THE DECISIONS OF THE Supreme Court of the United States AT OCTOBER TERM, 1901. [1] ARTHUR E. MUELLER, Trustee in Bankruptcy of Edward B. Nugent, Bankrupt, Petitioner, v. WILLIAM T. NUGENT. (See S. C. Reporter's ed. 1-18.) Bankruptcy amendment of response to order to show cause-power of referee-validity of order of commitment-imprisonment for debt-jurisdiction of bankruptcy court to compel surrender of property. 1. An application to amend a response to an order to show cause why respondent should not be required to pay over to a trustee in bankruptcy money belonging to the bankrupt's estate, in which he had denied jurisdiction on the ground that he had not received the money after the petition in bankruptcy was filed, by asserting that whatever money belonging to the bankrupt came to his hands was held adversely to the bankrupt, may. In 2. the discretion of the district court, to which the question of the validity of the referee's order directing the payment of such money had been certified at the respondent's request, be denied as too late, where first made after the decision by such court had been announced and a written opinion filed, and judgment was about to be entered. A referee in bankruptcy has power in the imprisonment until he pays over to the trustee in bankruptcy money adjudged to be in his hands belonging to the bankrupt's estate. 5. A bankruptcy court has power by summary proceedings to compel the surrender to the trustee in bankruptcy duly appointed, of property of the bankrupt which has come into the hands of a third party before the filing of the petition in bankruptcy, as the agent of the bankrupt, and to which he asserts no adverse claim. [No. 257.] Argued and Submitted November 13, 1901. WRIT of Certiorari to the United O`States Circuit Court of Appeals for the Sixth Circuit to review a decree which reversed a decree of the District Court for the District of Kentucky directing the impris onment of a person for violation of an or der in bankruptcy proceedings. Reversed. See same case below, 44 C. C. A. 620, 105 Fed. 581. Statement by Mr. Chief Justice Fuller: Edward B. Nugent was adjudicated a bankrupt March 23, 1900, on the petition of the Wayne Knitting Mills and others, his creditors, filed in the district court of the first instance to enter an order to show cause United States for the district of Kentucky, why a person should not be required to pay over to the trustee in bankruptcy money in February 19, 1900, and the matter was re his hands belonging to the bankrupt's estate, ferred to a referee. Arthur E. Mueller was aud, upon the hearing, to enter an order di-appointed trustee of the bankrupt's estate, recting the payment of such money by a cer tain date. 3. An order of commitment of a bankruptcy court, directing that a person be imprisoned urtil he complies with an order made in a proceeding in equity under the bankrupt act, is not invalid because it does not run in the name of the United States. 4. A person is not imprisoned for debt by an order of the bankruptcy court directing his and on the 7th of April he obtained an order 405 ered to said W. T. Nugent as the agent of the bankrupt, and the said amount has not been accounted for to the trustee in bankruptcy herein. with a recommendation that he be committed. On the suggestion that approaching senile imbecility made the bankrupt an unfit subject of punishment, the court discharged him, without prejudice to a renewal "I further certify that on the 19th day of of the matter before the referee if subsequent February, 1900, before the hour of 2 o'clock developments rendered it proper. P. M., being more than three hours before the April 13, 1900, the trustee filed his peti-petition praying for an adjudication of said tion praying that an injunction might be Edward B. Nugent as bankrupt was filed in issued against William T. Nugent, restrain- the clerk's office of said court, the stock of ing him from disposing of the sum of $14,- merchandise belonging to the bankrupt was 435.45, or any part thereof, belonging to the sold to one Hermann Straus for the sum of estate of the bankrupt, and for an order re- $12,000, and on said 19th day of February, quiring him to pay the money to the trustee. 