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W. testified that he borrowed said moneys, but, however, could give no de tails, as he kept no record thereof, and further stated that he repaid the full amount in cash to L. on March 19th. On March 26th, after being served with a subpoena in bankruptcy for his examination, L. called on W., and gave him $2,500 by check, which L. testified he did not need and was willing to loan to W. again, though the latter had not requested such loan. The check was immediately certified, and W. received the cash.

Lesser Bros. (William Lesser, of counsel), for the motion.
Steuer & Hoffman (Max D. Steuer, of counsel), opposed.

HOUGH, District Judge (after stating the facts). The story of Celia Friedman is inherently preposterous, as well as demonstrably false. I am convinced that she received (contemporaneously with the sale) $3,850, and has since acted as the confederate of her hiding husband. Considering the relationship between Mrs. Friedman and Levinson, and the connection by marriage with Wiltchick, I am convinced that the three have been acting in concert to protect the proceeds of the Friedman fraud from creditors. The $3,070 deposited by Max Levinson in the Jenkins Trust Company he received from Mrs. Friedman. His tale of hidden affluence and sudden payments of moneys long lent without security is ridiculous. Wiltchick, as a man of substance, has been used as a convenient depository for moneys he could be relied upon not to steal from those who wrongfully intrusted the same to him, and he has now by his own statements $2,500 handed him by Levinson.

The order may pass against Wiltchick, requiring him to pay over $2,500; but he, if he prefers, may give bond in double that amount. with sureties to be approved, for the payment of $2,500, on demand to the trustee when appointed or elected.

A summary order for $570 may pass against Levinson, and a summary order for $780 against Celia Friedman.

No summary order will be made against the Jenkins Trust Company; but that company may be enjoined from permitting the account of Max Levinson with them to be reduced below $570, except by check drawn by Levinson, certified by the trust company and payable to the order of the temporary receiver herein.

On Application for Reargument of Motion against Celia Friedman, Max Levinson, and Samuel Wiltchick, to Compel Them to Turn Over Certain Moneys, and also on Application to Punish the Parties Above Named for Contempt in Failing to Turn Over.

The brief on the application for reargument is an able presentation of one side of a question that in my experience has never been more clearly presented than in this case. It may be admitted that the District Court on the bankruptcy side has no power summarily to try a question of title, if any real question of title exists. It may also be admitted that the same court has no power summarily to order the appropriation by a receiver or a trustee of property obtained from the bankrupt either by fraud upon him or in pursuance of his intent to hinder, delay or defraud his creditors, if any property was so obtained. But if property which had once been in the possession of the bankrupt is

found in the possession of any person, and such person is, in the opinion of the court, very clearly but a cover or receptacle for that property which as between the bankrupt and such other person is still the property of the bankrupt, or if (to vary the simile) the person who holds property which was formerly in the possession of the bankrupt is but the alter ego of the bankrupt, then a summary order is proper, and no pretended instruments of transfer, no apparatus of conveyances, should prevail. The question is: Whose is the property? And if, according to the evidence, it be the property of the bankrupt, the bankruptcy court should order its restoration to the representative of the creditors and enforce that order by the most drastic means. If this be not done, creditors in most cases are utterly without remedy, for a plenary suit against persons who are in truth but receivers of stolen goods (or money) is but an expensive illusion.

In this case an unusually complicated scheme was pursued to hide the proceeds of the sale of the bankrupt stock. The complication of the method only renders more necessary the application of the rule which, I believe, exists.

The application for reargument is denied.

The opposition to the punishment of the persons proceeded against for contempt is really based upon a proposition perfectly sound in itself, but, I think, inapplicable to the matter in hand. A person who has no money should not be punished for contempt in failing to turn over money. But the very point of this proceeding is that it is the opinion of the court that the persons proceeded against have the money and do not tell the truth when they assert their inability to pay. Instances are numerous where this same objection was made in limine, and the court became satisfied in time, either that the parties incarcerated had spent the money, or intrusted it to still other persons who had made away with it, and thereupon the prisoners were released. But if any person into whose possession money is traced can avoid the legitimate consequence of the possession of that money by swearing that he no longer has it, or never had it, the administration of justice would become a farce.

