Robert H. Jackson

“ Of course, if he offers no evidence as to his inability to comply with the turnover order, or stands mute, he does not meet the issue. Nor does he do so by evidence or by his own denials which the court finds incredible in context. [8]
But the bankrupt may be permitted to deny his present possession and to give any evidence of present conditions or intervening events which corroborate him. The credibility of his denial is to be weighed in the light of his present circumstances. It is everywhere admitted that even if he is committed, he will not be held in jail forever if he does not comply. ”

“ Because these separate but interdependent turnover and contempt procedures are important to successful bankruptcy administration, we restate some of the principles applicable to each, conscious however of the risk that we may do more to stir new than to settle old controversies.
The turnover procedure is one not expressly created or regulated by the Bankruptcy Act. It is a judicial innovation by which the court seeks efficiently and expeditiously to accomplish ends prescribed by the statute, which, however, left the means largely to judicial ingenuity. ”

“ The trial court is obliged to weigh not merely the two facts, that a turnover order has issued and that it has not been obeyed, but all the evidence properly before it in the contempt proceeding in determining whether or not there is actually a present ability to comply and whether failure so to do constitutes deliberate defiance which a jail term will break. ”

“ For the foregoing reasons, among others, I would reverse the judgment of the Circuit Court of Appeals, with directions that the petitioner be released and that no further contempt proceedings be instituted against him based on his refusal to obey the turnover order.
Mr. Justice FRANKFURTER, dissenting.
This is one of those rare cases where I find myself in substantial agreement with the direction and main views of an opinion, but am thereby led to a different conclusion. Too often we are called upon to disentangle a snarled skein of facts into a thread of legal principles. ”

“ Conduct which has put property beyond the limited reach of the turnover proceeding may be a crime, or, if it violates an order of the referee, a criminal contempt, but no such acts, however reprehensible, warrant issuance of an order which creates a duty impossible of performance, so that punishment can follow. ”

“ Since no authority imposes upon either the Court of Appeals or the Bankruptcy Court any presumption of law, either conclusive or disputable, which would forbid or dispense with further inquiry or consideration of other evidence and testimony, turnover orders should not be issued, or approved on appeal, merely on proof that at some past time property was in possession or control of the accused party, unless the time element and other factors make that a fair and reasonable inference. ”

“ It is true that if the court was correct in finding that petitioner had possession of the property or its proceeds (and if he still has it) , he carries the keys of the jail in his pocket, because he can turn the property or proceeds over to the trustee at any time and thus get his freedom. The crucial question to petitioner in this contempt proceeding was whether he had possession of the property or its proceeds June 5, 1945. ”

“ In the first, a turnover proceeding, 'clear and convincing proof' is enough; in the second, embezzlement, 'proof beyond a reasonable doubt' is required. The burden of proof is heavier in the embezzlement case because a judgment of conviction may embody a criminal punishment, while a turnover judgment does not-it is merely an order for the surrender of property, similar to an order of delivery in a replevin suit.
There is no such reason for different measurements of proof in contempt and embezzlement cases ”

“ The trouble with the evidence in the contempt proceeding, the only evidence properly here for review, is that it is directed to the issue of the bankrupt's possession and control of property at the date of bankruptcy raised an definitely decided against her in the turnover proceeding. * * * Though not in form this is in substance a collateral attack upon the now finally established turnover order, which of course is not permissible.';↑ For almost forty years, the Second Circuit has tenaciously abided by the presumption of continued possession. ”

“ It is the duty of the referee and trustee to report any probable grounds for believing such an offense has been committed to the United States Attorney, who thereupon is required to investigate and report to the referee. ”

“ When we declined to review that turnover order, it became a final and binding adjudication. Neither court below was under a misapprehension as to the applicable law in the instant contempt proceeding. The District Court relied on In re Siegler, 2 Cir., 31 F.2d 972. But surely reliance on a case that was correctly decided is hardly an indication of misapprehension of law. If the Siegler dicision had preceded instead of followed [31] Oriel v. Russell, it might well have been one of the authorities relied upon in Chief Justice Taft's opinion. ”

“ A correlative duty is imposed upon the bankrupt fully and effectually to turn over all of his property and interests, and in case of a corporation the duty rests upon its officers, directors or stockholders. ”

“ The question now arises as to whether, in this contempt proceeding, the Court may inquire into the justification for the turnover order itself. It is clear however that the turnover proceeding is a separate one and, when completed and terminated in a final order, it becomes res judicata and not subject to collateral attack in the contempt proceedings. This we long ago settled in Oriel v. ”

“ Indeed it affirmed the commitment for contempt because it considered either that present inability to comply is of no relevance or that there is an irrebuttable presumption of continuing ability to comply even if the record establishes present inability in fact. It seems to be of the view that this presumption stands indefinitely, if not permanently, and can be overcome by the accused only when he affirmatively shows some disposition of the property by him subsequent to the turnover proceedings. We do not believe these views are required by Oriel v. ”

“ Such an inference is one thing when applied to a thrifty person who withdraws his savings account after being involved in an accident, for no apparent purpose except to get it beyond the reach of a tort creditor, see Rosenblum v. ”

“ Federal Trade Commission Act, 15 U.S.C. § 49, 15 U.S.C.A. § 49; Administrative Procedure Act of 1946, 5 U.S.C. § 1005 (c) , 5 U.S.C.A. § 1005 (c) ; and Atomic Energy Act of 1946, 42 U.S.C. § 1816 (d) , 42 U.S.C.A. § 1816 (d) .↑ 278 U.S. 358, 366, 49 S.Ct. 173, 175, 73 L.Ed. 419, quoting from In re Epstein, (cited as Epstein v. Steinfeld) , DC ., 206 F. 568, 569.↑ 278 U.S. 358, 364, 49 S.Ct. 173, 174, 175, 73 L.Ed. 419.↑ The late Chief Justice said '* * * the following seem to us to lay down more nearly the correct view,' and cited Toplitz v. ”