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January 5, 1914



White, McKenna, Holmes, Day, Lurton, Hughes, Van Devanter, Lamar, Pitney

Author: Day

[ 231 U.S. Page 714]

 MR. JUSTICE DAY delivered the opinion of the court.

This is a writ of certiorari to the Circuit Court of Appeals for the Second Circuit. The case concerns a prosecution

[ 231 U.S. Page 715]

     commenced in the Circuit Court of the United States for the Southern District of New York by the finding of two indictments against the petitioner herein charging perjury in a bankruptcy proceeding. Upon trial the defendant, Cameron, was convicted and sentenced and upon writ of error the judgment of the Circuit Court was affirmed by the Circuit Court of Appeals. 192 Fed. Rep. 548.

The first indictment, after setting forth the proceedings in bankruptcy against the Knickerbocker Piano Company, of which the defendant was president and treasurer, alleged that he, upon inquiry under oath before a special examiner and commissioner, appointed under § 21a of the Bankruptcy Act, prior to adjudication, testified:

"First. That he, the said Albert B. Cameron, the aforesaid witness, shortly prior to the filing of the aforesaid petition in bankruptcy, against the said Knickerbocker Piano Company, had sold a number of pianos to William C. Smith, the petitioner in bankruptcy aforesaid.

"Second. That he, the said Albert B. Cameron, the witness aforesaid, had a conversation with the said William C. Smith, concerning the sale to him of pianos by him, the said Albert B. Cameron.

"Third. That he, the said Albert B. Cameron, the aforesaid witness, had sold to the said William C. Smith, eight pianos for the sum of six hundred and sixty-eight dollars."

And it alleged that the defendant thereby committed perjury.

By the second indictment the defendant is said to have committed perjury in a proceeding before the referee in testifying:

"First. That he, the said Albert B. Cameron, had not been able to obtain the address of the said William C. Smith and had never known the said address.

"Second. That he, the said Albert B. Cameron, had

[ 231 U.S. Page 716]

     had a conversation or conversations with the said William C. Smith in regard to his, the said William C. Smith's buying pianos of and from the said alleged bankrupt."

The two indictments were consolidated and, the defendant pleading not guilty, trial was had and a verdict of guilty returned upon which judgment was rendered.

The petitioner contends that Bankruptcy Act does not authorize the proceeding before the commissioner prior to the adjudication. The record discloses that a receiver had been duly appointed of the assets and effects of the bankrupt and that he had applied to the court under § 21a of the Bankruptcy Act of 1898 for an order requiring the bankrupt, its officers and directors, to appear before a special examiner and commissioner to be examined concerning the property of the bankrupt and the acts and conduct of its officials. The court made the order requested and appointed the special examiner and commissioner, before whom Cameron appeared and testified, giving, in the course of his examination, the testimony charged in the first indictment to be false. This proceeding was prior to the adjudication in bankruptcy, which followed a few days later. Whether the examination of Cameron upon oath at that stage of the proceedings was authorized by the Bankruptcy Act depends upon a construction of clause a, § 21, of the act, which provides, in part, as follows:

"A court of bankruptcy may, upon application of any officer, bankrupt, or creditor, by order require any designated person, including the bankrupt and his wife, to appear in court or before a referee or the judge of any state court, to be examined concerning the acts, conduct, or property of a bankrupt whose estate is in process of administration under this act."

The controversy is over the meaning of the phrase, "a bankrupt whose estate is in process of administration under this act." The construction of this provision differs

[ 231 U.S. Page 717]

