Noell v. United States, 11989.

• Decision Date: 10 August 1950
• Docket Number: No. 11989.,11989.
• Citation: 183 F.2d 334
• Parties: NOELL et al. v. UNITED STATES.
• Court: U.S. Court of Appeals — Ninth Circuit

183 F.2d 334 (1950)

NOELL et al. v. UNITED STATES.

No. 11989.

United States Court of Appeals Ninth Circuit.

June 29, 1950.

Rehearing Denied August 10, 1950.

A. Brigham Rose, Los Angeles, Cal., for appellant.

Ernest A. Tolin, U. S. Atty., Norman W. Neukom and William L. Baugh, Asst. U. S. Attys., all of Los Angeles, Cal., for appellee.

Before BONE and POPE, Circuit Judges, and BLACK, District Judge.

BLACK, District Judge.

The appellants, husband and wife, were convicted after a lengthy jury trial of knowingly and fraudulently concealing assets in bankruptcy and making false oaths in connection therewith. They were tried under a three-count indictment charging violations of 11 U.S.C.A. § 52, sub. b(1, 2). Such sections of the Code have since been replaced by new Title 18 U.S.C.A. § 152, Crimes and Criminal Procedure. Their motion for new trial was denied and judgment and sentences were entered upon the verdicts of the jury.

In the first count defendants were charged jointly with knowingly and fraudulently concealing $25,000 and an automobile from Crules R. Cheek, first as receiver and then shortly thereafter as trustee. In count two Amelia E. Noell was charged with having made a false oath in her bankruptcy schedules concerning such automobile. Count three charged James A. Noell with having testified falsely before the Referee as to such automobile. Both defendants were convicted as to count one, she as to count two, he as to count three.

They have appealed jointly to this court.

It seems that the contentions of appellants are chiefly these: First, there was insufficient evidence to support the verdict as to any of the three counts. Second, and apparently the main contention of appellants, that in any event there was insufficient evidence to support that portion of count one which charged concealment of $25,000 in cash. Third, that the exhibits were withheld from the jury. And fourth that charts setting forth a summary by an examining accountant of appellants' books and papers of account and accounting records should not have been admitted in evidence.

As to such contention of insufficiency of the evidence to support the three counts, or any of them, suffice it to say that this court has examined the record and finds that there unquestionably was sufficient evidence presented to authorize the jury to pass upon the guilt or innocence of each defendant as to each count and to sustain the verdict as to each. And in view of all the circumstances disclosed by the evidence we have no good reason to and do not doubt the correctness of the jury's conclusions.

From the verdicts it is clear that the jury accepted as true the testimony of two witnesses whom appellants insist were unworthy of belief. But the jury had a right to believe them. We must and do test the sufficiency of the proof upon the basis of what the jury had the right to believe, and not upon what the defendants claim the jury should have believed. See Todorow v. United States, 8 Cir., 173 F.2d 439.

The second contention, in substance, is that even if the evidence is held to support the charge as to the automobile that in any event there was no substantial evidence to sustain that portion of count one that alleged that cash was concealed. Such apparently is based upon the argument that unexplained cash withdrawals by appellants of over $25,000 from their banking accounts in installments beginning less than two months and continuing to two days before they filed their voluntary petitions in bankruptcy, did not constitute any evidence or justify any presumption that they had any of such in their possession when the receiver was appointed, which was within a day of the filing of their petitions, or when the trustee was appointed, which was about ten days later.

Appellants rely on this point chiefly upon Maggio v. Zeitz, 333 U.S. 56, 68 S.Ct. 401, 92 L.Ed. 476; Hersh v. United States, 9 Cir., 68 F.2d 799, 804; Reiner v. United States, 9 Cir., 92 F.2d 823, 824-825. They have completely misinterpreted the holdings and effect of such decisions and have wholly disregarded the short lapse of time involved here as contrasted with the substantial periods in such relied-upon decisions.