1900, and before the hour of 2 o'clock P. M., This petition stated that William T. Nugent the said $12,000 was paid to said bankrupt was in hiding. The referee granted the in- by said Hermann Straus, in the form of a junction, and entered an order that said check on the German Bank of Louisville, William T. Nugent show cause within five Ky.; that said bankrupt indorsed his name days from service thereof why he should not across the said check and delivered the same be required to pay over. to said W. T. Nugent, his son, as his agent; that said W. T. Nugent received the cash upon said check on that day before the hour of 2 o'clock P. M., and paid therefrom the sum of $1,900 for rental on the building where said stock was located and the expenses of making the sale, leaving the sum of $10,100, which then and there still re mained in the hands of said W. T. Nugent as the agent of said bankrupt. A copy of this order was served on William T. Nugent, October 8, 1900, and on October 13 he appeared in person and by counsel, and filed a response to the rule. In this respondent set forth that "neither the court or the referee in bankruptcy herein has any jurisdiction either of this respondent or the matter involved, to make any order or to require this respondent to answer thereto, because he says that said records herein show "I further find that both of said balances,[4] that if respondent received said money or to wit, $4,133.45 and $10,100, belonged to any part thereof, it was before the petition the said bankrupt, and became and still are in bankruptcy was filed; and in that event the property of Arthur E. Mueller, trustee neither the court or the referee in bank-in bankruptcy in this cause, and that said ruptcy can proceed against this respondent W. T. Nugent holds the same as agent or as herein attempted by order or rule to pay, bailee only, and that he has not accounted and he now hereby asks that this be taken as for any part of said sums." his response herein, and that said order be set aside and vacated. He says that at no time since the filing of the petition in bank-recitals, as follows: ruptcy herein has he received said $14,435.45, or any part thereof." For further response he said that he had been indicted in the district court for receiving said $14,435.45, after the filing of the petition, and with retaining the same, and [3]aiding and abetting in the retention thereof, both after the filing and the adjudication, for the purpose of defeating the bankrupt law, and that he ought not to be required to respond, and his response would tend to incriminate him. The matter came on for hearing October 16, it being stipulated, without prejudice to the objection to the jurisdiction, that the depositions of Edward B. Nugent and others named (not including William T. Nugent), theretofore taken in the cause, might be read. The referee summarized the evidence, as appears from his certificate, thus: "The testimony shows, and I so find, that on the 9th day of February, 1900, the bankrupt, Edward B. Nugent, borrowed from George L. Erbach and Frank Hohmann, executors, the sum of $4,500, and as security therefor executed a mortgage upon the house and lot of land owned by said Edward B. Nugent, in the city of Louisville; that after paying the taxes and expenses of procuring the loan there remained from said sum so borrowed the sum of $4,133.45; that on said day the said balance of $4,133.45 was deliv The referee entered an order on the same day, October 16, 1900, omitting preliminary "And after hearing counsel, now therefore it is ordered and adjudged that the said response to the rule aforesaid be and the same is hereby held insufficient; and it appearing from the evidence in this cause that there came to the hands of W. T. Nugent $4,133.45, being the net proceeds realized from the mortgage executed by the bankrupt upon his house and lot in the city of Louisville, and that there also came to the hands of said W. T. Nugent the further sum of $10,100, being the net proceeds from the sale of the stock of merchandise sold to Hermann Straus,the first of said sums having come to the hands of said W. T. Nugent as the agent of the bankrupt on February 9th, 1900, and the second sum, to wit, $10,100, having come to the hands of the said W. T. Nugent as the agent of the bankrupt on February 19th, 1900, before the hour of 2 o'clock P. M., on said day, and it further appearing that the petition of the Wayne Knitting Mills and others, praying that the said Edward B. Nugent may be adjudged a bankrupt, was