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May 28, 1954


The opinion of the court was delivered by: BRUCHHAUSEN

Motion made by a trustee in bankruptcy for an order adjudging the respondent, Joseph Dalessio, in contempt for failing to obey an order of Hon. Samuel C. Duberstein, referee in Bankruptcy herein, dated March 16, 1954, directing the respondent to turn over to the trustee the sum of $ 24,813.50 in cash.

The said order was made by the Referee, based upon evidence adduced at hearings held on December 15, 1953, December 22, 1953 and January 12, 1954. The respondent filed a petition to review the said order. This Court confirmed the Referee's findings and order and in its memorandum opinion, dated April 12, 1954, in part, wrote:

 'Upon the argument, the respondent's sole contention was that he was unable to comply with the order and that the matter should be referred back to the Referee for the purpose of affording an opportunity to the respondent to prove such inability.

 'The record discloses that alleged inability to comply with the order was one of the principal issues raised by the respondent's answer (par. 4) and litigated before the Referee. The referee has made findings to the effect that the said sum, belonging to the bankrup's estate is in the possession of or under the control of the respondent and that the respondent's contention that he lost the moneys by gambling was not substantiated. The credible evidence fully supports the findings and the order absed thereon.'

 The respondent's alleged inability to comply with the order, as urged by hin in the said proceeding to review, related to the time of the making of the order by the Referee. The question was determined adversely to the respondent by the Referee, who held that the respondent then had possession or control of the aforesaid sum of money. This Court, as pointed out, confirmed the Referee's finding. That issue is now res adjudicata. In this connection 2 Collier On Bankruptcy, 14th Edition, sets forth at pages 552, 553:

 'The turnover order itself conclusively establishes the jurisdiction of the court, whether judge or referee, and the defendant's then ability to comply with the order. These matters may not be collaterally attacked in the contempt proceeding. In the contempt proceeding the only issue before the court is the alleged contemner's present inability comply.'

 The case of Maggio v. Zeitz, 333 U.S. 56, 68 S. Ct. 401, 92 L. Ed. 476, is cited in the footnote of page 553.

 It should be emphasized that as late as March 16, 1954, about a month prior to the date of the present motion for contempt, it was determined that the respondent was able to comply with the turnover order.

 In an opinion in the case of Lawrence Carpet Co., Inc., D.C.S.D., 122 F.Supp. 912, Judge Ryan, in granting a motion to punish for contempt, in part, wrote:

 'The (turnover) order issued on December 30, 1953 and the motion to punish for contempt on January 6, 1954. In view ofthe short lapse of time continuance on January 6, 1954 of the possession established on December 30, 1953 is a fair and reasonable inference. In is for respondent to dispel this inference by 'evidence of something that has happened since the turnover order was made showing that since that time there has newly arisen an inability' on his part to comply', citing Maggio v. Zeitz, 333 U.S. 56, 75, 68 S. Ct. 401, 92 L. Ed. 476.

 Although the Court found it unnecessary, under the circumstances in the Lawrence Carpet Co. case to hold a hearing on the question of present inability of compliance with the turnover order, there are cases wherein such hearings have been held, such as the case of In re Sussman, D.C., 85 F.Supp. 570, 572, wherein the turnover order was dated, October 28, 1947 and the contempt motion was argued about three and one-half months later. The Court, on granting the contempt motion, in part, wrote:

 'Even assuming as true the bankrupt's story as to his very modest manner of living and of his borrowings and other methods of obtaining money in order to support himself and wife for the year 1947, still I cannot accept that defense here as a full and complete exculpation. I must consider all the evidence. I cannot leave out of my mind the judicial determination that three or four months before October 28, 1947 bankrupt had in his possession and control the sum of $ 23,000 of the assets of the estate. The time element here is quite important.

 'His explanation of his inability to turn over the money is not sufficient. Of course, it is natural to presume that any one who evidences no indicia of affluence is not possessed of it. But it is also natural that one who must have known that he would be called upon the explain the loss or disappearance of a substantial sum of money would not likely exhibit signs of affluence.

 'I feel that the Maggio case is not to be read as authority for rendering the turnover order of no effect ...

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