Case Name: In re J. H. JACKSON CO., Inc.
Court: United States Court of Appeals for the Second Circuit
Jurisdiction: United States
Decision Date: 1926-11-19
Citations: 15 F.2d 614
Docket Number: No. 212
Parties: In re J. H. JACKSON CO., Inc.
Judges: 
Reporter: Federal Reporter 2d Series
Volume: 15
Pages: 614–616

Head Matter:
In re J. H. JACKSON CO., Inc.
(Circuit Court of Appeals, Second Circuit.
November 19, 1926.)
No. 212.
See, also, 15 F.(2d) 603.
McManus, Ernst & Ernst, of New York City (Irving L. Ernst, Walter E. Ernst, and Hugo I. Epstein, all of New York City, of counsel), for appellant.
Robert P. Levis, of New York City, for receivers in bankruptcy.
■ Before HOUGH, MANTON, and HAND, Circuit Judges.

Opinion:
HOUGH, Circuit Judge
(after stating the facts as above). This appeal rests on the assertion that the proceedings below are inconsistent with In re Sugarman (C. C. A.) 3 F.(2d) 436. We have held that matters of this kind, although summary, require "due hearing" — a phrase implying "a statement by the party plaintiff and an answer by the party defendant," and "an issue framed by what are practically pleadings; on those pleadings the trial is based, ¿nd at such trial each party is entitled to examine the other as well as to introduce witnesses." We adhere to that statement.
The proceedings below began in a form perfectly regular. There was a written petition preferred, alleging that Jackson had the books and papers. There was reasonable notice given; the matter was brought on by order to show cause, and Jackson made written answer. This was properly formal. See Remington (3d Ed.) § 2405-2408.
It is to be observed that the proceeding was not one to punish Jackson for contempt, but to obtain an order requiring him within a reasonable period to deliver what he had to the receiver. To justify such an order, circumstantial evidence is sufficient (In to Graning, 229 F. 370, 143 C. C. A. 490) and the proof of possession of (e. g.) books may be dedueible from the bankrupt's original possession and his own testimony concerning their loss or disappearance. (United States v. Moore [C. C. A.] 294 F. 852, at page 857). So the question narrows to this: Can there be a "due hearing" without an opportunity of introducing witnesses?
If there had been no answer on the part of Jackson, there would have been a statement that he had the books, etc., and nothing to controvert that, so the order would have passed. But by the filing of the answering affidavit there was in substance a pleading offered, setting forth new matter; that is, new in the form of a pleading. But this new matter is obviously false, in the sense of being wholly unworthy of belief. It formally introduced a defense, but the defense was sham; i. e., one which is palpably false. Witherell v. Wiberg, 4 Sawy. 232, Fed. Cas. No. 17, 917. Now a sham answer or a sham defense may be stricken out, and the case is then left as if no defense had been offered. The practice is too familiar in New York to need citations.
It may be noted, not as strictly relevant to the question of law presented, but as showing the nature of the hearing, that counsel for appellant, when before the court below, admittedly declared that Jackson had nothing to add, and "stood on his affidavit." We think the aetion of the District Court an instance of striking out a sham defense, and that a proper order was entered after due hearing. The question of contempt is not now before us.
The order to show cause, granted in this court, is discharged, and the order appealed from affirmed, with costs.