The orders to turn over having been duly served, and the time limited for payment having expired, the persons proceeded against are adjudged to be in contempt, and the usual order will be made.

POLITZ v. WABASH R. CO. et al.

(Circuit Court, S. D. New York. February 18, 1907.)

REMOVAL OF CAUSES-SEPARABLE CONTROVERSY-JOINDER OF UNNECESSARY PARTIES.

To a suit by a stockholder to have stock and bonds issued by a railroad company, to be exchanged for a prior issue of bonds, declared ultra vires and void, the company is the only necessary party defendant, and the joinder as defendants of directors or persons interested in the bonds to be retired will not prevent a removal of the cause by the company, where diversity of citizenship exists between it and the complainant. [Ed. Note. For cases in point, see Cent. Dig. vol. 42, Removal of Causes, § 79.]

On Motion to Remand to State Court.

Stephen M. Yeaman, for the motion.

Rush Taggart and Parsons, Closson & McIlvaine, opposed.

LACOMBE, Circuit Judge. Plaintiff is a stockholder of the Wabash Railroad Company. Among the obligations of that company are two series (A and B) of debenture bonds due in 1939. A plan has recently been proposed for retiring these bonds, by issuing and exchanging for them a certain amount of new 4 per cent. mortgage bonds and new preferred and new common stock. A stockholders' meeting was called in October last to consider the plan, and a majority of those present voted in favor of it, and for the issuance of the new bonds and stock necessary to carry out its provisions. At the same time 90 per cent. of the debenture holders voted in favor of the exchange. The complaint alleges that the plan has been carried out as to more than nine-tenths of the debenture bonds, and new bonds and stock to the requisite amount have been issued. The complaint sets forth the provisions of various state Constitutions and statutes, and avers that the "whole plan was and is illegal, unauthorized by law, in violation of law, and ultra vires," and that the bonds and stock issued pursuant thereto are unlawful and invalid. The complaint prays that the plan "be decreed and adjudged to be ultra vires." and that "all said bonds and preferred and common stock issued and used or applied by said Wabash Railroad Company for the purposes stated in said plan and scheme be decreed and adjudged illegal, void, and of no effect."

The Wabash Railroad Company is a nonresident, and removed the cause on the ground that there is a separable controversy between it and the plaintiff, to which the other defendants (mostly residents of this state) are not necessary parties. These additional parties are (1) the individual directors; (2) the trust company which is the registrar of stock of the railroad company; (3) the committee which represents the debenture holders in carrying out the plan; (4) the trust company in which debentures are to be deposited pending exchange; (5) the trustees named in the mortgage to secure the new 4 per cent. bonds; and (6) a single individual holder of debenture bonds. It is manifest that complainant can obtain complete relief without the presence of these additional parties. When he shall, by action against the Wabash Company, have established the proposition that the new bonds and stock are void, he need not concern himself with the re-exchange of such as may have been delivered. They will not constitute valid obligations against the railroad, and therefore will not affect the value of his stock. Individual holders of such of the new securities as have been issued may be allowed to intervene at the discretion of the court; but their presence is not essential to the determination of the fundamental issues raised by the complaint. It is difficult to escape the conviction that these additional "parties" have been brought into the case with the sole purpose of preventing, if possible, the removal of the

cause.

The motion to remand is denied.

AMERICAN BANANA CO. v. UNITED FRUIT CO.

(Circuit Court, S. D. New York. January 28, 1907.)

1. DISCOVERY-PRODUCTION OF BOOKS AND WRITINGS-FEDERAL STATUTE. In a proper case a party may be required to produce books and writings under Rev. St. § 724 [U. S. Comp. St. 1901, p. 583], in advance of trial, but such a direction should only be made when the situation is clearly such that in no other way can the ends of justice be properly subserved. [Ed. Note. For cases in point, see Cent. Dig. vol. 16, Discovery, § 107.]

