Shulman v. United States

DENISON, Circuit Judge. Ben Shulman and his three brothers were partners in a business which became bankrupt. In due course 'the referee made an order that the bankrupts deliver to the trustee a large amount of property, which, in the form of merchandise or money, they were concealing from him. On review the District Judge affirmed this order. This court dismissed a petition to revise, and did so because there was no finding of facts presenting a question of law. The trustee instituted contempt proceedings. The judgment of the court was that Ben Sehulman be imprisoned in a workhouse for one year, and that thereafter his imprisonment continue until, he complied with the turn-over order. Each of the three ■ brothers received a similar sentence, except that the first period of imprisonment was six months. The bankrupts bring these writs of error: 1. The United States, appearing by the district attorney, moves to.dismiss the writs of error, because not appropriate remedies. The sentences were plainly of a double aspect — punitive and remedial; The former aspect is dominating, and under Union Tool Co. v. Wilson, 259 U. S. 107, 110, 42 S. Ct. 427, 66 L. Ed. 848, a writ of error is proper. If the old method of reviewing a remedial sentence in a contempt matter, by petition to revise in matter of law, were still in force, there might be difficulty in 'considering on this writ of error the remedial part of the sentence (Taylor v. Vos, 271 U. S. 176, 183, 46 S. Ct. 461, 70 L. Ed. 889); but at the time these sentences were imposed the review under section 24b was by a peculiar appeal specified in the amendment of May 27, 1926, to that section (44 Stat. 664), and which may, for convenience, be called a law appeal; hence the difficulty of applying the jurisdictional statute of 1916, and considering the matter as if upon a proper appeal, seems to disappear, particularly as the return of these writs of error brings up the same kind of a record which would have been appropriate for such an appeal. Even if the lack of the statutory special allowance for this law appeal presents an obstacle, it may rightly be overcome by treating the writs of error as timely applications therefor and now making the allowance and hearing the case as if regularly here. This we understand to be the practice of the Supreme Court in analogous situations regarding a writ of error and certiorari. The motion to dismiss is overruled. 2. The contempt proceeding was initiated by the trustee’s petition. It contained no suggestion that a punitive or criminal sentence would be sought. So far as the record shows, the actual imposition of the sentences was the first notice any of the respondents had that they were in jeopardy in this respect. According to our understanding of the Gompers Case, 221 U. S. 418, 31 S. Ct. 492, 55 L. Ed. 797, 34 L. R. A. (N. S.) 874, as stated in our memorandum in Monroe Body Co. v. Herzog, 18 F. (2d) 578, this day filed, and in the absence of at least that minimum of notice which could be given by some order nisi after a court has observed that the propriety of a criminal punishment should be considered, that part of all the sentences which directed unconditional imprisonment for a definite time is erroneous, and must be vacated. The only further question open on this review is whether the coercive sentences are without any evidence to support them. 3. Upon the hearing of the contempt matter, the production of the turn-over order made at least a prima facie ease bf contempt against the respondents. In re J. H. Small Co. (C. C. A. 2) 16 F.(2d) 205. As to Ben Shulman, there was upon this contempt hearing a further investigation. He was permitted, unembarrassed by the effect of the former order, to give his explanation of the shortage. He went into the situation as .fully as he cared to. The court disbelieved his testimony and was confirmed in its former conclusion that Ben Sehulman was concealing a large amount of this property. The court’s conclusion to this effect, evident from its remarks on 'the. hearing and implied in its sentence, is not without substantial support in the new evidence, without regard to the former order. So much of Ben Schulman's sentence as directs his imprisonment until he complies with the turn-over order .should be affirmed; but, so that the subject of ability to comply with the order should not be improperly closed, the sentence should be conditioned, “or until further order of the [581] court.” As so modified, the order should be re-entered. 4. As to the three brothers: There was no further investigation, except that Ben Schulman testified, and there is nothing to dispute it, that they were only salesmen; that he was the manager of the business, and that they had nothing to do with the various matters which he mentioned in connection with the shortage, or with the shortage itself. Each of the three brothers presented his formal sworn denial that he had concealed anything or was able to comply with the turn-over order. The distinctions between their eases and that of Ben were seemingly not brought to the attention of the court. In strictness it would seem that the turn-over order made a prima facie ease of concealment against each of the three brothers as of its date, and so it could not now be said, as a matter of law, that there was no evidence supporting the present contempt finding. However, there are special features in this record. It appears that upon the turn-over order the three brothers were included, more or less pro forma, in connection with the announcement that there would have to be a' further investigation before they could be held ‘ for contempt. It appears, also, that, their partnership duty and liabilities were given some force in reaching the court’s present conclusion, and it also appears, as above stated, and is seemingly undisputed, that they had no part in the general management or control of the business, and there is no proof that they had anything specifically to do with any concealment, past or present. Upon this particular record, we feel compelled to say that their sentences to coercive imprisonment are not supported by substantial evidence, and that as to each of them the entire sentence must be vacated. Accordingly, in No. 4872, the sentence is vacated, is reversed as to the one-year punitive imprisonment, and the case is remanded for the entry of a proper order as to coercive imprisonment, as above specified. In the other three eases, 4873, 4874, and 4875, the entire sentences are vacated, and the records remanded for further proceedings. These remands will be without prejudice to further proceedings looking to punitive sentences against each one of the four, and without prejudice to a new and further inquiry into the ability of each one of the three to comply with the turn-over order.