Kattelman v. Madden

• Decision Date: 26 March 1937
• Docket Number: No. 10738.,10738.
• Citation: 88 F.2d 858
• Parties: KATTELMAN v. MADDEN.
• Court: U.S. Court of Appeals — Eighth Circuit

88 F.2d 858 (1937)

KATTELMAN v. MADDEN.

No. 10738.

Circuit Court of Appeals, Eighth Circuit.

March 6, 1937.

Rehearing Denied March 26, 1937.

Patrick H. Cullen, of St. Louis, Mo. (Clem F. Storckman, Cullen Coil, W. W. Henderson, and Harry Troll, all of St. Louis, Mo., on the brief), for appellant.

Harry C. Barker, of St. Louis, Mo., for appellee.

Before GARDNER, THOMAS, and FARIS, Circuit Judges.

FARIS, Circuit Judge.

Appellant was heretofore, and on the 16th day of September, 1935, adjudicated by default an involuntary bankrupt upon the petition of three creditors. The petition in involuntary bankruptcy was filed on the 18th day of July, 1935. Pending a hearing thereon and on July 19, 1935, one William S. Madden was appointed receiver of the estate of the alleged bankrupt (see section 11, cl. 3, title 11 U.S.C. A.) to take possession of and hold all assets thereof till a trustee should be elected. This order appointing a temporary receiver is fair upon its face and sets out that such appointment of a receiver is absolutely necessary. Prior to the appointment of such receiver, no notice thereof was given to appellant, but four days after such appointment appellant filed a motion to vacate the order making it, and the record discloses that his motion to vacate was "heard, argued, submitted and overruled." And no appeal was taken by appellant.

Thereafter, and on August 17, 1935, the receiver, appellee herein, filed a petition in the District Court, which inter alia averred that appellant had failed, neglected, and refused to turn over to appellee and had hidden and concealed the assets, books, and papers of the alleged bankrupt, in contempt of the terms of the order appointing appellee as receiver, that the receiver could not certainly and definitely describe the kind and amount of the property and assets withheld, in effect, because appellant had withheld all the books and papers of the estate, but that as of November 15, 1934, appellant had cash and securities of the value of $102,621.23, accounts receivable, $850,631,97, real estate $137,000, and other assets, namely collateral of customers $858,540.17, and praying that an order be entered directed to the defendant, the alleged bankrupt, "requiring him to appear and show cause why he should not be punished as for a contempt of the court, and that on a proper hearing he be punished as for a contempt of the court, its orders and processes in accordance with law."

An order to show cause was thereupon issued, directed to appellant requiring him to appear before the court on September 11, 1935, and show cause why he should not be punished for contempt, for his alleged failure to comply with the order of court made July 19, 1935 (the order appointing appellee as receiver), which ordered and directed appellant to turn over to the receiver, "all of his property, assets and effects, real and personal, and all choses in action, and all books, records, ledgers, papers, documents, correspondence, memoranda, bank statements," and other papers, not relevant or presently involved herein.

Appellant on the return day, to wit, September 11, 1935, filed a formal return to the order to show cause, in which he denied generally every allegation in the petition of the receiver for the order to show cause; averred that the order of July 19, 1935, was not an order adjudicating or determining what property, if any, was in the possession of appellant, and that no order adjudicating such fact has ever been made; that the order of July 19, 1935, is void and not binding on him, because it was made without notice; that said order was made without any issue having been framed before the court, for the purpose of determining what property he had ever had in his possession and what property he was under obligation to turn over.

Upon the issues thus made by the application of the receiver, and the allegation therein that appellant had "hidden and concealed and had failed and omitted" to turn over to the receiver his assets real and personal and his books and papers, and appellant's general denial, and plea to the power and jurisdiction of the court, the matter came on for hearing on the 11th day of September, 1935. Appellant appeared in person and by counsel, and the hearing began and continued for three days. At its conclusion arguments of counsel were heard and briefs were filed, and the court took time to consider. On November 23, 1935, the court made findings of fact, and a conclusion of law. In these findings of fact, the court set out in detail item by item, the property and assets, books and papers, which he found the appellant had hidden and concealed and failed and omitted to turn over to the receiver. Among these items was the sum of $39,205 in cash, two shares of corporate stock, and a Liberty bond, which, with other items set out in detail (in the schedule made a part of the court's order), the court found that appellant "on the 19th day of July, 1935, and thereafter had, and now has in his possession and under his control." (Then followed, as said, a schedule or list in minute detail of such property and cash.)