In Maggio v. Zeitz the Supreme Court points out that the punishment for contempt for failure to comply with a turnover order cannot be substituted for criminal prosecution for previous concealment of assets from the trustee. Its holding that Maggio could not be held for contempt was substantially based upon the determination of the Court of Appeals, In re Luma Camara Service, Inc., 2 Cir., 157 F.2d 951, 955, that "we know that Maggio cannot comply with the order, * * * which first direct Maggio `to do an impossibility, and then punish him for refusal to perform it.'"

In that Maggio contempt proceeding it appeared that the unexplained shortage of merchandise had occurred in November and December, 1941 and that on April 23, 1942 an adjudication of bankruptcy occurred, which was the approximate time of any fraudulent concealment of same from the trustee. But Maggio was not proceeded against criminally for concealing such from the trustee at the time of his appointment or at all. Instead, in April, 1943 or almost eighteen months after the alleged disappearance of the goods, turnover proceedings were instituted. In 1945, or almost four years after the shortage, Maggio was held by the District Court to be in contempt for having failed to comply with such turnover proceedings in 1943. The Supreme Court said:

"Courts of bankruptcy have no authority to compensate for any neglect or lack of zeal in applying these prescribed criminal sanctions * * *.

"Unfortunately, criminal prosecutions do not recover concealed treasure. * * *

"the turnover order has been sustained as an appropriate and necessary step in enforcing the Bankruptcy Act. * * *

"But this procedure is one primarily to get at property rather than to get at a debtor. * * *

"it is appropriate only when the evidence satisfactorily establishes the existence of the property or its proceeds, and possession thereof by the defendant at the time of the proceeding." 333 U.S. 56, 68 S.Ct. 404.

The Supreme Court made it clear that by the time of the turnover order in 1943 or the contempt order in 1945 that the evidence did not satisfactorily establish possession at such late dates by the defendant even though he might have had same in 1941. On this point the Supreme Court said: "Of course, the fact that a man at one time had a given item of property is a circumstance to be weighed in determining whether he may properly be found to have it at a later date. But the inference from yesterday's possession is one thing, that permissible from possession twenty months ago quite another. * * * Such an inference is one thing when applied to a thrifty person who withdraws his savings account after being involved in an accident, * * * it is very different when applied to a stock of wares being sold by a fast-living adventurer * * *."

There is nothing in that decision that even suggests that the Supreme Court would not hold one criminally liable if he had been indicted for and convicted of having concealed the merchandise from a receiver if the time lag as to concealment had been such as is here presented.

The decision of this Court of Appeals in Hersh v. United States, 9 Cir., 68 F.2d 799, 803, is clearly distinguishable. In the Hersh case the decision hinged upon the unusual and complicated factual situation which the court discussed in considerable detail. The bankrupt in that case in July filed a voluntary petition pursuant to a prior understanding with the creditors' committee and the trustee was not appointed until October. The principal checking accounts involved were shown to have existed in July. However, the court held that under the particular circumstances and especially by reason of the understanding with the creditors' committee as to a proposed settlement that there was no concealment and that defendant "was entitled to conduct his business and to utilize his funds therein in paying the expenses of the conduct of such business until such time as a custodian, receiver, or trustee was appointed to take possession of the property * * *."

In such connection the court did say: "The burden of proof was upon the government to show the concealment of the funds alleged in the indictment. In view of the fact that the concealment relied upon consisted in the transfer of monies to Klein and Auerbach several months before the trustee qualified, it was essential to show that this concealment continued down to the time the trustee was appointed and thereafter, with intent to deprive the trustee and the creditors of the aforementioned sum. As we have pointed out, the original concealment involved in the transfer of the money to Klein and Auerbach was accompanied by a disclosure to most if not all the creditors. Our attention is not called to any creditor who was not present or represented at the meetings where the setting up of these special deposits was arranged for. Under such circumstances there was no such concealment from the trustee as constitutes a crime under the Bankruptcy Act (11 U.S.C.A.) at the time of the transfer." 68 F.2d page 804.

Even then in reversing the conviction because of numerous errors in instructions the court in the Hersh case authorized a...