In re Margolies

266 F. 203, 1920 U.S. App. LEXIS 1666
Court of Appeals for the Second Circuit·Decided April 14, 1920·No. No. 179·Published·Cited by 9 cases

Opinion

HOUGH, Circuit Judge

(after stating the facts as above). The order complained of is plainly interlocutory, for the petitioner has as yet been required neither to pay nor perform; the trustee is given leave to prove his case — nothing more. It is also in a sense discretionary, for the court might have considered (as has often occurred in similar cases) that the certain expense of the proposed investigation outweighed probable gain.

[1] We have pointed out that under the statute discretionary orders can be revised only, for abuse of discretion, which is error of law (In re Weidenfeld, 254 Fed. 680, 166 C. C. A. 175) and that while we can review interlocutory proceedings, it is not advisable so to do (In re Strauss, 211 Fed. 123, 127 C. C. A. 521; In re Horowitz, 250 Fed. 106, 162 C. C. A. 278). As, however, this record raises nothing hut [204] a question of jurisdiction, and one of some novelty, we conclude to entertain the petition, as an exception to, and not a relaxation of, the general rule above stated.

[2] Bankrupt’s doctrine is that because, and solely because, he has a discharge, the court is without power (unless and until the discharge is revoked) to compel him by order to surrender concealed property, which, except for the discharge, it would be a contempt for him, after such older, to retain. Sections 2 (7), (13), (15), and 7 (2), of Bankruptcy Act (Comp. St. §§ 9586, 9591), It is not argued that discharge gives complete immunity for undiscovered wrong; it is admitted that plenary suits under sections 67 and 70 (sections 9651, 9654) may still be brought; but it is said that the personal control of court over bankrupt, by which he may be summarily required under pain of contempt to surrender whatever he unlawfully retains from his trustee (In re Schlesinger, 102 Fed. 117, 42 C. C. A. 207), vanished with, and by reason of, discharge.

No such quality is expressly given discharge by the act; but by inference from section 14 (section 9598) it is urged that, since a discharge must be refused if a bankrupt has concealed his property with intent to hinder, etc., or has refused to obey lawful orders of the court, it follows that, when the court discharges, it “certifies” that the applying bankrupt has not- concealed, etc., and has obeyed all lawful orders; wherefore it is a disregard of its own judgment summarily to hale a discharged bankrupt before the court that found so much in his favor.

This view of discharge is merely wrong. In granting discharges the court adjudges or “certifies” nothing further than that affirmative proof has not been given establishing the existence of one or more of the grounds for refusing discharge. The language of section 14 is that the judge “shall * * * discharge the applicant unless” he has done a forbidden thing; and that this language has been construed to mean unless the objecting parties show that he has done the forbidden is too well known to require citation. That discharge is not a certificate of character we have recently pointed out. In re. Hughes, 262 Fed. 500 (opinion Dec. 10, 1919). Indeed the act itself defines “discharge” to mean a “release” from provable debts other than those excepted by the statutes. Section 1, subsec. 12 (Comp. St. § 9585). As has recently been said, a “discharge operates merely to extinguish creditors’ claims.” In re Walsh, 256 Fed. 654, 168 C. C. A. 47.

A stronger argument may be founded on the analogies of the act of 1867 (14 Stat. 517) and the decisions thereunder. It was then held that after discharge a bankrupt could not be compelled to execute a conveyance, necessary to enable his trustee to realize the proceeds of a Stock Exchange seat, and that the court’s power to summon ,a bankrupt for examination concerning property said to have been fraudulently transferred passed away with discharge.1

[205] The differences between the present and former bankruptcy acts are very marked, and most of the cases cited rest upon the language of the twenty-sixth section of the late statute (R. S. §§ 5104 and 5107), providing that the bankrupt must “until his discharge be subject to the order of the court, and shall * * * do * * * all acts required by the court * * * to enable the assignee to demand, recover, and receive all the property and estate assigned, wherever situated.” But especially Woodruff, ]., in Re Dole, supra, fortified decision by considering many other parts of the statute, and came to the conclusion that that personal control over the bankrupt which is the essence of summary jurisdiction terminated with discharge.

In like manner we might be asked to consider section 1 (4), which defines the word “bankrupt” to “include,” not only a person against whom an involuntary petition has been filed, or who has himself filed a petition or been adjudged, but also one against whom is preferred “an application to set a composition aside or to revoke a discharge,” and also section 29b, which makes criminal the concealment of property belonging to the estate on the part of an accused “while a bankrupt or after his discharge”; and the argument might be made that one ceases to be a bankrupt whet) holding an unrevoked discharge, and it is only against him as a bankrupt that summary orders for examination or surrender of property may be entered. Though the argument is not without weight, we conclude that the present statute does not require the construction given that of 1867 in Re Dole. No such proviso as that of Rev. St. § 5104, can be found in the act of 1898, and the argument resting on the references just made to the language of the present statute fails for other reasons.

In Re Harper (D. C.) 175 Fed. 423, it was pointed out that some of the definitions in section 1 of the statute read “shall mean,” while others read “shall include,” and it was held not to have been “intended that definitions of words used in the act reading ‘shall include’ shall exclude other meanings or definitions of the word, or limit the ordinary and wellrunderstood meanings.” 2

Free access — add to your briefcase to read the full text and ask questions with AI

In re Margolies, 266 F. 203, 1920 U.S. App. LEXIS 1666 (2d Cir. 1920).

266 F. 203 (In re Margolies) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

Texas & N. O. R. Co. v. Phillips
211 F.2d 419 (Fifth Circuit, 1954)
Columbia Foundry Co. v. Lochner
179 F.2d 630 (Fourth Circuit, 1950)
In Re Hotel Governor Clinton, Inc.
107 F.2d 398 (Second Circuit, 1939)
In re Brown
87 F.2d 306 (Second Circuit, 1937)
Laugharn v. Chamberlain
34 P.2d 756 (California Court of Appeal, 1934)
In re Lipton
4 F. Supp. 799 (S.D. New York, 1933)
Quinn v. Gardner
32 F.2d 772 (Eighth Circuit, 1929)
In re Havens
272 F. 975 (Second Circuit, 1921)
Levy v. Schorr
266 F. 207 (Third Circuit, 1920)