Bearing upon appellant's recalcitrancy in refusing and failing to turn over his property to the receiver, the court also found:

"That prior to June 29, 1935, the Federal Securities and Exchange Commission examined into the affairs of the alleged bankrupt, which he claims caused him to close his establishment on said June 29th; that when the receiver herein on said July 19th took possession of the alleged bankrupt's offices on the second floor of the office building located at 705 Olive Street, Saint Louis, Missouri, they were stripped of all assets and records, excepting office furniture and equipment, including empty safes and files; that the defendant's safe deposit boxes were also empty and his checking and brokerage accounts had been reduced shortly prior to said June 29th from large to small balances; that at the times of the various hearings herein mentioned the whereabouts of his numerous salesmen were unknown and his other employes were then for several weeks away on vacations; that the receiver directly and through his counsel promptly and frequently demanded of defendant that he turn over all of his assets and records to the receiver and portions thereof were gradually but reluctantly so turned over; that finally, and on or about August 7th, 1935, receiver's counsel by mutual agreement and understanding with defendant, gave defendant until August 12th, 1935, to turn over to the receiver all of the remainder of his assets and records; that the defendant requested such time for further consultations with counsel and on said last mentioned day certain other records were delivered to the receiver, even though theretofore the defendant had asserted to the receiver and his counsel that he had turned over all of his records and assets; that the defendant's counsel on said August 12th advised counsel for the receiver that the said certain other records would be turned over to the receiver, but that no other assets would be turned over, and as to whether all of the records and assets were being or had been turned over he disclaimed any knowledge."

Appellant, as the court found, was at the time of the above hearing under charges for embezzlement and for operating a bucket shop, and so he declined to testify on the ground that his testimony might tend to incriminate him and prove him guilty of numerous offenses against the laws of the United States and of the state of Missouri. It is thus clear that he made no explanation as to what had become of the $39,205 in cash. If such explanation was made or attempted so to be, by any other witness, the record fails to disclose the fact. The evidence given at the above hearing is not in the record, and so the court's finding imports absolute verity. In the hearing in the case at bar, it developed that appellant had at least two witnesses whom he might then have offered, and whom he offered on the hearing herein involved.

As a conclusion, the trial court found and concluded and ordered as follows:

"Wherefore, the Court finds and holds that the said defendant now has in his possession, owns and controls the above described records and assets, and without now determining whether he likewise has additional records and assets that should now be turned over to said receiver herein, the Court hereby orders and directs the said Harold J. Kattelman, defendant herein, to, within five days from the date of the issuance hereof, to deliver and turn over to said W. S. Madden, the receiver herein, the records, assets and cash above specifically set out and described."

Thereafter, and on December 27, 1935, the receiver filed a petition praying that an order be issued and served on appellant requiring him to show cause, on a day to be fixed by the court, why he should not be punished for contempt for refusing to comply with the order of the court of November 23, 1935, last above quoted. The court issued an order directed to appellant to appear and make such showing, on January 3, 1936. Appellant appeared in person and by counsel. Continuances were asked and given till January 15, 1936, pending action by the Supreme Court on a writ of prohibition (Ex parte Kattelman, 56 S.Ct. 378), for which appellant had petitioned. Such latter petition having been denied by the Supreme Court (297 U.S. 692, 56 S.Ct. 384, 80 L. Ed. 985), the matter of committing appellant for contempt was heard on the order to show cause and the petition for commitment for contempt, filed by the receiver, with the result that the court found appellant guilty of contempt, for that he had failed and refused to comply with the order of court of November 23, 1935, and to turn over the cash, assets, property, books, papers, and other things in that order set forth to the receiver. Thereupon, it was ordered that he be committed to jail pending his purging himself of...