Kaufman v. United States

• Decision Date: 17 March 1914
• Docket Number: 184.
• Parties: KAUFMAN v. UNITED STATES.
• Court: U.S. Court of Appeals — Second Circuit

212 F. 613

KAUFMAN v. UNITED STATES.

No. 184.

United States Court of Appeals, Second Circuit.

March 17, 1914

The plaintiff in error, Henry Kaufman, hereinafter referred to as the 'defendant,' was president of the Daisy Shirt Company, a corporation organized under the laws of the state of New York, and was in charge of the company. This company was engaged in the manufacture and sale of shirts and had its principal place of business in the city of New York. On November 5, 1910, an involuntary petition in bankruptcy was filed against the company and it was duly adjudicated a bankrupt. The evidence discloses that between October 24 and November 2, 1910, Kaufman assigned a large portion of the outstanding accounts of the company to the Federal Finance Company for $2,718.15. He assigned other accounts to one Silverstone for $900. He sold to other parties a large quantity of merchandise belonging to the company receiving altogether $12,653.72. A large part of this was paid to him in cash and some of it in checks which he cashed. On or about November 3d, a few days before the company was thrown into bankruptcy, Kaufman left New York for California, stopping at Montreal on his way where he remained a month. He was arrested in California and brought from there to New York to answer an indictment charging him with aiding and abetting a bankrupt corporation to conceal its assets. He never turned over any of the money he had received as hereinbefore set forth. The defendant undertook to account for the money which he had received before leaving for California by claiming that he had paid certain specified amounts to his wife, his sister, his brother, his father, his mother-in-law, and to certain other persons including $495 to his attorney.

The defendant's testimony was that he had invested $16,000 in the business, which was inadequate for the demands made upon it; that it became necessary to borrow money, and the defendant secured a loan of $5,000 from the Madison Trust Company, which he put into the treasury of the corporation that he raised $1,200 on his mother-in-law's jewels which sum was deposited in the bank account of the corporation, as well as $875 on life insurance belonging to her, likewise paid to the corporation; that his sister loaned the company $2,400 in various amounts; that his father paid $2,500 to avoid foreclosure of mortgage assigned to the Franklin Trust Company as security for its loan to the corporation; that he pledged his wife's jewels with the Provident Loan Association for $1,600, which went into the treasury of the corporation; that he borrowed $400 from one Gutkin. He testified that things were going very badly with the corporation and that great pressure was brought to bear on him to pay the debts thus incurred; that he yielded to these demands and paid from the moneys received upon the assignment of the outstanding accounts and sale of merchandise sums aggregating $11,438, part of which went to merchandise creditors also. The other witnesses for the defense corroborated his statements to some extent.

Aaron William Levy, of New York City, for plaintiff in error.

H. Snowden Marshall, U.S. Atty., and Roger B. Wood, Asst. U.S. Atty., both of New York City.

Before LACOMBE, WARD, and ROGERS, Circuit Judges.

ROGERS Circuit Judge (after stating the facts as above).

The plaintiff in error who was the defendant below has been convicted of the crime of having aided and abetted the Daisy Shirt Company in concealing its assets in violation of section 29b of the Bankruptcy Act. He was not charged with having concealed the assets of the company from the trustee in bankruptcy. The indictment charged the Daisy Shirt Company with having concealed its assets from its duly qualified trustee in bankruptcy to an amount exceeding $5,000, and further charged that the defendant 'under the circumstances aforesaid did knowingly and fraudulently cause, procure, aid and abet, the Daisy Shirt Company while the said Daisy Shirt Company was a bankrupt as aforesaid, knowingly and fraudulently to conceal in the manner and form aforesaid, from William P. Myhan, the duly qualified trustee in bankruptcy of the said Daisy Shirt Company, the aforesaid sums of money and the aforesaid property belonging to the estate in bankruptcy of the said Daisy Shirt Company.'

The provision of section 29b of the Bankruptcy Act reads as follows:

'A person shall be punished, by imprisonment for a period not to exceed two years, upon conviction of the offense of having knowingly and fraudulently concealed while a bankrupt, or after his discharge, from his trustee any of the property belonging to his estate in bankruptcy.'

The Criminal Code in section 332 provides that:

'Whoever directly commits any act constituting an offense defined in any law of the United States, or aids, abets, counsels, commands, induces, or procures its commission, is a principal.'

The federal courts have such criminal jurisdiction only as is given by act of Congress. Jones v. United States, 137 U.S. 202-211, 11 Sup.Ct. 80, 34 L.Ed. 691. The defendant was indicted as a principal under section 332 of the Criminal Code, and the case was tried on that theory.

The offense of concealing the assets from the trustee in bankruptcy is a felony as one committing the offense may be punished by imprisonment for more than one year. Section 335 of the Penal Laws, Act March 4, 1909. In the case of felonies the common law recognized the distinction of principals and accessories, a distinction it refused to apply to persons participating in treason and in misdemeanors. In the case of treason and misdemeanors all persons who were guilty at all were punishable as principals and indictable as such. In the case of felonies one who aided and abetted the principal, but was absent when the crime was committed, or who after the crime was committed assisted the perpetrator, was simply an accessory. And according to the common law an accessory could not be tried before the conviction of the principal. But under section 332 of the Criminal Code of the United States all abettors of any crime are made principals. It is not necessary, therefore, that a bankrupt corporation should first be convicted before bringing to trial one charged with aiding and abetting in the concealment of its assets from a trustee in bankruptcy.

It is undoubtedly the case that decisions and dicta can be found denying that a corporation can be indicted. Lord Holt is reported as having said that 'a corporation is not indictable, but the particular members of it are. ' Anonymous, 12 Mod. 559. But it is a well-established principle of modern jurisprudence that an indictment will lie against a corporation, although there are some crimes, as treason, or felony, or breach of the peace, in respect of which it is agreed that an indictment could not be maintained against it, and it has been held that where a statute prescribes fine and imprisonment it is not applicable to a corporation because a corporation cannot be imprisoned. United States v. Braun & Fitts (D.C.) 158 F. 456. But in Cohen v. United States, 157 F. 651, 85 C.C.A. 113 (1907), this court decided that a bankrupt corporation was capable of committing the criminal offense of knowingly or fraudulently concealing its property from its trustee defined and made punishable by the Bankruptcy Act, and that persons who conspire to cause a corporation to commit such an offense are indictable for the conspiracy, and that it is immaterial that the corporation is not or cannot be indicted as one of the conspirators. We know of no reason why we should not adhere to the opinion we then expressed. We are compelled therefore to disregard the defendant's contention that, if the corporation could not be convicted of the offense described in section 29b of the Bankruptcy Act, he could not be convicted of aiding and abetting in the commission of such an offense. There is no distinction in principle between the Cohen Case, supra, and the case at bar. The fact that in the Cohen Case the indictment was for conspiracy under section 5440 of the Revised Statutes, while in this case the indictment is based on a concealment of assets, is a distinction without a difference so far as the principle involved is concerned.

It may be conceded that d...