Court Opinion

ID: 8867581
Source: CourtListenerOpinion
Date Created: 2022-11-26 18:10:54.694645+00
Date Added: 2024-06-11T17:06:03.386904
License: Public Domain

WALLACE, Circuit Judge.
We have no doubt of the power of the court below to make the order lining the petitioner for refusal to produce the books of the corporation (in bis custody as its president) for examination before the referee in bankruptcy, nor that the order was a reasonable exercise of judicial discretion. The provisions of tlie bankruptcy act authorizing the examination of third persons as witnesses, and compelling the production of books and documents upon such examinations, are intended to enable creditors to discover transactions which may affect the right of the bankrupt to obtain a discharge, and to enable the trustee to ascertain whether any assets exist which should be collected and applied towards the payment of the bankrupt’s debts. It is the duty of the bankruptcy court to see that such examinations are not permitted to transcend tlie limit of a legitimate investigation for these purposes; but of necessity this is a duty which involves the exercise of wide discretion, and which should not be interfered with by any appellate court except when it has been manifestly abused. It is not a valid objection to the production of the books of a corporation that their inspection may disclose concealed assets, or supply evidence to enable the trustee to maintain a civil action to recover the value, in the present case the bankrupts were the officers and directors of tlie corporation whose hooks were sought to be examined, their wives were the stockholders, and substantially the only capital originally contributed or subsequently employed in its business consisted of *416the professional reputation and personal sendees, as architects and builders, of the bankrupts themselves. Whether the profits of the business carried on in the name of the corporation were, as against the creditors, the property of the bankrupts; whether the corporation was merely a paper instrumentality,- and the bankrupts the real principals in all its transactions; or whether the corporation was a concern of which the wives of the bankrupts were the genuine, beneficial owners, — are questions which the court below was not called upon to decide. It suffices that enough appeared to justify the trustee in investigating the history of the transactions, with a view to bringing an action to test the title to the profits derived from them.
The order is affirmed.