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That the bankrupt is called upon to explain, there can be no question. In re Alex, 15 Am. Bankr. Rep. 450; Lesser v. Driesen, 2 Lack. Leg. N. (Pa.) 343. And he attempts to do so; but his explanation is utterly unsatisfactory, not to say lame and shifty. Payment of bills is claimed, but there are none worth mentioning for merchandise after August. Business and family expenses are also set up; but, even if the referee has cut these down beyond what might be, they are by no means vouched or to be allowed to the extent contended for. There is also an alleged purchase of gold stock by the bankrupt, which he claims to have paid $1,250 for, in cash, in October, to his cousin Harry Kaufman. But, aside from the certificate, which bears date in November, and notwithstanding that he took receipts for the payments, there is nothing but his own statement to substantiate it. And the purchase was at a time when he was selling his goods as fast as he could in order to get money, as he says, to meet the demands of creditors, of which he now wishes to make out that he was solicitous. Great stress is laid on the testimony of the bankrupt that the stock which he had at the close amounted to $8,000, and this enters into every showing that is sought to be made in his favor to which it is essential. But the idea that the depleted and broken up odds and ends which were found by the receiver had anywhere near that value is preposterous. According to the first appraisers, who seem to have known the cost marks and followed them as to new goods, there was but $3,400 worth, of which $432 was for cash register and fixtures, and this was still further reduced by the trustee's appraisement to $2,400; the amount realized at the sale being $2,282. The referee, out of abundant caution, allows $5,000, which is certainly liberal, and still finds nearly $7,000 worth of goods unaccounted for; nor is he out of the way in estimating the stock of the bankrupt before he got in his extraordinary purchases at another $5,000. It is said that the only evidence upon the subject is the statement of the bankrupt, who puts it at $3,000. But his usual line was from $5,000 to $6,000, and he admits that from January to August he was carrying the average, which warrants the conclusion that he had that quantity on hand at the close of that period. The importance of these amounts is manifest, particularly the latter; for it is only by putting the stock at $3,000 before the August, September, and October goods came in, and calling it $8,000, when the bankrupt went out of business, that counsel rely to figure him out of his dilemma. The thing that stares us in the face, after all has been said, is that within three months or less he got $11,000 worth of goods, in addition to what he had on hand, whether $3,000 or $5,000, making from $14,000 to $16,000 in all, of which $6,000 was received in October, when affairs were drawing to an end; by far the larger part also being shipped by express instead of freight, presumably by his direction, showing the anxiety to get them, as well as the disregard of expense in doing so. The question is what became of all this accumulation in the little time it was in his hands. Have the goods, he certainly did; and within the time mentioned, as the claims against him conclusively prove. Nor does it matter that some of them may have been ordered in the spring and summer. It is when he got them, and not when they were ordered, that counts in this reckoning. Neither are we concerned with what he paid out, or what expenses he may have been under, before that. By no possibility could this come out of what he did not get till afterwards. It is of no consequence, therefore, that merchandise bills to the extent of $3,500, as vouched by his bank checks, were liquidated from January to August, going back to this date, as urged by counsel. It tells nothing as to what was done with the goods received from August to October to know what was paid out on merchandise or anything else up to that time.

155 F.-59

Specifically stating, then, the case that is made out against the bankrupt, he is chargeable with the goods which he had and with those which came into his hands, worth from $14,000 to $16,000 at wholesale, to say nothing as to his profits upon them. On this he is entitled to credit for the value of the stock found in the store after he left it. And, assuming this to be as much as he had before the other goods were added to it, it leaves $11,000 or practically the amount of his extraordinary purchases. Out of this is to come the $270 deposited in bank and checked out during the contested period. And there was also a note of $150 at the First National Bank of Towanda which was taken care of. The general expenses of household and store are also to be allowed which—somewhat more than the referee—I have estimated at from $300 to $500. And freight and expressage were further paid to the amount of about $200. Sixty-six dollars and twenty cents worth of goods were also sold on credit, and not paid for; and $94.65 of others were returned, not having arrived until after the failure. If to this is added the $1,250 claimed to have been paid by the bankrupt for gold stock, which, upon any close consideration of the case, might not pass muster, and the $450, said to have been paid, through his wife, to Paltrowitz, his wife's relative, at Elmira, for borrowed money, which is open to even greater question, the total aggregate is only from $2,800 to $3,000, leaving a discrepancy, according to this, of over $8,000. The bankrupt's uncles, M. and B. Kaufman, to be sure, got a large amount of this—some 39 per cent, by weight, which is charged on the books, after allowing 10 per cent discount, at $1,342, but, taking the weight, was probably three times that. But the Kaufmans paid cash for whatever they got, according to the story, so that it does not affect the outcome, the bankrupt being chargeable with the money or the goods, whichever way you look at it. The same is to be said of the cash taken in at the October sale, which is entered on the books at $2,291.17, the bankrupt thus from these two sources alone getting over $3,500 which he apparently holds onto. But without regard to this, upon the best showing which can be made, as already pointed out, some $8,000 worth of goods have disappeared-by which, it will be observed, I increase, instead of reduce, the referee's findings—as to which the only conclusion to draw is that the bankrupt has made away either with the goods themselves or the proceeds, which he withholds and conceals from his creditors. The exemption given by the law was never intended for any such character of debtor.

