U.S. Supreme Court
Maggio v. Zeitz, 333 U.S. 56 (1948)
Maggio v. Zeitz
Submitted October 13, 1947
Decided February 9, 1948
333 U.S. 56
1. In a civil contempt proceeding against a bankrupt for failure to comply with an order to turn over to the trustee assets of the estate found to be in his possession or under his control at the time such order was issued (20 months earlier in this case), the bankruptcy court should not adjudge the bankrupt in contempt and commit him to jail to coerce compliance if it appears that he is presently unable to comply, even though the previous finding that he had possession of the property when the turnover order was issued has become res judicata. Pp. 333 U. S. 69-78.
2. Courts of bankruptcy have no authority to compensate for any neglect or lack of zeal in applying the criminal sanctions prescribed by the Bankruptcy Act by perversion of civil remedies to ends of punishment. P. 333 U. S. 62. chanroblesvirtualawlibrary
3. The summary turnover procedure, fashioned by bankruptcy courts as a means of retrieving concealed assets or books of account, is essentially a proceeding for restitution of property, rather than indemnification, and the primary condition of relief is possession of existing chattels or their proceeds capable of being surrendered by the person ordered to do so. Pp. 333 U. S. 62-63.
4. Resort to a turnover proceeding is not appropriate when the property and its proceeds have already been dissipated, no matter when that dissipation occurred. Pp. 333 U. S. 63-64.
5. In a turnover proceeding, the burden is upon the trustee to prove by clear and convincing evidence that the property has been abstracted from the bankrupt estate and is in the possession of the party proceeded against. Oriel v. Russell, 278 U. S. 358. P. 333 U. S. 64.
6. The presumption that possession of property of a bankrupt, once proven, continues until the possessor explains when and how possession ceased is not a rule of law to be applied in all cases, but a rule of evidence to be applied only when the time element and other factors make that a fair and reasonable inference. Pp. 333 U. S. 64-66.
7. A turnover order should not be issued or affirmed on a presumption thought to arise from some isolated circumstance, such as one-time possession, when the reviewing court finds from the whole record that the order is unrealistic and unjust. Pp. 333 U. S. 66-67.
8. When a turnover proceeding is completed and terminated in a final order, it becomes res judicata, and is not subject to collateral attack in a subsequent proceeding in civil contempt to coerce obedience . Pp. 333 U. S. 68-69.
9. Even though a turnover order has become res judicata as to the issue of possession of the goods in question at the time of the turnover proceedings, a subsequent proceeding in civil contempt to coerce compliance tenders the issue as to present willful disobedience, which must be tried like any other issue, and the Court is entitled to consider all evidence relevant to it. Pp. 333 U. S. 74-75.
10. In a civil contempt proceeding to coerce compliance with a turnover order, the bankrupt may not challenge the previous adjudication of possession made when the turnover order was issued, but he may be permitted to deny his present possession and to give any evidence of present conditions or intervening events which corroborate such denial. Pp. 333 U. S. 75-76.
11. In a civil contempt proceeding to enforce a turnover order, a trial court is obliged to weigh not merely the facts that a turnover order has issued and has not been obeyed, but also all other evidence chanroblesvirtualawlibrary
properly before it, in determining whether or not there is actually a present ability to comply and whether failure to do so constitutes deliberate defiance which a jail term will break. Pp. 333 U. S. 76-77.
12. This Court regards turnover and contempt orders, and petitions for certiorari to review them, as usually raising only questions of fact to be solved by a careful analysis of evidence, which should take place in the lower courts, and this Court is loath to review particular cases, especially where the order carries approval of the referee, the district court, and the circuit court of appeals. P. 333 U. S. 70.
13. When a misapprehension of the law has led both courts below to adjudicate rights without considering essential facts in the light of the controlling law, this Court will vacate the judgments and remand the case to the district court for further proceedings consistent with the principles laid down in this Court's opinion. P. 333 U. S. 77.
157 F.2d 951, judgments vacated and case remanded.
A referee in bankruptcy found the bankrupt in contempt for failure to comply with a turnover order previously affirmed by the District Court and the Circuit Court of Appeals. The District Court affirmed, and ordered the bankrupt committed to jail until he complied or until further order of the court. The Circuit Court of Appeals affirmed, although it said it knew that the bankrupt could not comply with the turnover order. 157 F.2d 951. This Court granted certiorari. 330 U.S. 816. Judgments vacated and case remanded to the District Court, p. 333 U. S. 78.