The Bridgeport evening farmer., 1913-03-13
Sensational Hearing in Bank
TnptCy Court in Case Of
]. W. ziegIeT & Co.
FUNDS ENTRUSTED TO
RECEIVER INVOLVED
Arguments in Motion to Dismiss
Well Known Grocer to Be
Heard Next Week


At hearing held yesterday after
noon before Referee John w. Banks,
in the United States Bankruptcy
Court, for the appointment of a per
manent trustee over the estate of J.
w Ziegger & Company, startling a6-
missions relating to. the alleged i'm
proper handling of funds amounting
to- 81, 900 by the temporary receiver.
Charles D. Cleveland, were brought to
light
Admissions were made upon the wit
ness stand by Receiver Cleveland that
) not only had he failed to deposit funds
entrusted to his care as trustee in the
proper government repository, but
that they had been deposited to his
individual account and with other per-
sonaI moneys had been attached in a
suit for $50, 900 brought through Attor-
neys DeForest & Klein.
1t was further shown in the exami-
nation of the witness by Attorney
Henry Greenstein behalf of the
creditors that the witness in lifting
the attachment had pledged funds,
with which the trust fund had been
intermingled, as collateral for surety
bonds. later accepted by Judge Lucien
Burpe0 in the Superior court for the
release of the attachment.
Although contested vigorously and in
heated debate by an array of eminent
legal talent, a motion for the removal
Of the temporary receiver. upon the
grounds that he was an improper, in
competent and untrustworthy person
to control trust funds, was heard by
the referee who ordered that such mo-
ton be wut In writing and fled with
the court Argument upon this mo-
ton WIN be heard next week.
Representing Mr.. Cleveland at yes
4erdmyss session were States Attorney
SaaIes JuGson, Shapiro & Shapiro and
former REPRESENTATIVE Charles VIII
FTa-- - fez<- Hf1rs
owur 1D6 pet1tloning creditors were
Judge E@nry Stevenson, SpannDrd &
7Ea11ettes Gould & Gould and FaIFon
& Greenstein-
The oa@e which on several occasions
sattrac4@d considerable attention has
besn before the courts for two years
past, when q petition was filed for the
appointment of q receiver for J. W.
Zie@5er & Co., Wholesale grocers in
waAer street. Nathan c. Herr was
made State receiver The case was
later complicated by the appointment
of Charles ID. Cleveland, Of Stoddard,
Gilbert q Company, living in Cannon
street. as federal receiver in invol1n-
tary oanEuptcy proceedings. A con-
hlct arose between the United States
and STATE courts over the turning over
OF $500 assets to the federal tempor-
ary receiver. The federal court was
given jurisdiction, and Mr.. Herr was
ordered TO deliver the assets to CIeve-
land, which was accomplished.
Wf1iIe these assets were in the GUS
tody OF the federal temporary receiver,
hearings have been held before Ref
eree Banks for the appointment of a
permanent trustee, and 104 creditors
have proven claims aggregating ap-
pr0x1mR4sly SO, 900.
On a vote for appointment of trus-
tee yesterday a deadlock resulted when
Rsferee Banks decided that neither
side was entitled to permanent re-
cefver. Attorney Greenstein repre-
senting the creditors, demanded an
by the temporary receiver, which re-
suited in the subsequent motion to re-
move the trustee
Clashes between counsel yesterday
were frequent and forensic and at the
adjourned hearing interesting develop
ments are promised
Following the decision Of Referee
Banks that np permanent trustee
could be appointed, attorney for the
creditors demanded that the tempor-
ary receiver be compelled to testify
as to the disposition OF funds placed
in his care In an explanation of the
request Attorney Greenstein alleged
that the receiver had used this money
improperly and for his own private
purposes and thereby violated his
trust duties. Considerable argument
resulted among counsel but the ref
cree agreed that the receiver should
be heard at once. He was called to
the stand.
Charles E. Cleveland under direct
examination stated that he had 1iv-
ed in Bridgeport for the past thirty
years, and for the past year and a
half had been temporary receiver
Asked if any funds had been turned
over to him by State Receiver Herr he
said that the amount was So, 500 in two
checks made out to him as tempor-
ary receiver. Upon further question:
ing he admitted that he had endorsed
the checks first as receiver and
again with the simple endorsement
1CharIes z. Cleveland and that they
mad been deposited with other pri-
vate funds in the Bridgeport Trust
Company.
To the question did you check out
against these funds for your private
purposes the witness answered, s'Yes
and no." It was finally established
that he had done so.
Under scathing criticism of the acts
the witness was asked why the funds
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