The exceptions are dismissed, and the report of the referee is confirmed.

In re LEVERTON. (2.)

(District Court, M. D. Pennsylvania. September 6, 1907.)

No. 897, in Bankruptcy.
BANKRUPTCY ALLOWANCES TO TRUSTEE-REMOVAL FOR MISCONDUCT.

A trustee in bankruptcy removed for cause held, on his accounting, not entitled to allowance of personal expenses or commissions on the ground that, although residing at a distance of 75 miles from the property, he secured the appointment by soliciting claims to be sent to his attorney, and that he was guilty of willful misconduct in conniving with the bankrupt in concealing the books of the business, and favoring the bankrupt's

relatives in the sale of the property. In Bankruptcy. On report of John W. Codding, referee, sustaining exceptions to the account of Henry Goodman, trustee.

C. A. Van Wormer, for trustee.
J. C. Ingham, for creditors.

ARCHBALD, District Judge. The trustee, having been removed by the court for due cause, has filed his account, charging himself with $2,282, received from a sale of the bankrupt's goods, and taking credit for insurance, rent, watchman, expense of making appraisement, etc., amounting to $200.46, which the referee has allowed, and for personal expenses of $40.95, and commissions of $85.64, which he has refused; and the case is thereupon brought here by the trustee to review these rulings. The items in question are objected to by creditors, on the ground that the accountant has been unfaithful to his trust, having been not only overfriendly with the bankrupt, against whom there are charges of fraudulent concealment which he has failed to prosecute, but having so conducted the sale of the store stock, about the only other duty he had to perform, as to discourage some and favor other bidders, relatives of the bankrupt, by whom it was principally purchased. Both grounds of complaint are abundantly sustained by the evidence.

It was shown in the proceedings for the removal of the accountant that before the petition in bankruptcy was filed, but when it was plainly immanent, the accountant was furnished by the bankrupt with a list of his creditors, in order that he might go to them and effect a compromise of 50 cents on the dollar, which the bankrupt was prepared to offer, the accountant who was also a creditor being promised the whole of his claim for doing so, and that, when this fell through, the list was made use of to solicit and get claims into the hands of the accountant's attorney, by which the election might be controlled and the accountant chosen. Profession was indeed made to the other creditors, at the time of his election, of an intent to follow up the bankrupt, the meagerness of whose stock, after the extraordinary purchases made within a few months of his failure, called for rigid scrutiny and vigorous action. But nothing came of it. And, on the contrary, there is evidence that the accountant has sided, if not colluded, with the bankrupt since then. The books and papers, relating to the business of the bankrupt, for instance, are of the utmost importance upon the question of fraud or irregularity, and so far only a very meager part of them have come out of hiding. The bankrupt says that he left everything of the kind in the store, but the receiver, after searching diligently, was not able to find them. That they were not there is plain. And yet first one, and then another of these books, or what purport to be such, after their existence had been established by other evidence, together with certain bills or invoices, turn up in the hands of the accountant, both he and the bankrupt having previously denied on more than one occasion that there were any. He says he got them in the store, and he endeavors to account for their previous nonproduction by the suggestion that they were in the hands of his attorney. They do not amount to much as they stand, either books or bills; those which would do so not being forthcoming. But such as they are, and whether genuine or fictitious, of which there is some question, the accountant.must have got them from the bankrupt, with whom he is thus convicted of conniving and juggling with regard to them. In re Robert Lewin, 18 Am. Bankr. Rep. 72, 155 Fed. 500.

