to pay over the said sum of $2,500, and committed him to the custody of the marshal, to be held in captivity in the city jail until he should pay to the trustee the said sum of $2,500, or be otherwise discharged by due process of law. The bankrupt petitions this court to set aside the order and judgment committing him to jail upon the ground that the order of the referee was void because he had received no notice of the charge against him upon which it was founded, or of the intention of the trustee to ask for such an order, and had had made, and because the district court erred in refusing to dismiss the proceedings against him for contempt for failure to comply with the referee's order, and in refusing to permit him to produce testimony to show that he was unable to comply with it.

P. H. Cullen and T. P. Bashaw (J. D. Hostetter, on the brief), for petitioner.

Dorsey A. Jamison (Robert E. Collins and Edwin R. Chappell, on the brief), for respondents.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

SANBORN Circuit Judge, after stating the case as above, .

The bankrupt, Rosser, was committed to jail for contempt of court, in that he failed to obey the order of the referee to turn over to the trustee $2,500 alleged to have been a part of his estate when he was adjudged a bankrupt, and to have been in his possession when the order for him to deliver it to the trustee was made. He challenges the order of commitment on three grounds: (1) That conceding that the money was a part of his estate at the time of the adjudication in bankruptcy, and that he had control of it when the order for its delivery to the trustee was made, the order of commitment constituted imprisonment for debt, and violated section 16, art. 2, of the constitution of Missouri, and section 8954 of the Revised Statutes of that state; (2) that as a matter of fact the $2,500 was not a part of his estate, and was not in his possession when the order for its payment was made; and (3) that the proceedings which culminated in the order of commitment did not constitute due process of law. These objections will be considered in their order.

The power of a court to punish for contempt of its proceedings for disobedience of its lawful orders, is inherent in the being of every court of general jurisdiction. Without it orders of a court would be without force or effect, would command neither respect nor obedience, and there would be neither warrant nor reason for its longer existence. From the earliest annals of our law this power has been exercised. It rests upon the fundamental principles of judicial establishments, and is inseparable from the existence as well as from the usefulness, of a court of general jurisdiction. 4 Bl.Comm. 286; State v. Matthews, 37 N.H. 451; Watson v. Williams, 36 Miss. 331; Hurd, Hab. Corp. 7; Ex parte Crenshaw, 80 Mo. 447, 453; In re Knaup, 144 Mo. 653, 667, 46 S.W. 151. The act to establish a uniform system of bankruptcy throughout the United States (30 Stat. 544, c. 541) vests in the district courts of the United States the power to 'cause the estates of bankrupts to be collected, reduced to money and distributed, and determine controversies in relation thereto, except as herein otherwise provided (section 2, subd. 7); * * * * * punish persons for contempts committed before referees (section 2, subd. 16). ' The effect of an adjudication in bankruptcy is to place all the property of the bankrupt not exempt by law in the custody of the district court, and to charge the bankrupt, and all other persons who have the possession or control of any of it, as trustees for the court and for the trustee in bankruptcy, who is subsequently appointed. The act os congress requires the bankrupt to 'comply with all lawful orders of the court' (section 7, subd. 2); forbids him to 'disobey any lawful order, process or writ' issued by the referee (section 41, subd. 1); subjects him to the punishment of imprisonment for a period not exceeding two years for knowingly and fraudulently concealing, while a bankrupt, or after his discharge from his trustee any of the property belonging to his estate in bankruptcy (section 29b); or for making a false oath or account in or in relation to any proceeding in bankruptcy (section 29b, subd. 2). There can be no doubt that under the general rules of law and under these specific provisions of the bankrupt act the court and the referee were vested with the right and subjected to the duty making the necessary orders to require the bankrupt and all other persons who had the possession and control of the property of the bankrupt estate to surrender and deliver it to the trustee. Such orders constitute one of the essential means by which the court and the referee are empowered to collect the estate of the bankrupt. It is a broad and comprehensive power, and great caution should be exercised to observe its limits and to issue under it only lawful orders. But, without its lawful exercise, the administration of the estates of bankrupts would in many cases be so complicated and tedious that all the assets would be wasted in litigation, and the beneficent purpose of the bankrupt law would fail of accomplishment. Two essential facts limit this power and condition its lawful exercise. They are that the money or property directed to be delivered to the trustee or other officer of the court is a part of the bankrupt estate, and that the bankrupt or person ordered to deliver it has it in his possession or under his control at the time that the order of delivery is made. If the property is not a part of the estate, obviously no lawful order for its delivery to the trustee can be made. If...