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United States v. Schireson.

December 19, 1940


Appeal from the District Court of the United States for the Eastern District of Pennsylvania; William H. Kirkpatrick, Judge.

Author: Goodrich

Before MARIS, JONES, and GOODRICH, Circuit Judges.

GOODRICH, Circuit Judge.

Appellant, Henry J. Schireson, was convicted upon both counts of an indictment charging that he concealed assets from his trustee in bankruptcy and that he made a false oath with reference to his assets, in violation of section 29, sub. b(1) and (2) of the Bankruptcy Act of 1898, as amended in 1926, 44 Stat. 662, 11 U.S.C.A. ยง 52, sub. b(1,2).

Schireson filed his voluntary petition in bankruptcy on April 22, 1937 in the Eastern District of Pennsylvania. His schedules listed assets of approximately $350 and liabilities totalling some $35,000. In June of 1939, the Collector of Internal Revenue seized the safety deposit box of the bankrupt's wife in the Merchantville National Bank and Trust Company of Merchantville, N.J. With few exceptions the defendant's wife did not use her husband's name but was known as Rose or Rosalie Weinroberts, Wein-Roberts or Roberts. In the box was found property valued at approximately $130,000 consisting chiefly of securities, but including some cash, jewelry and policies insuring the life of the defendant for the benefit of his wife. In 1930 Schireson had transferred to Miss Roberts about $130,000 worth of securities. This transfer took place in Chicago where the parties then lived. Some years later Schireson came to Pliladelphia and opened professional offices for the practice of plastic surgery. It seems that Miss Roberts has lived in Merchantville since 1935. The securities found in her safety deposit box were, for the most part, shown to have been acquired in exchange for the securities originally transferred to her by the defendant (or their proceeds), although about 20 per cent of the original securities still remained.

The government's theory was that while ostensibly this property belonged to Miss Roberts, in reality it was that of the bankrupt, while the defendant contended that he had made a valid prenuptial gift of the property to Miss Roberts. The trial of this case consumed approximately nine days. A great deal of testimony was offered regarding transactions involving transfer of assets by the defendant to Miss Roberts and other affairs of the defendant and Miss Roberts over a period of years. The contention of the prosecution is that this testimony established the ownership and virtual control over this property in the defendant with the transfer at most a trust for his benefit. The evidence of the government, if believed, was sufficient to establish its contention. The problem here is a typical one for the trier of the facts, and there is no object to be gained by outlining the testimony in this opinion.

The defendant complains that irrelevant testimony was received. While we do not understand that he insists that any particular part of this testimony was inflammatory or prejudicial he does contend that the sum total thereof tended to becloud the issues and confuse the jury. A short answer to this contention might be that the jury may as well have been confused in the defendant's favor as against him. It must be confessed as the transcript is read after the trial is over that some of the testimony is a little hard to give probative weight to for any issue in the case. But it must be remembered that it is easier to determine what are the important issues in a case after a trial has occurred than before it, and we should hesitate to interfere in a field so largely within the discretion of the trial judge. The case was ably submitted to the jury in a charge which clearly brought out the issues. We find no occasion for correcting the discretion of the trial judge in this instance.

Nor was there any error in the trial court's definition of reasonable doubt.We have examined carefully the charge on this point and we believe it was adequate to give the jury, so far as words can do so, an understanding of what the concept of reasonable doubt is. We do not believe it to be the law that a trial judge must make this a matter of ritual and use the precise words found in a decision either in Pennsylvania or elsewhere.

