In re Karp

196 F. 998, 1912 U.S. Dist. LEXIS 1617

• Court: District Court, S.D. New York
• Decided: May 4, 1912
• Status: Published

Opinion

MAYER, District Judge.

The bankrupts herein apply to be purged of contempt of court and for release from jail. They were adjudged guilty of contempt by an order entered December 5, 1911. On or about January 31, 1911, they were arrested under a writ of ne excat. Samuel Karp remained in custody and in jail until the early part of April, 1911, a period of about two months, whereupon he was released on bail. Jacob Karp remained in jail under the writ of ne exeat until July, 1911, a period of about six months, and then was released on bail. Various applications in connection with various proceedings herein have been made to the judges of the court, but only one prior application has been made in respect of the order adjudging these bankrupts guilty of contempt. This application was made before Judge Hand in the latter part of February, 1912, less than three months after the contempt order had been entered.

There are submitted on behalf of the bankrupts various affidavits which were not before Judge Eland, and which account for various sums of money claimed to have been used for the support of the families of the bankrupts and for counsel fees. The affiants state their businesses and addresses, and set forth with particularity the dates and amounts of the moneys advanced as above stated for the benefit of the bankrupts. The condition of the families of these bankrupts, consisting, in each -instance, of a wife and a large number of minor children, is pitiable, and in that regard affidavits are made by the superintendent of a charitable society and the president of a benevolent association. Nothing has been presented to contradict the affidavits as to the condition of these two families, and I presume that, if the conditions were other than set forth, counsel for the trustee would have called the same to my attention in view of the fact that these two men connected with benevolent organizations had given their addresses and could have been readily interviewed. But, in addition to what appears on the face of the papers, I have had an independent investigation made by a responsible official of a responsible philanthropic organization, and he has reported to me that the conditions of these two families are as represented. A copy of his report to me is hereto annexed. The report of the special master, rendered after a thorough and painstaking inquiry, shows that these two bankrupts -were guilty of gross misconduct, and have defrauded the creditors out of assets to the amount of about $14,600. The special master has found that Samuel Karp was initially responsible for the disappearance of $10,200 and Jacob Karp for $4,470 and, believing that they were acting in co-operation, he recommended that an order be made directing both of the bankrupts to turn over the total sum of $14,500 in round numbers. The situation, as thus briefly outlined, is difficult of solution.

The object of these proceedings is to compel the bankrupts to turn over the amount referred to and to uphold the dignity of the court and command obedience to law. If corrupt bankrupts believed that there is any definite period within which they may be released from custody, it may well be that some of them would willingly submit to an order for contempt as a slight penalty for the making away of assets to the detriment of merchants who have extended credit to them. On the other hand, where it appears that bankrupts are not able to respond, there must be some limit to imprisonment, for it certainly was never intended that imprisonment should be perpetual. It is never easy to discover what has become of secreted assets, but it not infrequently happens that such assets are dissipated in the efforts of the corrupt bankrupt to save himself from the penalty of the law, and to support his family obligations during a period when he is unable to get into a new business or employment. In this case the trustee and his counsel have rendered a distinct service by their commendable pursuit of these bankrupts and the bankrupts must realize, to the fullest extent, the serious character of their acts. Samuel Karp has been confined altogether (on the writ of ne exeat and the contempt order) for a period less than his brother, and is entitled to less consideration because of the gravely discreditable story which he told as to the disappearance of the money in his possession.

Under all the circumstances, an order will be made discharging the bankrupts from custody as follows: Jacob Karp on May 7, 1912, and Samuel Karp on June 1, 1912. Settle order on two days’ notice.