Jaffke v. Dunham

LOCATION: Roth's mail-order book business

DECIDED BY: Warren Court (1956-1957)
LOWER COURT: United States Court of Appeals for the Seventh Circuit

CITATION: 352 US 280 (1957)
ARGUED: Dec 12, 1956
DECIDED: Jan 14, 1957

Facts of the case


Media for Jaffke v. Dunham

Audio Transcription for Oral Argument - December 12, 1956 in Jaffke v. Dunham

Earl Warren:

Number 60, Robert W. Jaffke versus William C. Dunham, Trustee.

Mr. Miller.

Herbert J. Miller, Jr.:

May it please the Court.

This is a petition for reclamation filed by one, Jaffke, who is the petitioner here, against William Dunham, who was the trustee in bankruptcy of the estate of Robert Knetzer, who has since died.

The two principal issues in this case are, first, a question of appellate procedure.

The question whether the Court of Appeals had the right to refuse to pass on questions urged by the Appellee, the petitioner here, who was victorious in the trial court, in the absence of a cross-appeal.

The second principal issue, presented by this case, is whether the trustee in bankruptcy, the responded here, had a duty to investigate the source of payments made to him.

Under a turnover order, these payments being made on -- and the time period running up to three and half years after the bankrupt was adjudicated at such.

The bankrupt in this case, Robert Knetzer, had, prior to 1948, engaged in a fraudulent scheme of defrauding people of money which they had deposited on automobile.

In 1948, he was adjudged a bankrupt.

In July of 1949, approximately nine months after his adjudication, the respondent trustee filed a petition asking the bankruptcy court to enter a turnover order.

This, the Court did in July of 1949.

Compliance with the turnover order, not being forthcoming, the bankrupt was the adjudged in contempt of court on December 1st, 1949, and it was sentenced to be incarcerated as a civil contempt order.

This was stayed -- the sentence to jail was paid, however, until March of 1950.

Subsequent at this date, he was placed in jail.

However, subsequent to March of 1950, on many occasions, the bankrupt was release from custody, ostensibly to obtain assets with which to comply with the turnover order which required him to pay to the trustee in bankruptcy, the sum of $250,000.

While on these excursions from custody, the bankrupt contacted Jaffke, the petitioner here.

And by reasons of certain fraudulent representation to him, concerning a large scale building development which was to be run by the Bison Corporation, a fictitious organization, Knetzer defrauded Jaffke of the sum of $47,000.

This occurred in a period commencing in December of 1950, approximately a year and a half after the entry of the turnover order and payments were made by Jaffke to Knetzer through October of 1951.

After this money had been obtained from Jaffke, he subsequently discovered that he had been the defrauded.

And he approached the bankrupt and attempted to ascertain what had become of his asset.

Pursuant to this conversation, the bankrupt executed an affidavit, which in effect states, that he had borrowed $47,000 from Jaffke and that he had paid $36,000 of Jaffke's money over to the trustee in bankruptcy.

Subsequently, Jaffke filed his petition for reclamation in the bankruptcy court.

He named as the defendant, the bankrupt, Robert Knetzer, suing him for $47,000 and he also named as the defendant trustee of Knetzer's estate.

Well, prior to trial, however, Knetzer died and the case proceeded with only the respondent trustee as the defendant in the case.

At the trial, it appeared that the -- the fraudulent representations of the bankrupt to Jaffke was set out in full, and demonstrated that Jaffke had gone out on the basis of these representations and had borrowed money from other people which he subsequently repaid in order to invest in this scheme.

The trial court found that the -- Knetzer had committed a fraud on Jaffke and the appellate court affirmed that finding of fraud.

Therefore, I shall not detail all of those facts here.

At the trial, it appeared, further, that the trustee in bankruptcy had, on several occasions, been approached by Knetzer while he was a civil contemnor at a time from one to two years subsequent to the time when he had been adjudged to -- a civil contemnor for failure to comply with his turnover order.

And pursuant to Knetzer's request, the trustee would call his attorney or would call the bankruptcy judge who sentenced Knetzer to jail and would ask that Knetzer have additional time free from incarceration.