United States v. Rhodes

• Decision Date: 13 December 1913
• Docket Number: 4229.
• Citation: 212 F. 513
• Parties: UNITED STATES v. RHODES et al.
• Court: U.S. District Court — Southern District of Alabama

212 F. 513

UNITED STATES v. RHODES et al.

No. 4229.

United States District Court, S.D. Alabama.

December 13, 1913

[Copyrighted Material Omitted]

Jas. B Sloan, U.S. Atty., and Alex. T. Howard, Asst. U.S. Atty., of Mobile, Ala.

C. E Hamilton, of Evergreen, Ala., C. J. Torrey, of Mobile, Ala., and F. W. Hare and Barnett & Bugg, all of Monroeville, Ala., for defendants.

TOULMIN District Judge.

This is an indictment against the three above-named defendants for a conspiracy on their part to commit an offense against the Bankrupt Act, namely, that portion of section 29b, providing punishment upon conviction of the offense of having 'knowingly and fraudulently concealed, while a bankrupt, * * * from his trustee any of the property belonging to his estate in bankruptcy. ' Joseph E. Rhodes and John J. Rhodes were the bankrupts, both individually, and as partners doing business under the name of Rhodes Bros. Calvin J. Rhodes was not a bankrupt; he was an outsider, and had no connection with the business of the bankrupts, so far as appears from the indictment. These three defendants were indicted, under section 37 of the Penal Code (Act March 4, 1909, c. 321, 35 Stat. 1096 (U.S. Comp. St. Supp. 1911, p. 1600); section 5440, Rev. St. (U.S. Comp. St. 1901, p. 3676)), for concealing the assets of Rhodes Bros., who conducted a general mercantile business at Excel, Ala., in anticipation of the bankruptcy of said firm, and of the appointment of a trustee; and the indictment alleges, in substance, that said concealment continued after the adjudication in bankruptcy and after the trustee took charge of the estate. One of the grounds of the demurrers is that the indictment does not allege or show that these three defendants conspired to aid the bankrupts to commit this offense, but charges, in effect, that all three were guilty of a conspiracy to commit the offense, and that Calvin J. Rhodes, not being a bankrupt, could not conspire to commit an offense which, under the bankrupt law, only a bankrupt could be guilty of committing.

A person who conspires with another to commit an offense against the Bankruptcy Act is liable to prosecution. Section 29b of the act provides that a person shall be punished upon conviction of the offense of having knowingly and fraudulently concealed, while a bankrupt, from his trustee any of the property belonging to his estate in bankruptcy. If a bankrupt conceals his property before the appointment of a trustee and continues to conceal it after the appointment, he violates the Bankruptcy Act, and a conspiracy that he shall do so violates the conspiracy statute. Although the bankrupt alone can be indicted for violating the act, persons combining with him to violate it may be guilty of conspiracy. This indictment therefore is not insufficient because it appears that one of the defendants was not the bankrupt.

The indictment charges the removal and concealment of certain property before the bankrupt proceedings were instituted, and the trustee was appointed; but it alleges that the trustee was subsequently appointed, and the property was never turned over to him but was concealed from him. The indictment charges that the property was concealed in anticipation of bankruptcy, and that the concealment was a continuing one after the trustee was appointed. If the bankrupt concealed his property before the appointment of a trustee, and continued to conceal it after the appointment, he violates the Bankruptcy Act, and a conspiracy that he shall do so violates the conspiracy statute.

The Bankruptcy Act does not make any act of the bankrupt before the bankruptcy criminal. But if the bankrupt, before the bankruptcy, has concealed his property, and, after his trustee is appointed, continues to conceal it from his trustee, he is criminally liable under the statute, and, if indicted for such crime, evidence of his acts of concealment before the bankruptcy, as well as those subsequent thereto, would be admissible as part of the res gestae.

The word 'conceal,' when coupled in an indictment with the words 'unlawfully, knowingly, and fraudulently,' clearly excludes unintentional acts. The manner of concealment need not be set out. United States v. Comstock (C.C.) 161 F. 644.

'An indictment under Rev. St. Sec. 5440, for conspiracy to conceal property from the trustee in bankruptcy, in violation of the Bankrupt Act, is insufficient where it does not use the statutory words 'knowingly and fraudulently' in characterizing the offense to which the conspiracy related, or any equivalent words therefor. The words (quoted) are an essential part of the statute and describe an essential ingredient of the offense. ' U.S. v. Comstock et al. (C.C.) 162 F. 415.

The Waldman Case (C.C.) 188 F. 524, is not applicable here, because in that case the defendants were not the bankrupt and had no connection with the bankrupt (a corporation). They might conspire as much as they chose, but there was nothing to indicate that the bankrupt would conceal its property, or that the defendants could compel or induce it to do so. They were outside parties who conspired to have it done. One who is not a bankrupt cannot be guilty of the offense of concealing the bankrupt's property.

'The...