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swered in the affirmative. I am unable to perceive from an examination of the record any cogent reason for passing upon any other question found in the voluminous briefs submitted by counsel.
In re LEVIN.
(District Court, S. D. New York. February, 1904.) 1. BANKRUPTCY-EXAMINATION OF BANKRUPT-PRIVILEGE-CRIMINATING QUES
Where a bankrupt was under indictment at the time he was examined before the referee, and was asked as to the accuracy of a creditor's proof of claim, to identify his signatures to certain notes filed by another creditor, whether he knew a third creditor, and whether he was a salesman in the bankrupt's employ, and to identify his checkbook, after testifying that he could tell whether or not a claim had been paid by reference to his checks, the answers to such questions could not by any possibility incriminate him, and hence he was not entitled to refuse to answer on the
ground that his answers might so tend. In Bankruptcy. On certificate of referee. The following is the opinion of Dexter, Referee:
I, Stanley W. Dexter, one of the referees of said court in bankruptcy, do hereby certify that, in the course of the hearing of said cause before me, the following questions arose, pertinent to the said proceeding, as appears in the copy of the stenographer's record herewith submitted :
(1) The witness declined to answer question as to the accuracy of the proof of claim of the Consolidated Gas Company for $4.30; stating that he declined to answer-adopting the suggestion of his attorney-on the ground that the answer might tend to incriminate or degrade him. His attorney objected on the ground that the bankrupt was under indictment, and is defendant in several criminal proceedings, and that he need not testify in this proceeding, upon the ground that it would tend to incriminate him. I directed the witness to answer, and he refused.
(2) The witness' attention was called to the claim of IIyman Schlesinger for $850, based on promissory notes, and he was asked to look at the notes and state whether or not the signatures to the notes were his signatures. He declined to answer upon the ground that it would tend to degrade or incriminate him. I directed the witness to answer, and he still refused to answer.
(3) The witness was asked to look at the claim of Abram A. Klasky, and was asked whether he knew Klasky, and refused to answer upon the same grounds. He also refused to answer the question whether or not Klasky was a salesman in his employ. I directed him to answer, and he declined upon the same ground.
(4) In the first part of the examination of the witness, the witness was shown proof of claim filed by Stern Bros., of West Twenty-Third street, for $276.61. He examined the claim, and stated that he knew he was indebted to Stern Bros., but could not state the amount. He believed, however, that one bill was paid, but could not tell which bill, except by reference to the checks in his trunk, which was then in the possession of the trustee. Subsequently the checkbook was handed to him, and he was asked to identify the checkbook, and refused to do so, although directed so to do by me.
(5) Before the bankrupt raised any question of privilege, his couns objected to his testifying in the proceeding at all, on the ground that the bankrupt was under indictment, and that any answers given in this proceeding might tend to degrade or incriminate him. The bankrupt adopted the suggestion of his counsel, although he stated that he did not know whether or not it would tend to incriminate him.
(6) The bankrupt was asked the following question: "Q. Mr. Levin, are you prepared to say that the answer to any of the questions that have been asked you will tend to degrade or incriminate you?” and the witness said, “I declipe to answer that." I directed him to answer, and he refused.
And the said questions are certified to the judge for his opinion thereof, with the recommendation that the bankrupt be punished and be committed for contempt of court.
Julius Henry Cohen, for the motion.
HOLT, District Judge. As I understand the rule, if the question is of such a description that the answer may or may not criminate the witness, he can refuse to answer (Judge Marshall's opinion on Burr's trial, 25 Fed. Cas. 39); but if the court is convinced that the answer to the question cannot by any possibility criminate him, and especially if the witness does not swear that he believes that it would, it is the duty of the court to compel him to answer. Otherwise every bankrupt can absolutely refuse to be examined at all. I think that each of the questions put could not by any possibility call for answers which would criminate the bankrupt. Referee's rulings affirmed.
Motion to punish for contempt granted, unless the bankrupt answers the questions before the referee at a meeting to be fixed by the referee.
MCARTHUR BROS. CO., Limited, v. 622,714 FEET OF LUMBER.
MCARTHUR v. 836,693 FEET OF LUMBER.
(District Court, W. D. New York. March 31, 1904.)
Nos. 102, 103. 1. ADMIRALTY-DEMURRAGE-DELAY IN LADING-FAULT.
Libelants of a cargo were not entitled to recover demurrage for delay in loading where the proof showed that whatever delay arose was owing to the failure of the steamer and tow to arrive as scheduled, by reason of which other vessels arrived, and were loaded in turn at the dock, in accord
ance with the customs of the port. 2. SAME-DISCHARGE-REASONABLE DISPATCH-DELAY.