filed in the office of the clerk of the above-styled court on February 19th, 1900, at 5 o'clock P. M., and it appearing that said W. T. Nugent has failed to pay over said sums, or any part thereof, to the trustee in bankruptcy herein, and that said sums are the property of the bankrupt, Edward B. Nugent, and belong to said trustee as part of said estate, "It is further ordered that said W. T. Nugent be and he is hereby required to pay to Arthur E. Mueller, trustee in bankruptcy in this cause, on or before 9.30 o'clock A. M., on October 17th, 1900, the said aggregate sum of $14,233.45." Thereupon, October 17, William T. Nu[5]gent filed his petition *that the order of October 16 might be reviewed by the District Judge, and the referee made his certificate of the proceedings and the foregoing summary of the evidence, the depositions put in before him being returned therewith, concluding: "And the said question, to wit, the validity of the said order of October 16th, 1900, above set forth in full, is certified to the judge for his opinion thereon." The referee also reported that William T. Nugent had failed to comply with the order in whole or in part; that he was in contempt of court; and recommended "that he be punished for contempt, and committed to prison until he shall have paid to the said trustee the said sum of $14,233.45." money was potentially in the custody of the law in these proceedings, and subject to the orders of the court. The rule and its serv. ice constituted sufficient notice and demand. The order made was that the respondent should pay the money to the proper officer. Disobedience of that order is made punishable as a contempt by the express provisions of the act. "The court therefore has jurisdiction of the person and of the subject-matter. The rulings of the referee appear to be right, and are approved and confirmed, and his recommendation as to punishing the respondent for the contempt adjudged will be acted upon with appropriate vigor. "The judgment of the court, in the exercise of its statutory discretion, will be that the respondent, W. T. Nugent, for his contempt aforesaid, be imprisoned in the county jail until he shall deliver to Arthur E. Mueller, the trustee, said sum of $14,233.45; and the court will reserve the right to suspend or set aside this judgment and sentence upon the delivery and payment of the money as ordered." 104 Fed. 530. On the 3d of November the respondent Nugent asked leave to file an amended response, The record of the district court shows that stating that he had not made full response on the 1st day of November the cause came as to the entire facts because the referee had on to be heard on the petition of William T. held he could not be examined as to transac Nugent for a review of the order of court tions involved in the indictment, and denyentered by the referee requiring said Nugent ing that the $14,233.45, or any part thereof, to pay over, and the certification of the ref- was now in his possession or under his coneree, and his recommendation that said Nu-trol, or was on October 8, 1900; and saying gent be punished for contempt, and that the court, being fully advised, delivered a written opinion, which was ordered filed, whereupon William T. Nugent moved the court to postpone the entry of judgment until November 3, and it was so ordered. The district judge stated the facts at length; pointed out that the response was put upon two grounds; namely, that the court and referee were without jurisdiction, and that respondent had been indicted; held that as to the indictment it was not an indictment for disobedience to the order, but under § 29 of the bankrupt act; that exculpation could not criminate; that he could have denied receiving or concealing the money, or paid it into court, but he had done neither; that he had the money, and that it belonged to the estate; that the response really rested on the denial of jurisdiction; and that the referee had the power to order the money to be surrendered. The matter was summed up in these words: "The respondent has the money in his hands as agent or bailee only. His possession is that of his principal. His principal was his father up to a certain stage of these proceedings, but whether up to the filing of the petition or up to the adjudication we need not stop to inquire, as it is immaterial [6]in this case. At one or the other of