In re Havens , 255 F. 478 ( 1918 )

HOUGH, Circuit Judge

(after stating the facts as above). [1] 1. The petition of Havens asserts in substance that the District Court was without jurisdiction to do anything but dismiss the original petition, and therefore erred in allowing any amendment.

[4] Jurisdiction is no'more (for present purposes) than the power to hear and determine a cause. Byers v. McAuley, 149 U. S. 628, 13 Sup. Ct. 906, 37 L. Ed. 867. Not only did the District Court possess jurisdiction in this fundamental sense, but it was the only court that could originally hear and adjudicate on the matters presented or sought to be presented by the petition as first framed.

Being thus rightfully possessed of the cause, the court also enjoyed that power of amendment which is incidental to all judicial administration and vital to the ends of justice. Bank v. Sherman, 101 U. S. 406, 25 L. Ed. 866. We are not permitted by this petition to inquire into the sufficiency of the Exchange Bank’s first pleading. It was evidently regarded by the District Judge as “too vague and general,” and therefore amendment was required. This is common practice. In re Rosenblatt, 193 Fed. 640, 113 C. C. A. 506; In re Riggs Restaurant Co., 130 Fed. 691, 66 C. C. A. 48—decisions plainly indicating approved practice in this circuit.

The amendments made and permitted to stand were no more than a restatement, descending into unnecessary particulars of the original petition, and we hold that such amendment was properly permitted.

[2] 2. The bank’s petition for revision presents a question slightly different from the cases thought to support so much of the order as struck out of the amended petition the allegation of concealment by Havens of the proceeds of the mortgage of May, 1917.

It was assumed below that this was an act of bankruptcy not set forth in the original petition and only charged in and hy an amendment made more than four months after its commission. Whether such an act, occurring more than four months before amendment, could be introduced into a pending proceeding, was thought an “interesting question” by Racombe, J., in the Riggs Case, supra. This court answered it in the negative (In re Haff, 136 Fed. 80, 68 C. C. A. 646), the matter not having been covered by In re Sears, 117 Fed. 294, 54 C. C. A. 532, which was correctly explained and limited in application by Gleason v. Smith, 145 Fed. 897, 76 C. C. A. 427. The general rule as stated in the Half Case has been approved, especially in the Ninth circuit (Walker v. Woodside, 164 Fed. 685, 90 C. C. A. 644), and in the Seventh (In re Brown Commercial Car Co., 227 Fed. 390, 142 C. C. A. 83). Our own decision (In re Condon, 209 Fed. 801, 126 C. C. A. 524) is (in this respect) but a reassertion of the Haff Case.

This rule rests in theory upon the reasoning of Justice Nelson in Re Craft, 6 Blatchf. 177, Fed. Cas. No. 3,317, where it was pointed out that “to allow a substantial amendment — that is, one going to the whole foundation of the proceeding nunc pro tunc — -would be a direct violation” of a limitation “obviously for the benefit of the debtor,” namely, the requirement that proceedings must be brought within a limited time after the act of bankruptcy is committed; i. e., under the present statute, four months.

If. therefore, the creditors’ allegations in respect of the proceeds of the 830,000 mortgage are to be regarded as stating an act of bankruptcy committed and complete more than four months, before amended petition filed, the order complained of was right. But the allegations stricken out are to the effect that the concealment complained of not only occurred within four months of original petition, but liad continued down to the date of amendment.

The concealment of property made an act of bankruptcy by section 3 may be a continuing concealment and the four months period may run from the date of discovery. Citizens’ Bank v. De Pauw Co., 105 Fed. 926, 45 C. C. A. 130. It was, we think, clearly the intent of the pleader to allege a continuing concealment, not discovered until within four months of amendment. The language is vague, and if the District Judge had required a further amendment, setting forth the circumstances of concealment and discovery with greater particularity, we should have regarded such an order as the exercise of reasonable discretion and therefore not reviewable. In re Rosenblatt, supra. But to strike out the allegations altogether was, we think, error, because it prevented presentation to the court of what (reading the pleadings benevolently) may be shown to be entirely within the decisions above referred to.

[3] 3. It being admitted that the order requiring Havens to attend and be examined was, under Cameron v. United States, 231 U. S. 710, 34 Sup. Ct. 244, 58 L. Ed. 448, proper, it was error to practically nullify the order by granting the alleged bankrupt immunity from service.

We are of opinion that all the facts shown in evidence inevitably point to the conclusion that Havens had departed from Olean a few days before this petition in bankruptcy was filed, and thereafter practically secreted himself. Against such evidence Havens’ statement of a conclusion that he had been “since October, 1917, a citizen and resident of the state of Missouri,” is no more than an effort to deny the logical result of the facts shown against him.

As, however, he may hereafter find it advisable to show himself within the Western district of New York, as he did in April last, we shall consider whether an alleged bankrupt, while attending the trial of an involuntary petition against him, is privileged from examination under section 21a; for, if this be true, he must also be privileged from performing any other duty laid upon him by the act and usually enforced by a court order.

It is argued under section 7 of the act (Comp. St. § 9591) that Havens could not be required to attend'for examination at Buffalo, because it was more than 150 miles distant from his home or principal place of business. Assuming that both his personal and business homes were most remote from Buffalo, we think the section referred to has no application,, because he had already come there. Inasmuch as he refused to obey the order at all, the question whether (assuming a remote residence) he could have been compelled to continue in attendance without having his expenses paid is a question not before us.

It is true that one going to a town or place in order to attend a trial is secure from service of process eundo morando redeundo, even though he be a party. Hale v. Wharton (C. C.) 73 Fed. 739. But a party who is attending the trial of his cause is assuredly subject to the orders of the trial court in respect of the matter under adjudication. What the District Court had jurisdiction over was the question whether Havens was a bankrupt, and the examination directed, since it must relate to the “acts, conduct or property” of the alleged bankrupt himself, was a most important part of that investigation. The argument for immunity really assumes that any bankrupt who chooses to remove himself from the territorial jurisdiction of adjudication is by the fact of removal entitled to all the privileges of a stranger; indeed, rather more, in that he can attend the bankruptcy court for such purposes as he pleases, and decline to attend when he does not please.

But the duties of a bankrupt are laid down by the statute, and so are his privileges. Section 9 (Comp. St. § 9593). The order complained of exceeded the statute. If the bankrupt removes into another district, ancillary proceedings are open to his creditors. Babbitt v. Dutcher, 216 U. S. 102, 30 Sup. Ct. 372, 54 L. Ed. 402, 17 Ann. Cas. 969; In re Madson Steele Co., 216 U. S. 115, 30 Sup. Ct. 377, 54 L. Ed. 407. But when the bankrupt is in attendance upon the court lawfully engaged about the business of his adjudication, he must submit to all the lawful orders of that court, including examination under section 21a. This we regard as inherent in the nature of the jurisdiction created, by the Constitution and defined by the Bankruptcy Act. It is therefore ordered, in No. 75, that the petition of the Exchange National Bank be sustained, with costs, and that of Havens be dismissed, with costs, and in No. 95 that the petition of the Exchange National Bank be sustained, witli costs.