Opinion
No. 6519.
May 16, 1932.
Appeal from the District Court of the United States for the Central Division of the Southern District of California.
In the matter of the bankruptcy of Alex Faerstein, doing business as Al Fairs Day Night Men's Shop. From an order reversing referee's order granting a rehearing and annulling turnover order, pursuant to petition of W.H. Moore, Jr., trustee in bankruptcy, Loeb L. Cossack and others appeal.
Affirmed.
Appellant seeks to reverse an order of the District Court reversing the referee's order granting a rehearing and "annulling the turn over order."
February 7, 1931, the referee, on petition of the trustee, issued a show cause order to the bankrupt and his attorneys to turn over certain ledger accounts, deposit books, bank check book, bank statements, canceled checks, and all other books of account and records of the bankrupt, and requiring R.H. Cossack, assignee of the bankrupt, to account to the trustee for cash in his possession, and requiring Loeb L. Cossack, one of the attorneys for the bankrupt, to turn over to the trustee the sum of $300 collected by him from the San Bernardino National Bank on December 27, 1930, at a time and place stated in the order. At the designated time (March 10) and place the parties appeared, the trustee by his attorneys and the bankrupt and R.H. Cossack by their respective attorneys. Testimony was taken without objection "on behalf of the petitioner and the various respondents." March 11 the referee made and filed findings of fact and conclusions of law, and pursuant thereto, on the same day, issued the turnover order directing that the items enumerated in the show cause order and the sums of $1,912.50 and $300 be turned over to the trustee. No review was sought. On March 19, 1931, Cossack filed a petition for a new trial or reconsideration of the turnover order, praying that it "be set aside and reconsidered." On March 20, without notice to the trustee, the referee in bankruptcy ordered that the "turnover order of March 11 * * * be set aside and annulled and that a further hearing upon said order to show cause be had on the 8th day of April, 1931," at a stated time and place. On March 23, 1931, the trustee in bankruptcy petitioned for review of the referee's order, and on March 30 the referee certified the matter to the District Judge, and the petition, with the certificate, was filed with the clerk on the 3d day of April, 1931. On April 20, 1931, the referee filed with the clerk of the District Court an amendment to certificate on review of order of March 20, 1931, reciting that: "In said certificate I omitted to set forth that I had vacated the original order and granted a reconsideration thereof on the ground that the referee was of the opinion that he had no jurisdiction to make the order and to permit the production of further evidence in order that proper findings might be made thereon."
Thereafter, the matter being presented to the District Judge, the "order of the referee of March 20, 1931, * * * annulling the turn over order of March 11, 1931, is reversed."
The issue concisely is, Did the referee have the power after having made and entered formal findings and conclusions, and after the "turn over order" was issued, to set the same aside, or was the exclusive power vested by law and rule in the United States District Judge to review such order?
Hiram E. Casey and A.L. Wirin, both of Los Angeles, Cal., and Loeb L. Cossack, of San Bernardino, Cal., for appellants.
Craig Weller and Thomas S. Tobin, all of Los Angeles, Cal., and Charles Bagg, of San Bernardino, Cal., for appellees.
Before WILBUR and SAWTELLE, Circuit Judges, and NETERER, District Judge.
Referees are invested with certain powers, "subject always to a review by the judge." Section 66, title 11, USCA. The referee has no independent judicial authority. He is not a distinct court, and has no power not conferred by order of reference, by law or general orders. "The district courts of the United States in the several States * * * are made courts of bankruptcy." 11 USCA § 11. A court is said by Blackstone to be a vested judicial power to adjudicate issues between contending factors, and is composed of the actor, or plaintiff; the reus, or defendant; and the judex, the judicial power which examines the truth of the contending parties and applies the remedy. A referee is an instrumentality of the court, with limited powers. His jurisdiction is defined by section 66, title 11, USCA, supra, and his duties are given in section 67. Neither of these sections gives him the power to review and set aside the order made, and in issue on this appeal.
General Order No. 27 of the Supreme Court (11 USCA § 53) provides that, when a review is sought of any order of the referee, a petition shall be filed with the referee setting forth the error complained of and the referee shall certify to the United States District Judge the question presented, a summary of the evidence, and finding and the order of the referee thereon. The procedure is specific and is clearly stated. Rule 84 of the trial court requires that a petition for review, as provided in General Order 27, supra, must be filed with the referee within ten days from the date of notice of such order.