Where, by the exercise of customary diligence and promptitude, a steamer and tow could have been unloaded 242 days earlier than the discharge was effected, the consignee was liable for the delay,
HAZEL, District Judge. The libelants are not entitled to recover demurrage for delay in loading the steamer Tecumseh and barge Marengo at Parry Sound. The proofs show that whatever delay arose at that port was owing to the failure of the steamer and tow to arrive, as scheduled, on November 8, 1901. They arrived two days later. Meanwhile other vessels arrived, and were loaded in turn at the dock
1. See Shipping, vol. 44, Cent. Dig. $8 572, 587.
Demurrage, see notes to Ilarrison v. Smith, 14 C. C. A. 657; Randall v. Sprague, 21 C. C. A. 337; Hagerman y. Norton, 46 C. C. A. 4.
where the Tecumseh and barge were to take cargo. By universal rule, such vessels were entitled to priority in loading. Empire Co. v. Phila. & R. Coal & Iron Co., 77 Fed. 919, 23 C. C. A. 564, 35 L. R. A. 623; Williscroft v. Cargo of Cyrenian (D. C.) 123 Fed. 169. The subsequent loading of libelant's steamer and tow was in the usual order of precedence, and, considering the limited facilities of the port, was accomplished with all reasonable promptitude. The Tecumseh and her tow, the Marengo, arrived at the respondent's dock in Erie Basin at Buffalo, N. Y., the port of discharge, at 9 o'clock in the forenoon of November 26, 1901, and immediately tendered delivery of their cargo of lumber to the claimant, who was the consignee. According to the evidence, a reasonable time, under favorable conditions, in which a steamer and barge could have been unloaded, was three days. Unloading, however, was not begun on the Tecumseh until November 30th, and on the barge not until December 2d. There was some delay on account of the prior arrival of other lumber-carrying vessels, which, as already stated, were entitled to be unloaded in turn ahead of libelant's steamer and tow. Other evidence is found in the record to show that the cargo, in view of the circumstances, was discharged, with reasonable diligence. Consideration of the entire case, however, is certainly persuasive that both ships could have been unloaded with less Jelay. The respondent is chargeable with knowledge of the arrival of the Tecumseh and Marengo, and, although the promptitude with which the vessels were to be unloaded was not expressly stipulated, nevertheless the charterers impliedly agreed to unload the cargo within a reasonable time, and in accordance with custom and usage of the port. Cargo was not discharged until December 6th. As already stated, there was some delay because of unusually congested conditions at Buffalo, owing to the approaching close of the season of navigation. A fair preponderance of the evidence shows that there was an unreasonable delay of 27/2 days through failure of the consignee to provide necessary facilities for a speedier discharge of the cargoes carried by the libelant's vessels. Libelants had the right to expect that cargo would be discharged with reasonable dispatch, and, further, that when unloading commenced the lumber would be moved with customary diligence and promptitude, unless prevented by extraordinary conditions. No such conditions are shown by the proofs as will justify denying to libelants demurrage for delay held to be unreasonable. It appears that the lien for demurrage has not been waived or abandoned. The evidence of Capt. Smith, a disinterested witness for libelants, shows that the earning capacity of the Tecumseh is $61 per day, and that of the Marengo $29 per day.
Some evidence was given by respondents to the effect that the crew of the Marengo was discharged on arrival of the barge at this port. Such evidence has not sufficient weight to negative the testimony of Capt. Smith that, despite the lateness of the season, the barge had an earning capacity in the amount stated.
I therefore decide that libelants are entitled to recover damages as follows: On the libels filed in behalf of the Tecumseh, $152.50; and in the case of the Marengo, $72.50—besides costs in each case.
In re COHEN.
(District Court, D. Massachusetts. February, 1904.) 1. BANKRUPTCY-TRUSTEES-APPOINTMENT BY REFEREE.
Where, at the first meeting of the creditors of a bankrupt, the referee found it impracticable to pass on the validity of the claims there presented, because the validity of a large number of them was attacked by other creditors, and therefore continued the consideration thereof, it being impossible to select a trustee in the ordinary manner, it was proper for the referee to appoint a trustee of his own selection, as authorized by Bankr,
Act July 1, 1898, c. 5+1, $ 44, 30 Stat. 557 [U. S. Comp. St. 1901, p. 3438). 2. SAHE-PETITION FOR REVIEW-EVIDENCE.
Where, on petition by creditors for review of an order appointing a trustee for a bankrupt, the creditors desire a review of the evidence, they should either have the evidence before the referee taken down stenographically, and by him certified to the judge, or should specifically point out to the referee the testimony which they wish summarized, and should ask
him to certify specific findings of fact. 3. SAME-CONTINUANCE.
Where, at the first meeting of creditors of a bankrupt, disputes as to the validity of certain claims arose, the right to continue the hearing of such contests was within the discretion of the referee.