those times his principal, by operation of law, was changed, and an officer of this court was substituted for his father. That change in no way lessened the duty of paying the money to the proper principal upon notice and demand. After the change, however, the "that neither at the time of the filing of the petition in bankruptcy herein against E. B. Nugent, or at any time subsequent thereto, did he have in his hands any amount of money belonging to said Nugent which he held as his agent or bailee. He says that whatever money came to his hands on February 19, 1900, belonging to said E. B. Nugent, or any such money at any subsequent date thereto, was not received or held by this respondent as agent or bailee, or in any trust capacity whatever, but was held ad-[7] versely to said E. B. Nugent." The district court would not permit the proposed amendment to be filed, and entered this order: "Came William T. Nugent, respondent herein, and tendered an amended response, and moved to file same, and the court, not having postponed the imposing of the sentence for that purpose, and being of opinion that it is not discreet or admissible practice to permit amendments upon hearings such as this, especially after the delivery of an opinion of the court, declines at this stage of the proceedings to permit a further response to be filed. "And thereupon, pursuant to the opinion of the court, filed herein on the 1st instant, it is the judgment of the court that William T. Nugent, for his contempt aforesaid, be imprisoned and confined in the county jail of Jefferson county, Kentucky, until he shall deliver or pay to Arthur E. Mueller, the trustee herein, said sum of $14,233.45, or otherwise satisfy the said trustee with respect thereto; and the court reserves the right and power to suspend or set aside the judgment and sentence upon the delivery, payment, or satisfaction aforesaid." Thereafter William T. Nugent filed a petition for review under subdivision b, § 24, of the act, in the circuit court of appeals, praying "that the orders, judgments, and sentence of the district court be reviewed and revised in the matters of law, so as to adjudge that your petitioner be released and discharged," or "that he be permitted to further respond in said matter." constitute the record on which the case is to be reviewed. Cunningham v. German Ins. Bank, 43 C. C. A. 377, 103 Fed. 932; Courier-Journal Job Printing Co. v. Schaefer-Meyer Brewing Co. 41 C. C. A. 614, 101 Fed. 699. The exercise of the court's discretion in refusing to receive an amended response to an order to show cause, after the case has been heard and determined and a written opinion delivered, will not be disturbed on appeal or review. McCloskey v. Barr, 38 Fed. 165. The filing of a petition in involuntary bankruptcy is a caveat to all the world, as well as to the respondent. This petition alleged error in that the dis- Neale v. Neale, 9 Wall. 1, 19 L. ed. 590. trict court held that the referee and the Even if the filing of an amended response court had jurisdiction to proceed against was allowable, before the judge, at that stage petitioner in a summary way; that the of the proceedings, a conclusion of law court had jurisdiction on the proceedings would not be accepted. Facts on which to and recommendations of the referee to pun-base intelligent action should be stated. ish petitioner for contempt; that the referee had power to grant the injunction against petitioner, or to proceed on rule to show cause; that the response was insufficient; that the facts were that the money belonged to the bankrupt's estate, and was held by petitioner as the bankrupt's agent, and was not claimed adversely; that the amended [8] response should not be filed; that the petitioner was properly before the court; and that the contempt proceedings should not be dismissed and petitioner discharged. The amended response was attached as an exhibit to this petition, although it had not been filed in the district court, or made part of the record there by certificate of exceptions or order of identification; and the petition also set up several matters and exhibits which apparently were not before the referee or the district court in the proceeding. The trustee moved to expunge these various matters and exhibits. To expedite the hearing this motion was reserved, and it was stipulated that "such affirmative allegations of said petition for review as properly should be denied be treated as controverted of record without prejudice to the hearing of said motion." The circuit court of appeals, December 13, 1900, filed a memorandum opinion, and entered judgment reversing the decree of the district court, with directions to that court to vacate the order of the referee on respondent to show cause and his order adjudging respondent to be in contempt thereof, and that respondent be discharged from imprisonment. An extended opinion was subsequently filed. 