When an order is entered, the referee's power over the order is ended. The remedy is exclusive and he may not review or change the order. In re Russell (D.C.) 105 F. 501; In re Wister Co. (D.C.) 232 F. 898; also, In re Greek Mfg. Co. (D.C.) 164 F. 211; In re Marks (D.C.) 171 F. 281; In re Avoca Silk Co. (D.C.) 241 F. 607; Matter of J.W. Renshaw's Sons, Bankrupt (D.C.) 3 F.2d 75; Matter of Wm. L. David (C.C.A.) 33 F.2d 748; David v. Hubbard, 280 U.S. 514, 50 S. Ct. 19, 74 L. Ed. 585.
That the procedure of review is plainly defined and power limited in the interest of regularity and for the common good is clearly stated by Judge Sawtelle of this court, sitting as District Judge, in Re Octave Mining Co. (D.C.) 212 F. 457, 458, as follows: "It is manifest that the mode prescribed by General Order 27 is the only manner in which the decisions of the referee may be reviewed. * * *"
While the issue in that case was of a different nature, the terse statement of the procedure to review has forceful application here. See In re Shelley (D.C.) 8 F.2d 878; Matter of D.F. Walser, Bankrupt (D.C.) 20 F.2d 136, 9 A.B.R. (N.S.) 610.
An analysis of the nonapplicability of the cases cited by appellants would unduly extend this memorandum. Nearly all of the cases are based on nonjurisdiction of the referee to determine adverse claims. Smith v. Mason, 14 Wall. 419, 20 L. Ed. 748; Marshall v. Knox, 16 Wall. 551, 21 L. Ed. 481; Bardes v. Hawarden Bank, 178 U.S. 524, 20 S. Ct. 1000, 44 L. Ed. 1175; Louisville Trust Co. v. Comingor, 184 U.S. 18, 22 S. Ct. 293, 46 L. Ed. 413; Jaquith v. Rowley, 188 U.S. 620, 23 S. Ct. 369, 47 L. Ed. 620; Galbraith v. Vallely, 256 U.S. 46, 41 S. Ct. 415, 65 L. Ed. 823; Harrison, Trustee v. Chamberlin, 271 U.S. 191, 46 S. Ct. 467, 70 L. Ed. 897; In re Walsh Bros. (D.C.) 163 F. 352; Plymouth County Tr. Co. v. MacDonald (C.C.A.) 53 F.2d 827. That issue is not before this court. Nor is the sufficiency of the order on contempt proceedings. In re Miller Harbaugh (C.C.A.) 54 F.2d 612. The other cases cited are beside the issue, or are not persuasive. They either do not involve, or are not decisive of, the question of control of a referee of a formal finding and formal order entered upon an issue duly raised in the administration of a bankrupt estate within the ten-day period for filing a petition for review.
In re Hawley (D.C.) 116 F. 429; In re Keyes (D.C.) 160 F. 763; Lockman v. Lang (C.C.A.) 128 F. 279; Id. (C.C.A.) 132 F. 1; In re Romine (D.C.) 138 F. 837; Samuel v. Dodd (C.C.A.) 142 F. 68; In re Simon Sternberg (D.C.) 151 F. 507; Bernard v. Abel (C.C.A.) 156 F. 649; In re Looney (D.C.) 262 F. 209; Johnson v. Goldstein (C.C.A.) 11 F.2d 702; In re Jacob Sitnek (D.C.) 52 F.2d 861, 18 A.B.R. (N.S.) 359.
The plain and simple expressions of the statute, together with the general orders and court rule, free from uncertainty or ambiguity, make it obvious that there is no room for doubt or need of inspired aid to ascertain the intent of the Congress plainly expressed, or of the Supreme Court in promulgating the general orders, or of Rule 84 of the local court in aid of the efficient and harmonious administration of the provisions of the Bankruptcy Act.
The court is only concerned with the power of the referee in setting aside the order in issue. It is not considering the sufficiency of the order on any contempt proceeding; nor whether findings made, and some items in the turnover order, are without the referee's jurisdiction; nor the finality of the order or ability or nonability of appellants to comply therewith. Nor can the court on this appeal determine the jurisdiction of the referee in the turnover order as to adverse claims now asserted or the finality of the order thereto. That is a matter which could have been presented to the United States District Judge on petition for review. Some of the items directed to be turned over are not challenged by appellants on jurisdictional grounds, and as to such the order is beyond question. Books, records, etc., of the bankrupt were without question subject to summary proceedings. Babbitt v. Dutcher, 216 U.S. 102, 30 S. Ct. 372, 54 L. Ed. 402, 17 Ann. Cas. 969.
Affirmed.