In re Strobel

• Decision Date: 16 June 1908
• Citation: 163 F. 380
• Parties: In re STROBEL.
• Court: U.S. District Court — Eastern District of New York

163 F. 380

In re STROBEL.

United States District Court, E.D. New York.

June 16, 1908

Benjamin F. Edsall (Albert C. Aubery, of counsel), for trustee.

Frank Trenholm (A. J. Dittenhoefer, of counsel), for petitioner.

CHATFIELD District Judge.

The present motion is an application to punish one Abraham M Bachrach for contempt, because of his failure to turn over the sum of $3,015.76, with interest, to the trustee in bankruptcy of one Leonard J. Strobel, individually and as surviving partner of the firm of Hines & Strobel.

A recital of the steps in this proceeding is necessary at the outset: The firm of Hines & Strobel was engaged in the manufacture of watch cases. By an arrangement with Mr Bachrach, a contract was entered into, in August, 1904, under which Bachrach furnished gold, and Hines & Strobel were to manufacture watch cases for him, being compensated for the work which they did, and being obligated to return the gold either in the form of watch cases or currency. It is now contended by Mr. Bachrach that this contract made the firm of Hines & Strobel bailees as to the gold furnished them. Subsequently, it appeared that the firm of Hines & Strobel had not turned over all of the gold furnished by Mr Bachrach, or had manufactured some of the surplus metal and sold the watch cases made therefrom, and they were therefore indebted to Mr. Bachrach for the amounts so used. And a further arrangement was made under which Hines & Strobel were to give a chattel mortgage, on machinery and fixtures, for the amount of this indebtedness, and the arrangement between Bachrach and the firm as to the manufacture of watch cases was to go on. Nothing further happened until the summer of 1905, when certain creditors obtained judgments and made levies upon the property of the firm of Hines & Strobel. Mr. Bachrach then found that his chattel mortgage had been filed in the county of New York, instead of in Brooklyn, where the mortgagors resided, and, after consultation with his attorneys, it was decided to file a petition in bankruptcy. Such petition was prepared and verified by Mr. Bachrach, and contains an allegation that the firm of Hines & Strobel is indebted to the said Bachrach in the sum of $3,500. This petition was filed upon the 17th day of August, 1905, a receiver appointed, and the property at the plant of the bankrupt firm turned over by the receiver to Mr. Bachrach. Upon an application for confirmation of the delivery of this property by the receiver, Mr. Bachrach gave a bond, and the matter was referred to a special commissioner, who decided that the property should be returned to the trustee. This report was confirmed by an order made August 2, 1906. Mr. Bachrach then made an application to resettle and amend this order, and for such further relief as might be proper, and this motion was in turn denied, upon the 19th day of November, 1906, and a reference ordered to ascertain the value of the property declared to have been wrongfully withheld from the trustee; the receiver's accounting being stayed pending the conclusion of the matter.

Upon this reference the special commissioner determined the value of the property to be $3,015.76, and his report was confirmed by an order of this court upon the 12th day of August, 1907. An appeal was then taken to the Circuit Court of Appeals, and Mr. Bachrach gave a further bond, pending the appeal, to cover the sum of $3,015.76, with interest and costs of the appeal. Upon this appeal a decision has been rendered affirming the order both with respect to the value of the property as found by the commissioner, and with respect to the question of wrongful taking from the receiver by Mr. Bachrach. An order having been entered upon the mandate from the Circuit Court of Appeals, the trustee has applied for and obtained the order to show cause now under consideration.

It is alleged, in the affidavits submitted by Mr. Bachrach in opposition to this application, that he has never knowingly taken the position of creditor to the firm of Hines & Strobel. On the contrary, Mr. Bachrach swears: That he supposed he was the owner of all the gold and had a chattel mortgage upon tools and machinery in the premises, but that, prior to the time of filing the petition in bankruptcy, he found that his attorneys had by mistake filed the chattel mortgage in the wrong county, and that his lien thereby was lost; that his attorneys, upon investigation, advised him to file a petition in bankruptcy and to buy in the property in bankruptcy; and that he verified the petition under their instructions without reading the same. This petition, as has been said, contains a categorical statement that Bachrach is a creditor of Hines & Strobel.

The allegation of the petition is in the following language:

'The claim of your petitioner, Abraham M. Bachrach, is as follows: Goods, wares, and merchandise sold and delivered, and materials furnished, and moneys advanced by Abraham M. Bachrach, to the alleged bankrupt above named, on or about and between the 26th day of August, 1904, and the 15th day of August, 1905, both days inclusive, amounting to the sum of $3,500.'

The verification is in the usual form required by the laws of the state of...