Kaye v. Spach
Decision Date | 22 May 1962 |
Docket Number | No. 18994.,18994. |
Citation | 302 F.2d 298 |
Parties | Arnold S. KAYE and Sanford Grossbart, Appellants, v. May SPACH, Trustee, Appellee. |
Court | U.S. Court of Appeals — Fifth Circuit |
Sidney T. Schell, Arnold S. Kaye, Schell, Kaye & Nodvin, Atlanta, Ga., for appellants.
Robert R. Frank, Miami Beach, Fla., Joe W. Gerstein, Atlanta, Ga., Frank & Weston, Miami Beach, Fla., for appellee.
Before TUTTLE, Chief Judge, and CAMERON and BROWN, Circuit Judges.
This is an appeal by Arnold Kaye, a lawyer, and Sanford Grossbart, his client, from an order of the trial court adjudging them in contempt of court by reason of their conduct in proceedings of the bankruptcy of one Robert L. Strauss.
The proceedings during which the attempt citation and conviction issued were ancillary proceedings in the bankruptcy of Strauss which was pending in the Southern District of Florida. They were part of a Section 21, sub. a, 11 U.S.C.A. § 44, sub. a, investigation "concerning the acts, conduct, or property of the bankrupt." May Spach, the Trustee, represented by counsel, sought to examine Grossbart and sought an opportunity to see books belonging to Grossbart and Grossbart Jewelers, a corporation, purportedly in order to ascertain whether there had been any improper transfers of assets from the bankrupt's estate to that of Grossbart or his interests, or whether there had been any preferences or other impermissible relations between the parties. In pursuit of this effort the Trustee caused a subpoena duces tecum to be issued calling on Grossbart to produce the corporate records. Grossbart, through his attorney, moved to quash the subpoena on the ground that they contended the records contained no entries disclosing any transactions with the bankrupt, either directly or indirectly. To counter this motion, the Trustee's counsel produced several witnesses who testified to certain dealings between Grossbart or his jewelry company and the Bankrupt Strauss, or his wife. Included in this evidence was testimony that a corporation, which shared the ownership with Grossbart of Grossbart Jewelers, had acquired its stock in Grossbart Jewelers from Strauss's wife. Included also is testimony that Grossbart had borrowed $7,000 from Mrs. Strauss, which transaction was handled by Strauss, and that the note for this $7,000 was actually delivered by Grossbart to Strauss. Grossbart testified that this note was later exchanged by Mrs. Strauss for stock (apparently 51%) in Grossbart Jewelers, the corporation whose books and records are here in issue. Before bankruptcy she had transferred this stock to another corporation. Furthermore Grossbart testified that a few months before bankruptcy he had borrowed several smaller amounts from Strauss, that certain amounts had been paid to Strauss and he answered in the affirmative when asked whether "the books and records of Grossbart Jewelers reflect when these moneys were repaid." The Referee and the trial court both found that there was ample evidence warranting an order by the Referee directing that Grossbart's books of account be submitted to the Trustee in order for her to have an opportunity to call to the attention of the Referee such matters as might be relevant upon the interrogation of Grossbart in the Section 21, sub. a proceeding.
The Referee entered an order directing Grossbart to submit the books to the Trustee through her counsel for examination. The following colloquy took place:
Thereafter the Referee certified the record to the District Court for a ruling by the court as to whether Grossbart and Kaye should be held in contempt of court. As a preliminary to its decision, the trial court made the following comments:
Other acts of an obstructionist nature were charged by the Referee against Kaye individually, and these were adverted to by the trial court in its determination that Kaye was guilty as charged. Because, however, we find that the flat refusal of the lawyer and the witness to comply with the court's order as to the corporate records, fully justified the trial court's judgment of contempt, we do not consider it necessary to consider these other matters.
Appellants contend here that their conduct in refusing to comply with the Referee's order to make the books available to the Trustee in bankruptcy was fully justified by a recent decision of this Court, Herron v. Blackford, 5 Cir., 264 F.2d 723. In that case there was in dispute the question whether a third party witness in a Section 21, sub. a hearing should be required to submit to the trustee and his counsel copies of corporate minutes consisting only of eighteen pages, wherein it was stated by the objecting party that the minutes were silent as to any transactions with the bankrupt. In deciding that the trial court in that case should have itself examined the eighteen pages of corporate minutes, this Court said:
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