But even more serious than this is what occurred at the sale of the bankrupt's stock by the accountant. When it was about to take place, for instance, he refused to await the arrival of the train which was due in a few minutes, upon which bidders were expected and came, nor would he allow those who had gathered to go into the store and examine the goods until the hour for the sale had come, or within a few minutes of it. The stock, also, instead of being arranged so that the same class of goods, such as boots and shoes, hats and caps, underwear, trunks, clothing, or furnishings, would be together, were divided up into unusual and mixed sections, of which it was very difficult to get at the value. It is true that what purported to be lists were put in the hands of bidders, but no opportunity was given to test them, and, while other bidders had to take the chance of this, M. Kaufman, an uncle of the bankrupt, with whom the accountant was also on very friendly terms, in some unaccountable way seems to have become possessed of these lists in advance, by which (being also plainly favored in other ways by the accountant in his bidding) he was enabled to become the successful purchaser of nearly every section. As a part of the last one, also, consisting of odds and ends, there was included, according to the subsequent contention, but unknown to any one at the time except the accountant and Kaufman, a certificate for $5,000 of gold mining stock, which had been bought according to the bankrupt a few days before his failure for $1,250, in cash, of his cousin Harry Kaufman. This was scheduled by the bankrupt at $750, but was struck off with the rest of the section to M. Kaufman for $12. It is said that it is worthless, and that the purchaser is satisfied to return it; but that is not the question. It is the good faith of the accountant that is in issue, which is not helped out by anything ex post facto. It is also said that the fairness of the sale is shown by the amount realized, which was 80 per cent. of the appraisement, an unusual experience. But, if so, it was by no favor of the trustee, whose conduct was not calculated to conduce to it. And that considerably more could have been secured, if he had been at all anxious for it, is shown by the gains made, when a resale of one or two sections, which had been struck off to Kaufman, was forced by the other bidders. It is further said that the referee refused to disturb the sale upon the very same exceptions as are now urged against it, and that this concludes the subject. But there is nothing to show upon what the judgment of the referee was then based, and it might have been out of consideration for the different purchasers, which would be another matter.

That the referee, under the circumstances, properly denied the accountant's claim for commissions, there can be no question. It is specifically provided by Bankr. Act July 1, 1898, c. 541, § 48c, 30 Stat. 558 [U. S. Comp. St. 1901, p. 3439], that “the court may in its discretion withhold all compensation from any trustee who has been removed for cause.” But, without this, upon the general principles which prevail with regard to the administration of trusts, compensation is to be withheld where there is either fraud or willful misconduct. 28 Am. & Eng. Encycl. Law (2d Ed.) 1038.

Nor do the expenses of the accountant stand any better. Hanna v. Clark, 204 Pa. 145, 53 Atl. 757. These, in the present instance, are made up of railroad fares, hotel bills, etc., made necessary because the bankrupt's estate was at Dushore, while the accountant lived at Scranton, 75 miles distant. Had a trustee been selected from the vicinity, as should have been done, in the interest of economy, this expense would have been entirely obviated. And as the accountant, through the solicitation of claims, not to say interest in the bankrupt, pushed himself forward into the place, now that occasion has been found to remove him, he must bear the brunt of it.

The exceptions to the report of the referee are dismissed, and the report confirmed.

In re REID,

(District Court, E. D. Michigan, s. D. October, 1906.)

WITNESSES-PRIVILEGE AS TO PRODUCTION OF DOCUMENTS-TAX STATEMENTS.

Comp. Laws Mich. 1897, § 3846, which provides that property state ments which are required to be made by property owners to the assessing officers shall be filed, and shall be used for no other purpose except the making of an assessment, and that "any officer or person who shall make or allow to be made, willfully or knowingly any other or wrongful use of such statement shall be liable to the person making such statement for all damages resulting, *" imposes an absolute prohibition upon the use of such statement for any other purpose as a matter of public policy, and an officer cannot be compelled to produce such a statement as evidence either in a state or federal court, even though no objection is made.

[Ed. Note.—For cases in point, see Cent. Dig. vol. 50, Witnesses, $ 779.]

*

In Bankruptcy. On question certified by Harlow P. Davock, referee.
D. A. L'Esperance and B. B. Selling, for creditors.
Frank E. Doremus, for Benjamin Guiney, city assessor.

SWAN, District Judge. In the course of an examination before the referee in the above cause, Benjamin Guiney, president of the board of assessors of the city of Detroit, was called as a witness for the Ameri

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