The defendant complains of a variance between the allegations of the indictment and the proof offered in that the most the government's proof tends to show is a secret trust by which the equitable ownership of certain property was retained by the defendant with the legal title therein passing to Miss Roberts. We find no merit in this contention. Part of it is based upon a concept of concealment growing out of the Gretsch case, elsewhere disapproved of in this opinion. Aside from that, however, it is perfectly clear that under the statute the trustee succeeds both to legal and equitable interests in property owned by the bankrupt at the time of the bankruptcy, provided that the bankrupt could have transferred that interest or the property could have been followed by the bankrupt's creditors. Thummess v. Von Hoffman, 3 Cir., 1940, 109 F.2d 293. The items of ownership were described with careful particularity in this indictment. There is no possible prejudice resulting to the defendant from proof establishing an equitable as distinguished from a legal title. The contention, therefore, is without substance. We agree with the trial court that United States v. Knopfer, D.C.M.D. Pa. 1935, 12 F.Supp. 980, does not support the defendant's argument on this point and also agree with the trial court that if it did go so far we should not follow it.

There is also nothing to the contention that the indictment does not include the money received from payments of one Carlough. Proof regarding these payments is dealt with in another portion of this opinion where the relevant facts concerning the receipt of the money are stated. While this "Carlough" money is not mentioned by name in the indictment there is alleged concealment of "moneys, goods, wares and merchandise" followed by a description of what is explicitly said to be "a portion of said property". This count of the indictment concludes with the allegation that "a more particular description of said moneys, goods, wares and merchandise being to this Grand Inquest at present unknown". In view of this language we cannot accept the argument that the indictment charges only the concealment of the property specifically described.

This leads us to the two really important questions in this case. defendant contends that the District Court for the Eastern District of Pennsylvania had no jurisdiction and to subject him to trial there violated his constitutional rights under the Sixth Amendment. This argument, although not so expressly stated, must apply only to the concealment count because, obviously, if there was a false oath it was made in Philadelphia. The basis for the argument upon the lack of jurisdiction on the concealment count is that the assets alleged to have been concealed by Dr. Schireson originally came from Illinois, were subsequently moved to New Jersey and were not shown ever to have been within Pennsylvania at any relevant time. The question is squarely raised whether a man can be guilty of the offense of concealing in the Eastern District of Pennsylvania when the physical things alleged to have been concealed are elsewhere.

It must be borne in mind that concealment is no crime until bankruptcy comes about. There can be no concealment from a trustee prior to the appointment of a trustee. United States v. Yasser, 3 Cir., 1940, 114 F.2d 558. A man who is not a bankrupt may have buried treasure all over the world. He commits no offense under the Bankruptcy Act. Certainly it was no indictable concealment to have valuable objects in a bank vault in New Jersey before bankruptcy. The wrongdoing came only after bankruptcy had supervened. But the acts which the defendant did thereafter were done in Pennsylvania.

In connection with the problem of analyzing what is involved in this offense it must be borne in mind that the word "conceal" does not mean merely to secrete or hide away. It means, also, "to prevent the discovery of or to withhold knowledge of". If a bankrupt owned land with an office building on it, it is hardly conceivable that he could physically hide it away. Yet there could be no doubt that he would be concealing this asset from the trustee in bankruptcy by failing to disclose his ownership. Suppose that the goods were on the New Jersey side of the line and the bankrupt and the trustee were on the Pennsylvania side of the line, and the bankrupt stood in the line of the trustee's vision in such a way that the latter could not see the objects in New Jersey. There can be no doubt that the concealment took place in Pennsylvania. So, here, if the bankrupt falsified his schedule of assets in Philadelphia he "withheld knowledge of" them from the trustee and thereby concealed them no matter where the goods were located.

The defendant in this case cites Gretsch v. United States, 3 Cir., 1916, 231 F. 57.That case involved a New Jersey bankrupt and New York assets; a majority of this court held, even though the point was made for the first time on appeal, that the prosecution would not lie in the District of New Jersey. The decision has received unfavorable comment in Leavitt, Federal Bankruptcy Act, Section 29, 11 Corn.L.Q. 300, 307; 16 Col.L.Rev. 602; 2 Collier on Bankruptcy, 14th Ed. 1940, 1153; see, however, 14 Michigan L. Rev. 673. While not expressly contrary we think the point of view of the court in Conetto v. United States, 9 Cir., 1918, 251 F. 42, and in United States v. Shapiro, 7 Cir., 1939, 101 F.2d 375, is distinctly in the opposite ...

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