Court Opinion

ID: 8744723
Source: CourtListenerOpinion
Date Created: 2022-11-26 11:02:15.745745+00
Date Added: 2024-06-11T17:00:35.944602
License: Public Domain

On Rehearing.
(July 17, 1901.)'
Upon the examination of the bankrupt and other witnesses under section 21 of the bankruptcy statute of 1898, the bankrupt was present in person and by his counsel, and the witnesses, including himself, were subjected to cross-examination by his counsel. The transaction which was made the issue in the objections to his discharge was distinctly a subject of the examination. At the hearing upon the specifications in opposition to his discharge this testimony was offered in evidence, was objected to by the bankrupt’s counsel as incompetent and immaterial, and was admitted subject to the objection. The testimony of Bigelow was important, and, if not properly admitted, the remaining evidence was inadequate to prove the specifications. The testimony of Miller and Mills did not bear materially upon the fraudulent concealment of the particular lot of land mentioned in the specifications. The propriety of admitting, at the. hearing upon the application for a discharge, Bigelow’s testimony, and that of Miller and Mills, upon the examination, and before the issues upon the.objections to the bankrupt’s discharge had been framed, was the question upon the reargument. In Re Krueger, 2 Low. 182, Fed. Cas. No. 7,942, Judge Lowell examined section 26 of the bankruptcy act of 1867 (Rev. St. § 5086), which corresponds to section 21 of the present act, and says:
“These examinations thus stand, in effect, on the footing of summary bills of discovery. The discovery cannot be limited by reference to an action pending, for there is no such limitation in the law; but it is to be confined to the subject-matter, the trade, dealings, and estate of the bankrupt.”
The right of the trustee extends to a discovery of whatever tends to bring to light the estate of the bankrupt so as to enable the trustee to pursue the estate, and reduce it to possession, and to enable *631creditors “to discover transactions which may affect the right of the bankrupt to obtain a discharge.” In re Horgan, 39 C. C. A. 118, 98 Fed. 414. The testimony of the bankrupt himself, which is ordinarily reduced to writing by or under the supervision of the referee, and given under the solemnity of an oath, amounts, when protection against criminative testimony has been waived, to his admission, which can be used elsewhere, but not in any criminal or penal proceeding, as an admission against himself. In re 'Krueger, supra. The testimony of third persons upon these roving attempts at discovery is not directed to a defined issue, and therefore the rules of evidence are not caieiully applied, and testimony is liable to be given which is not carefully guarded, and may be unconsciously derived from hearsay. Inasmuch as no issue has been framed, the bankrupt or his counsel cannot always perceive the inferences which, may be drawn from the testimony, and therefore will not produce rebutting facts. The danger in using the information which has been thus gathered in one of these “fishing excursions” as testimony upon which a court can rely in an issue between the bankrupt and his creditors is such as to render its admission inexpedient. It is liable to produce an injustice, and the testimony may, therefore, be regarded as inadmissible. The attention of the district judge was not apparently called to this question, for it did not appear in the exceptions to the referee’s report. The order of the district court is reversed without costs, and the cause is remanded to that court, with liberty, upon a proper application for that purpose, to take new proofs upon the specifications presented by the objecting creditor. Submitted without argument.