44 C. C. A. 620, 105 Fed. 581. The writ of certiorari was then granted by this court. 180 U. S. 640, 45 L. ed. 711, 21 Sup. Ct. Rep. 927. Mr. William W. Watts argued the cause, and, with Mr. John Richard Watts, filed a brief for petitioner: The referee's office is "a first court in bankruptcy." White v. Schloerb, 178 U. S. 542, 44 L ed. 1183, 20 Sup. Ct. Rep. 1007; Pirie v. Chicago Title & T. Co. 182 U. S. 438, 45 L. ed. 1171, 21 Sup. Ct. Rep. 906. The referee's certificate of the question which was presented, the summary of the evidence, and his findings and order thereon, 408 International Bank v. Sherman, 101 U. S. 406, 25 L. ed. 867. One whose agency to the bankrupt is established will be summarily ordered by the court to turn over property coming to his possession before the filing of the petition, without beneficial claim in him. Bryan v. Bernheimer, 181 U. S. 188, 45 L. ed. 814, 21 Sup. Ct. Rep. 557. A court in bankruptcy, upon adjudication, coming into control of the res, has the power to inquire by rule, of one alleged to be an agent, why he shall not deliver over to the trustee in bankruptcy the property in the hands of such agent. Re Moore, 104 Fed. 869; Re Francis-Valentine Co. 36 C. C. A. 499, 94 Fed. 793; Re Brooks, 91 Fed. 508; Re Stokes, 106 Fed. 312; Re Rosser, 41 C. C. A. 497, 101 Fed. 562. If the law allows to receivers summary the debtor's property, it also allows the same process against third persons with respect to process to trustees in bankruptcy. 67, 15 Sup. Ct. Rep. 1018. White v. Ewing, 159 U. S. 38, 40 L. ed. And the law does allow this fiduciary the summary process invoked in this case. High, Receivers, 2d ed. § 144; Re Cohen, 5 Cal. 494; Geisse v. Beall, 5 Wis. 224; Green v. Green, 2 Sim. 430; Miller v. Jones, 39 Ill. 54; Smith, Receiverships, pp. 64, 122; Ryan v. Kingsbery, 88 Ga. 361, 14 S. E. 598; American Constr. Co. v. Jacksonville, T. & K. W. R. Co. 52 Fed. 937; Brandt v. Allen, 76 Iowa, 50, 1 L. R. A. 653, 40 N. W. 82; Griffith v. Griffith, 2 Ves. Sr. 400; People v. Rogers, 2 Paige, 103; Miles v. New South Bldg. & L. Asso. 95 Fed. 919; Beach, Receiv ers, 209; Bibber-White Co. v. White River Valley Electric R. Co. 107 Fed. 177; Re Tyler, 149 U. S. 164, 37 L. ed. 689, 13 Sup. Ct. Rep. 785. Two essential facts limit the power of the court in bankruptcy to order the bankrupt and all other persons to deliver over the money or property of the bankrupt. They are that the money or property directed to be delivered to the trustee or other officer of the court is a part of the bankrupt es tate, and that the bankrupt or person ordered | Phelps, and Fred Forcht, Jr., filed a brief for to deliver it has it in his possession or under respondent on motion for certiorari. his control at the time that the order of delivery is made. Re Rosser, 41 C. C. A. 497, 101 Fed. 562. See also Pirie v. Chicago Title & T. Co. 182 U. S. 438, 45 L. ed. 1171, 21 Sup. Ct. Rep. 906; Wasson v. Hawkins, 59 Fed. 233. There being no attachment in this case for the taking of the body of the respondent, and no necessity for one, the writ need not run in the name of the government. *Mr. Chief Justice Fuller delivered the[8] opinion of the court: General order in bankruptcy XXVII. (172 U. S. 662, 43 L. ed. 1193, 18 Sup. Ct. Rep. viii.) provides: "When a bankrupt, creditor, trustee, or other person shall desire a review by the judge of any order made by the referee, he shall file with the referee his petition therefor, setting out the error complained of; and the referee shall forthwith re-certify to the judge the question presented, [9] a summary of the evidence relating thereto, and the finding and order of the referee thereon." Foster, Fed. Pr. 2d ed. pp. 654–656. This is not a habeas corpus case, but a view of orders made in a civil suit in equity under the provisions of the bankruptcy act. Goldman