     in the Federal courts, some of them having held that there can be no such examination until after adjudication, as it is only then that the bankrupt can be subjected to such proceeding. Of this class are Skubinsky v. Bodek, 172 Fed. Rep. 332; Podolin v. McGettigan, 193 Fed. Rep. 1021; In re Thompson, 179 Fed. Rep. 874; In re Davidson, 158 Fed. Rep. 678; In re Crenshaw, 155 Fed Rep. 271. To the opposite view are In re Fixen, 96 Fed. Rep. 748; In re Fleischer, 151 Fed. Rep. 81; Ex parte Bick, 155 Fed. Rep. 908; Wechsler v. United States, 158 Fed. Rep. 579; United States v. Liberman, 176 Fed. Rep. 161. We are of opinion that the estate was in process of administration at the time when the examination before the commissioner was ordered and the testimony of Cameron given. This court has decided that the filing of the petition in bankruptcy operates to place the property of the alleged bankrupt in custodia legis and prevents any creditor from attaching it; and, although by the terms of the act the estate does not vest in the trustee until the date of the adjudication, it is placed at the time of the filing of the petition under the control of the court with a view to its ultimate distribution among creditors. Acme Harvester Co. v. Beekman Lumber Co., 222 U.S. 300, 307; and see Mueller v. Nugent, 184 U.S. 1, 14; Everett v. Judson, 228 U.S. 474, 478, 479. And this is true, notwithstanding, as contended by the petitioner, that should the attempt to obtain an adjudication of bankruptcy fail upon the subsequent hearings, the receivership would necessarily be vacated and the property turned back to the alleged bankrupt.

In order to arrive at the true meaning of § 21a other provisions as well as the purpose of the act must be had in view. The object of the examination of the bankrupt and other witnesses to show the condition of the estate is to enable the court to discover its extent and whereabouts, and to come into possession of it, that the rights of creditors may be preserved. If such examination is postponed

[ 231 U.S. Page 718]

     until after adjudication, which may not take place for at least twenty days, within which the bankrupt in involuntary bankruptcy is given leave to appear and plead, the estate may be concealed and disposed of and the purpose of the act to hold it and to distribute it for the benefit of creditors defeated. The importance of such early examination of Bankrupts was emphasized in In re Fleischer, supra. By subdivision 9 of § 7 of the act, it is provided that the bankrupt shall, "when present at the first meeting of his creditors, and at such other times as the court shall order, submit to an examination concerning the conducting of his business, the cause of his bankruptcy, his dealings with his creditors and other persons, the amount, kind, and whereabouts of his property, and, in addition, all matters which may affect the administration and settlement of his estate." Here is found authority to examine the bankrupt at such other times than the first meeting of creditors as the court may direct. This section should be read with § 21a, and throws light upon its proper construction. In this case the petitioner had invoked the jurisdiction of the court, a receiver had been appointed to take possession of the property, the court was so far in possession of it as to prevent other courts from seizing it and thus defeating the bankruptcy jurisdiction. We are of opinion that the estate was then in process of administration and the examination ordered was within the jurisdiction of the court.

Other questions in the case relate to alleged violations of immunity afforded the defendant under statutes of the United States, which were invoked by him at the trial in the Circuit Court. Records were there offered in evidence showing the testimony given by Cameron before the examiner and before the referee. Cameron claimed that this testimony was incompetent for the purpose of establishing his guilt beyond showing that it was in fact given.

[ 231 U.S. Page 719]

     Counsel for petitioner relies upon the immunity clause of § 7 of the Bankruptcy Act, and upon § 860 of the Revised Statutes in force at the time the testimony was given but repealed by the act of May 7, 1910, c. 216, 36 Stat. 352. Section 7, subdivision 9, of the Bankruptcy Act, cited above, concludes, "but no testimony given by him shall be offered in evidence against him in any criminal proceeding." This section was before this court, so far as the immunity provided is concerned, in Glickstein v. United States, 222 U.S. 139, where it was held not to prevent a prosecution for perjury in the giving of testimony by a bankrupt, and the immunity was held to apply to past transactions concerning which the bankrupt might be examined. In the opinion in that case Edelstein v. United States, Circuit Court of Appeals for the Eighth Circuit, 149 Fed. Rep. 636, which had held that the words "any criminal proceeding" in which immunity is provided are limited to such criminal proceedings as arise out of the conduct of the bankrupt's business or the disposition of his property, etc., concerning which he may be examined, was cited with approval. In Ensign v. Pennsylvania, 227 U.S. 592, 600, it was held that full effect could be given to the immunity provision by confining it to the testimony given under subdivision 9, to which it was immediately subjoined. As the present prosecution was based upon alleged false swearing in the course of the bankruptcy proceedings, § 7 of the Bankruptcy Act can have no application.

Petitioner also invokes the protection of § 860 of the Revised Statutes, which reads:

"No pleading of a party, nor any discovery or evidence obtained from a party or witness by means of a judicial proceeding in this or any foreign country, shall be given in evidence, or in any manner used against him or his property or estate, in any Court of the ...

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