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UNITED STATES v. ZISBLATT FURNITURE CO.

June 3, 1948

UNITED STATES
v.
ZISBLATT FURNITURE CO., Inc., et al.



The opinion of the court was delivered by: NEVIN

The defendant, Morris Zisblatt, an officer of Zisblatt Furniture Company, Inc., indicted together with others not yet brought to trial, was tried to a jury and convicted of the charge in an indictment filed on August 3, 1945, that he did in violation of Title 11 U.S.C.A. 52, sub. b, 'unlawfully, wilfully, knowingly and fraudulently conceal from the trustee of the Estate of Zisblatt Furniture Company, Inc., assets in the form of money or property or both * * * .'

The court is confronted by three motions made by the defendant, Morris Zisblatt:

 1. Before trial, upon the conclusion of the Government's case and then again verdict, the defendant moved for a dismissal of the indictment upon the ground that the prosecution is barred by the statute of limitations embraced in Sec. 29, sub. d of the Bankruptcy Act, Title 11 U.S.C.A. 52, sub. d.

 2. Upon conclusion of the Government's case, the defendant moved for dismissal of the indictment upon the ground that the alleged offense was committed without the territorial jurisdiction of the court.

 3. Upon conclusion of the Government's case and again after verdict, the defendant moved for acquittal on the ground that the evidence was inadequate to sustain the charges.

 The court grants the motion to dismiss the indictment upon the first ground, and therefore finds it unnecessary to consider the other motions.

 The concealment of assets is alleged to have taken place 'from on or about the 1st day of January, 1940, and continuously thereafter down to and including the time of the filing of the indictment.' The petition in bankruptcy was an involuntary one and was filed on June 7, 1940. The corporation was adjudicated a bankrupt on June 10, 1940, and a trustee was appointed and qualified on July 2, 1940.

 Under the Bankruptcy Act of 1898, it was provided that no prosecution for an offense committed thereunder could be had more than one year after the commission of the offense. In 1926, the Bankruptcy Act was made to conform to the general statute and a three-year limitation was substituted, thus providing for greater uniformity of legislation in the matter of limitations, but there had been confusion as to when the statute of limitations for the crime of concealment of assets commenced to run, and in 1938, by amending Section 29, sub. d of the Bankruptcy Act, supra, Congress sought to remove the confusion. This section as amended reads:

 'A person shall not be prosecuted for any offense arising under this title unless the indictment is found or the information is filed in court within three years after the commission of the offense: Provided, That the offense of concealment of assets of a bankrupt shall be deemed to be a continuing offense until the bankrupt shall have been finally discharged, and the period of limitations herein provided shall not begin to run until such final discharge.'

 Sec. 14, sub. a (11 U.S.C.A. 32, sub. a), of the Bankruptcy Act, concerning the granting of discharge, states:

 'The adjudication of any person, except a corporation, shall operate as an application for a discharge: Provided, That the bankrupt may, before the hearing of such application, waive by writing, filed with the court, his right to a discharge. A corporation may, within six months after its adjudication, file on application for a discharge in the court in which the proceedings are pending.'

 The bankrupt corporation in this case never applied for a discharge, and the last day upon which its petition could have been filed was December 9, 1940.

 The Government contends that the failure of the corporation to obtain a discharge has the effect of depriving the defendant, Morris Zisblatt, of the benefits of the three-year statute of limitations, which would otherwise be available to him if a discharge had been procured by the bankrupt corporation. In other words, it is contended that the event which initiates the running of the three-year period not having occurred, and there having been no possibility at the time the indictment was filed that it ever could occur, there is no statute of limitations for the crime of which this defendant is accused.

 At common law there were no fixed periods for the commencement of suits and it frequently has been stated that limitations of time for the bringing of an action are creations of statute. While there was no general statute of limitations with respect to personal actions until the seventeenth century, pleas of limitations in criminal and real actions had been permitted for centuries. The courts were strict about the timeliness of a proceeding upon the theory that after a long lapse of time in criminal cases, proof of guilt or innocence would be extremely difficult to establish, and in civil ...


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