The following is the opinion of Olmstead, Referee:
This was a petition to review the action of the referee in appointing a trustee of said estate. The proceedings were begun by an involuntary petition, and a receiver had been appointed by the honorable judge of the District Court before adjudication under circumstances which had not been, in the opinion of the referee, fully disclosed to the court. Subsequently a petition was filed by certain creditors represented by Mr. Blanchard for the appointment of a coreceiver; alleging grounds which, to the referee, seemed to warrant the immediate appointment of an additional receiver. The facts as developed at the various stages of this proceeding were that the debtor had, prior to the filing of the involuntary petition, absconded, and that soon after meetings of his creditors were held, and a proposition of settlement on the basis of 33 per cent. was made. The liabilities are in the neighborhood of $10,000. The assets of the estate will probably realize about half that sum. The original proposition to pay 33 per cent. was not carried out, and was soon after followed by the involuntary petition. The petitioning creditors were represented by William Charak, Esq., whose brother was an indorser or surety for the debtor in a large sum. Mr. Charak secured the appointment of his brother-in-law, Mr. Reinherz, as receiver. This case is a pretty good illustration of the evil practice, which had become too common, of purchasing the claims of creditors either immediately before or after the filing of bankruptcy petitions. It is the observation of the referee that creditors, upon the announcement of a failure, become panic-stricken, and are often willing to accept sums which may be offered for their claims far below their real value, and this condition of mind is frequently taken advantage of by designing persons. The scheme which seems to have been contemplated by the parties interested in purchasing these claims was to make an offer of 33 per cent., when the estate would probably pay, with careful administration, between 40 and 50 cents on the dollar, and thus secure the purchase of these claims for the benefit and gain of the purchasers. In other words, what was the interested parties' gain became the creditors' loss. The only safe course, under the ample guaranty of the bankrupt law, is for creditors never to sell their claims until after an appraisal has been had by the regular, sworn appraisers of the court. Then the creditors
( 2. Appeal and review in bankruptcy cases, see note to In re Eggert, 43 C. C. A. 9.
know what the true value of the estate is, what they may expect, and what is the true worth of their claims. An appraisal had been made before the adjudication, but by appraisers suggested by the parties interested in the purchase of these claims, and such appraisal may not have afforded the same guaranties of accuracy to the creditors which an appraisal made by entirely disinterested appraisers would have furnished. When the first offer of 33 per cent. either fell through or was withdrawn, an involuntary petition was filed, and the Charaks undertook to purchase the claims of creditors, with a view, as was stated, of having the petition dismissed. The experience of the referee is to the effect that creditors, after the filing of a petition, and especially where a prior offer had been withdrawn, which offer in this case may or may not have been a bogas one, are generally willing to accept the best offer made them under the circumstances. The referee is of the opinion, from the testimony introduced at the first meeting of creditors, that the purpose of Mr. Charak and his brother in purchasing these claims was to protect themselves on the guaranty made to the debtor. In other words, there appears in this case to have been an attempt to manipulate the status of creditors, and to speculate on prospective dividends --a practice which certainly, after the filing of petitions, it seems to the referee, should be discouraged. In view of these facts and other facts set forth in the petition for a co-receiver, the referee was impelled to appoint a co-receiver in order that a thorough investigation might be made. Accordingly he selected A, K. Cohen, Esq., a well-known and reputable attorney, to act with Mr. Reinherz. Mr. Cohen has faithfully discharged his duty, and conferred with the referee in the administration of the estate. At the first meeting of creditors, William Charak, Esq., represented a large number of claims, to which objection was made by Mr. Blanchard, representing another faction of creditors. On the one side were the creditors represented by Mr. Blanchard. On the other were the large number represented by Mr. Charak. Mr. Blanchard called several witnesses to the stand, who testified that claims represented by them had been sold to Mr. Charak. The primary purposr of the choice of a trustee is that the creditors shall have an honest and able representative. After the reference of a bankruptcy petition, the referee is the magistrate administering the "estates in his charge." Bankr. Act July 1, 1898, c. 511, $ 29€, cl. 3, 30 Stat. 55+ (U. S. Comp. St. 1901, p. 3433). Upon him devolves the principal and a heavy responsibility in the administration of estates which are conducted "under the direction of the court.” Bankr. Act, $ 47a (2), 30 Stat. 557 [U. S. Comp. St. 1901, p. 3438]. In the proof and allowance of claims the bankruptcy act also gives the referee a large discretion. Section 570, 30 Stat. 560 [U. S. Comp. St. 1901, p. 3443) provides that upon objection the consideration of claims may be "continued for cause by the court upon its own motion.” In view of the extraordinary facts developed in this case, the referee decided that the only proper course to pursue was to take the administration of this estate into his own hands, and appoint a trustee of his own choosing. He accordingly suspended all the claims presented for the trustee to investigate, and appointed Lee M. Friedman, Esq., a well-known and reputable attorney, as the trustee, who has since qualified. In order that partiality might not seem to be shown towards the creditors represented by Mr. Blanchard, the referee refrained from appointing A. K. (ohen, Esq., as trustee : preferring, under the extraordinary circumstances of this case, to take a third and entirely independent person.
The course pursued by the referee was thus a direct course, but the same result might have been accomplished by another but more indirect course. The referee has sometimes refused to approve, as general order 13 authorizes him to do, the choice of a candidate as not a competent person; and, inasmuch as these claims were represented by Mr. Charak, whose action in purchasing claims, either himself or by his brother, did not meet with the approval of the court, the referee would have been justified in refusing to approve of the candidate voted for by the creditors represented by Mr. Charak; and, inasmuch as there was no hope of Mr. Blanchard's faction and Mr. Charak agree ing on a candidate, the referee, in all probability, would have been called upon, from the failure of the creditors to make a choice in this contingency, to appoint a trustee. It seemed, however, to him more advisable, in view of