Court Opinion

ID: 6861750
Source: CourtListenerOpinion
Date Created: 2022-07-23 20:49:33.085767+00
Date Added: 2024-06-11T16:05:15.474431
License: Public Domain

MANTON, Circuit Judge
(dissenting).
The auditor appointed was to “define and simplify all the issues herein; to take and report testimony; to audit and state accounts; to make computations; to make findings on conflicting evidence and to make and file a report thereon in the office of the Clerk of this Court with all convenient speed, which report shall not finally determine the issues, but shall * * * be admitted at the trial before the jury as prima facie evidence of the evidentiary facts and of the conclusions of fact therein set forth.”
The auditor heard testimony; he defined the issues to be: (a) Whether the bankrupt intended to and did effect an unlawful preference of the defendant over other creditors; and (b) whether the defendant knew or had reasonable cause to believe that the bankrupt was insolvent at the time of payment, and that the payment would effect a preference.
Not content with defining the issues, he presumed to decide them. He found that' the bankrupt intended to effect a preference, and that the appellant knew of the bankrupt’s insolvency at the time of payment and that the payment would effect a preference. His determination of these issues was offered in 'evidence and received over objection and exception. The finding of the auditor was that the “Elite Rug Company, Inc., knew that this would be the effect of such payment and intended to effect such preference,” and that, “The defendant had reasonable cause to believe that the Elite Rug Company, Inc., was insolvent when such payment was made and that the payment would effect the preference aforesaid.”
The appellant was entitled to a jury trial, and therefore a jury’s answer to the questions of whether the Elite Rug Company, Inc., was insolvent when payment was made, and whether or not the payment would effect a preference. It was a right guaranteed to the appellant under the Seventh Amendment to the Constitution. Schoenthal v. Irving Trust Co., 287 U. S. 92, 53 S. Ct. 50, 77 L. Ed. 185. In re Peterson, 253 U. S. 300, 40 S. Ct. 543, 547, 64 L. Ed. 919, sustains the District Court’s authority to appoint an auditor because “courts have * * * inherent power to provide themselves with appropriate instruments required for the performance of their duties.” But the auditor must not be substituted for the jury where a defendant is entitled to a jury trial. As said in the Peterson Case: “In so far as the task of the auditor is to define and simplify the issues, his function is, in essence, the same as that of pleading.”
Findings, as such, are proper, but the findings here made by the auditor were not simply the findings as to proof, but were the findings as to the things to be proved. He did not find only what the facts were, but made findings decisive of the very issues involved. He determined in his findings all the issues which the jury were to answer. The court supported the right to appoint the auditor in the Peterson Case, saying: “Nor can the order be held unconstitutional, as unduly interfering with the jury’s determination of issues of fact, because it directs the auditor to form and express an opinion upon facts and items in dispute. The report will, unless rejected by the court, be admitted at the jury trial * * * as prima facie evidence.”
But this does not mean that the report of an auditor, his determination of issues, is admissible in its entirety, including his conclusions on the questions which the jury must decide. In the instant case, the auditor served no purpose because all the testimony was submitted anew to the jury.
The theory and the purpose of an auditor has been, not to decide cases, but to assist in determining balances of accounts where long items of accounting are involved; to aid a jury in simplifying issues, never to decide issues of insolvency or preference in payments.
With the report of the auditor, including his conclusions upon the issues involved before the jury, there was placed in the balance against the appellant a determination by an officer of the court of the very issues which the jury were to determine. This was not the kind of assistance intended by general rule 26 of the Rules of the Dis*284trict Court of the United States for the Southern District of New York, and, on the contrary, was prejudicial to the appellant.
The judgment should be reversed and a new trial ordered.