2 EVIDENCE-REQUIRING PRODUCTION OF DOCUMENTS-CORPORATIONS.

An action to recover treble damages under the Sherman anti-trust act (Act July 2, 1890, c. 647, § 7, 26 Stat. 210 [U. S. Comp. St. 1901, p. 3202]), is penal in character, but such fact does not preclude the court from requiring the defendant, when a corporation, to produce books or writings under Rev. St. § 724 [U. S. Comp. St. 1901, p. 583].

[Ed. Note. For cases in point, see Cent. Dig. vol. 20, Evidence, §§ 15401558.]

At Law. Motion under section 724, Rev. St. U. S. [U. S. Comp. St. 1901, p. 583], to require the production before trial and deposit with the clerk for defendant's inspection of a great number of books and papers the property of defendant now in its custody and concerned with details of its business. The action is for treble damages under the Sherman anti-trust act.

Everett P. Wheeler, for the motion.

Henry W. Taft, opposed.

LACOMBE, Circuit Judge. Originally it was held that the provisions of section 724, Rev. St. [U. S. Comp. St. 1901, p. 583], were directed solely to securing the production of the books and writings upon the trial of the issues. Later authorities hold that in a proper case production in advance of trial may be required. Bloede Co. v. Bancroft Co. (C. C.) 98 Fed. 175; Gray v. Schneider (C. C.) 119 Fed. 474. Such a direction, however, should only be made when the situation is clearly such that in no other way could the ends of justice be properly subserved. The "trial" of an action at common law is to be had before a court and jury and questions as to the admissibility or inadmissibility of individual items of evidence can be ruled on intelligently and fairly only by the judge who is presiding at the trial and is fully informed as to all the circumstances which prior evidence has disclosed. It puts an unreasonable burden upon a court, already fully occupied, to sit in advance of the trial to oversee the clerk with whom papers are deposited and to be called upon summarily and at intervals to determine whether some particular letter or telegram is one which a plaintiff might fairly inspect, or is concerned with matters which are none of plaintiff's business. Sometimes no other course can be followed, but such is not the case here. The averments of the complaint, the statements in the affidavits, and the specifications in the notice of motion all show that the plaintiff is supplied with information amply sufficient to enable it to go to trial and undertake to make out its cause of action by there and then calling for such writings as it needs, provided that their

presence on the trial is secured by order made under this section. The section does not contemplate that plaintiff shall sit down at leisure in the absence alike of court and jury, and during days or weeks prepare and practically put in its side of the controversy, leaving defendant to meet the case thus made in the hurry of the trial.

As to the constitutional question. It seems entirely clear that this is a penal action. It is instituted by a person who claims to have been injured by the unlawful acts of defendant to recover, not only the damages which will compensate him for any loss he has sustained, but also a penalty of twice as much again, which represents no damages, but only a fine imposed for bad conduct. But, as was intimated in U. S. v. Am. Tob. Co. (C. C.) 146 Fed. 557, the decision in Hale v. Henkel, 201 U. S. 43, 26 Sup. Ct. 370, 50 L. Ed. 652, has modified the rule heretofore applied when the books and papers sought to be dragged to light by the power of the state are the property of a corporation. It was held in that case that neither the provisions of the fourth amendment to the Constitution nor the principles enunciated in the case of an individual in the Boyd Case, 116 U. S. 616, 6 Sup. Ct. 524, 29 L. Ed. 746, constitute any protection to a corporation which is charged with abuse of its franchise. It would seem to make little difference whether the books and papers are called for under a subpœna duces tecum or under section 724; whether the charge is presented in an action brought by the state of its own motion, by the state on the relation of some one, or by a private person to whom the state has promised the fine it has prescribed as punishment of the offense in the event that such person shall succeed in proving the commission of that offense.

The motion is granted to the extent of requiring the defendant to get together all the books and papers enumerated with sufficient definiteness, and have them present at the trial. Defendant need be under no apprehension by reason of failure to produce any books and papers called for which do not exist. Proof that they did not exist, when notice of motion was served, will be sufficient compliance with the order. But it should comply with the terms of the order frankly and fully. It should have in court all the documents fairly within the enumeration and which would enable plaintiff to show defendant's past conduct touching the matters complained of. It will be no sufficient response to the order to state upon the trial that some contract. letter, or what not, manifestly material, is not at hand, but in Venezuela or elsewhere.

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