v. Smith, 93 Fed. 182. Mr. W. M. Smith submitted the cause for respondent. Mr. Fred Forcht, Jr., was with him on the brief. Fraudulent transfers which have been consummated cannot be reached by this summary proceeding. Re Mayer, 98 Fed. 840. It may be true that if the money is under the control of the bankrupt, in the hands of a third party, he may be ordered to pay, and in case of refusal can be punished for contempt, as the money is under his control; but the transferee, obtaining possession before bankrupt proceedings, cannot be held for contempt. Re Rosser, 41 C. C. A. 497, 101 Fed. 562; Bardes v. First Nat. Bank, 178 U. S. 524, 44 L. ed. 1175, 20 Sup. Ct. Rep. 1000; Wall v. Cox, 181 U. S. 244, 45 L. ed. 845, 21 Sup. Ct. Rep. 642. The ascertainment, as between the trustee in bankruptcy and a stranger to the bankruptcy proceedings, of the question whether certain property claimed by the trustee does or does not form part of the estate to be administered in bankruptcy, shall not be brought within the jurisdiction of the national courts solely because the rights of the bankrupt and of his creditors have been transferred to the trustee in bankruptcy. Bardes v. First Nat. Bank, 178 U. S. 524, 44 L. ed. 1175, 20 Sup. Ct. Rep. 1000. These contempt proceedings are of a crimimal nature, and the same rules must govern as in the trial of indictments. See Accumulator Co. v. Consolidated Electric Storage Co. 53 Fed. 793; Kirk v. Milwaukee Dust Collector Mfg. Co. 26 Fed. 501; New Orleans v. New York Mail S. S. Co. 20 Wall. 387, 22 L. ed. 354; Re Ellerbe, 13 Fed. 532. In civil matters, a party always has the right to plead over after action upon a plea in abatement or bar, and certainly this is the rule in criminal matters. Respondent accordingly filed his petition for a review of the order of October 16. The referee thereupon certified to the judge the question presented, a summary of the evidence relating thereto, and the finding and order of the referee thereon. He pursued in so doing form No. 56 of the forms in bankruptcy. 172 U. S. 718, 43 L. ed. 1226, 18 Sup. Ct. Rep. xlv. The question certified was "the validity of the said order of October 16th, 1900, above set forth in full." At the same time the referee reported the disobedience of William T. Nugent, and recommended that he be committed. No exception was taken before the referee or the district court to the sufficiency of the trustee's application, or to the adequacy of the certificate, and the entire evidence was transmitted. Subdivision b of § 24 provides: “The several circuit courts of appeals shall have jurisdiction in equity, either interlocutory or final, to superintend and revise in matter of law the proceedings of the several inferior courts of bankruptcy within their jurisdiction." [30 Stat. at L. 553, chap. 541.] The district court affirmed the order of October 16, and ordered respondent to be committed for his failure to comply therewith, court of appeals his petition for review. and thereupon respondent filed in the circuit The matters of law to be passed on by that tober 16, as affirmed by the district court, court were the validity of the order of Ocand the correctness of the order of commitment. And these were to be determined on the record of the district court. The circuit court of appeals had in prior cases recognized the general proposition that those courts are confined on petitions for review to matters of law arising on the record of the courts below, and may well have assumed that there was no necessity for a specific ruling on the motion to ex1 Bishop, New Crim. Proc. § 755. punge the new matter accompanying the peThe order and sentence thereunder are er-tition in this instance. Cunningham v. Gerroneous and void, because they do not run in the name of the government. man Ins. Bank, 43 C. C. A. 377, 103 Fed. 932; Courier-Journal Job-Printing Co. v. United States v. Wayne, Wall. Sr. 134, Schaefer-Meyer Brewing Co. 41 C. C. A. 614, Fed. Cas. No. 16,654; Folger v. Hoogland, 5 101 Fed. 699. The record of the district Johns. 235. See also Re Bronson, 12 Johns. court in respect of the order of October 16[10] 460; Worden v. Searls, 121 U. S. 27, 30 L. was the record made before the referee, who ed. 858, 7 Sup. Ct. Rep. 814. had certified the question of the validity of Messrs. H. M. Lane, W. M. Smith, Zach the order at the request of respondent, and |