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United States v. Margolis.

November 29, 1943


Appeal from the District Court of the United States for the District of New Jersey; Guy L. Fake, Judge.

Author: Biggs

Before BIGGS, MARIS, and WOODBURY, Circuit Judges.

BIGGS, Circuit Judge.

The appellant was indicted, convicted and sentenced on both counts of an indictment charging him with making false oaths in the bankruptcy proceeding of United Machine Liquidating Co., Inc. The indictment refers to no statute, but the charges are based on section 29, sub. b(2) of the Bankruptcy Act as amended, 11 U.S.C.A. § 52, sub. b(2). The referee to whom the bankruptcy proceeding stood referred was conducting hearings pursuant to Section 21, sub. a, of the Bankruptcy Act, 11 U.S.C.A. § 44, sub. a, in an endeavor to ascertain the nature and extent of the bankrupt's assets and its business. Margolis had had business dealings with the bankrupt and its president, Sands, over a long period of time.

The first count of the indictment charges that Margolis was asked, "Did you have possession in the last few months of any of the books of the United Machine Liquidating Company?" and that he answered, "No."; that he was asked, "What did you do with them?", referring to the Accounts Receivable and Accounts Payable Books of the bankrupt, and that he answered, "I never had them."; and that he was asked also, "how much money did you give United Machine Liquidating Company for its assignment?", referring to an assignment of a conditional bill of sale against the plant of C. Fiory Piece Dye Works, and that he answered, "$3,000." It is alleged that his answers to these questions were knowingly false.

The second count of the indictment charges that Margolis was asked, "And the machinery that you repossessed from Empress Fabrics Finishing Company belongs to the Hamilton Investment company?", referring to a King and Gerber calender, and that he answered, "That is right." It is alleged in the count that his answer was knowingly false.

Proof of perjury of false swearing presents an exception to the general rule that evidence which is sufficient to convince a jury of a defendant's guilt beyond a reasonable doubt will sustain a conviction. At common law it was necessary to prove the falsity of the defendant's oath by the sworn testimony of at least two witnesses. That rule was modified. Today it is sufficient if the testimony of a witness is adequately corroborated whether by oral or documentary evidence. In United States v. Palese, 3 Cir., 133 F.2d 600, 603, 604, we held that a conviction could be sustained if competent evidence corroborated the falsity of the oath and that particular circumstances which indicated its falsity need not be corroborated. We will apply the test of the Palese case to the proof offered by the United States under the first count.

The first question framed in the first count in the indictment was asked and answered on December 18, 1939. The word "few" used in the clause "in the last few months" of the question, means "mot many; of small number". Webster's New International Dictionary. We conclude that the question referred to a time within two or three months of the day of hearing. Sands testified that he delivered all of the books of United Nachine Liquidating Company, except two,*fn1 to Margolis "around October of 1939". Sands stated that he helped Margolis carry all the books of the bankrupt, except the accounts receivable and accounts payable books, into Margolis' apartment and that from time to time he saw them on a buffet in Margoli' diningroom. Sands also testified that Margolis left some of the books at the office door of the trustee's accountant, Rea. Rea stated that after December 18, 1939 he found books of the bankrupt at his door. He testified also that he had received some books from the appellant though he could not fix this date with particularity.

Charles Yedwab, an accountant, testified that Margolis had paid him $10 to release to Margolis the accounts receivable and accounts payable books of the bankrupt, which with the other books of the bankrupt had been given to him by sands for auditing some time prior to the bankruptcy; that in accordance with Margolis' instructions he left the two books at a cigar store in order that Margolis might pick them up. Sands' testimony was to the same effect. Sands stated also that Margolis told him that he had received these books from the clerk at the cigar store. Neither Sands nor Yedwab could fix exact dates, but it is clear that Margolis received the accounts receivable and accounts payable books of the bankrupt prior to the hearing before the referee on December 18, 1939. A former deputy marshal testified that on March 11, 1942, he went to Margolis' apartment with to agents of the Federal Bureau of Investigation and there found the sales book of the bankrupt. We must conclude that Sands' testimony as to the delivery of the books to Margolis prior to the hearing of December 18, 1939 is fully corroborated by competent evidence.

As to the second question which was asked of Margolis on December 27, 1939, it is unnecessary of repeat the corroborating testimony of Yedwab which we have summarized in the preceding paragraph. The appellant raises another point, however. He asserts that he corrected his erroneous statement as to his possession of the accounts receivable and accounts payable books as soon as he was asked by the referee, "Do you mean to tell me that Mr. Yedwab did not give them [the two ledgers] to you?" and that his erroneous statement was innocently made.An examination of the questions and answers preceding and following the critical question and answer could have led the jury to the conclusion that Margolis would not have corrected his statement if the referee had not shown that he had knowledge of Yedwab's dealings with Margolis. If Margolis' original answere was knowingly false, the crime charged had been completed and is not expunged by a recanting. Cf. United States v. Norris, 300 U.S. 564, 573, 57 S. Ct. 535, 81 L. Ed. 808.

As to the third question, the government contends that Margolis also swore falsely when he answered that he had given $3,000 to the bankrupt as the consideration for an assignment of certain contracts by the bankrupt to Hamiltom Investment Company. This company was owned and operated by Margolis. Sands' testimony as to consideration actually given for the assignment by Margolis or Hamilton is corroborated in essential details. $1,950 of the sum of $3,000 was represented by a debt due from the bankrupt to North Jersey Properties, Inc., which Margolis had assumed. By the testimony of a disinterested witness, the attorney representing North Jersey Properties, Inc., it was shown that Margolis paid $600 against the principal of the debt and settled the balance of the claim for $675. At the very time Margolis was testifying before the referee in respect to this transaction, the settlement of the balance of the obligation had been agreed to by Margolis and he had sent postdated checks in payment. This was corroborated by a letter sent by Margolis himself to the attorney for North Jersey Properties, Inc. The amount of consideration for the assignment was reduced by this settlement by the sum of $675 as Margolis knew. $500 of the $3,000 represented an obligation which Fiory & Co. owed the bankrupt on notes which had been discounted by Hamilton for United. Margolis sued the bankrupt and Fiory & Co., and got judgment against the latter but did not succeed in serving United with process. At the hearing before the referee Margolis stated categorically that he had procured a judgment against United for $500 which he had statisfied of record. This was not true. The clerk of the court in which the suits were brought testified that no judgment had been procured against United by Margolis. The appellant also included in the $3,000 the amount of a hospital bill owed by Sands which Margolis knew to be the personal obligation of Sands. This was corroborated by Margolis' own testimony. Such evidence is acceptable as corroboration. Cf. United States v. Buckner, 2 Cir., 118 F.2d 468.

The questions and answeres framed in the first count were pertinent to the issues presented in ther proceeding before the referee. The appellant's motion for a directed verdict properly was denied as to the first count.

The appellant contends that because Sands was an admitted perjurer his testimony should not have been considered. Even a convicted perjurer, however, may testify competently. The jury must determine his credibility.*fn2 The court must charge that the testimony of such a witness must be scrutinized with care. The learned District Judge's charge was adequate.

The question and answer on which the second count is based relate to the King-Gerber calender transactions. The record in respect to these is so involved that it is difficult to discover exactly what was done by Margolis, by Sands and by their respective ...

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