In Re Pearlman, 16 F.2d 20 (2d Cir. 1926)

*21 Arthur Leonard Ross, of New York City, for petitioner.

Israel Akselrod, of New York City, for respondent.

Before HOUGH, MANTON, and HAND, Circuit Judges.

HAND, Circuit Judge (after stating the facts as above).

We have ignored the absence of any proper return to the District Court, the practice being so loose, and have examined the record as best we can. It is destitute of any proof that at the time of adjudication, and a fortiori at the time when the petition was filed, the policies had a surrender value. The time of filing the petition determines the trustee's right (Burlingham v. Crouse, 228 U.S. 459, 33 S. Ct. 564, 57 L. Ed. 920, 46 L. R. A. [N. S.] 148, a right itself limited to such surrender value as the policy then has. We cannot speculate as to the probability that the policy, which was four years old, had such a value; the only evidence is that it had not. As the proof stands, the trustee made out no case.

The informality of the proceedings makes it nearly impossible to learn the facts. There was no answer, and so no issue; no report of the referee, and so no findings; and the meandering colloquy of counsel, parties, and referee is extraordinarily confusing. Our decision in Re Sugarman, 3 F.(2d) 436, was disregarded by every one, and the result is to throw much difficulty in the way of any review. While the order must be reversed, in view of the character of the proceedings throughout, the trustee should have an opportunity to retry the case after proper issues have been framed by an answer.

While we have examined the record as though it were regularly before us, the occasion seems to us apt to restate the practice applicable to petitions for review of referees' orders. The proceeding is in substance an appeal from the court of bankruptcy i. e., the referee to the District Court. By section 39 (5), being Comp. St. § 9623, it is made the duty of referees to "make up records embodying the evidence, or the substance thereof, * * * together with their findings therein, and transmit them to the judges." General Order XXVII requires the referee to "certify to the judge the question presented, a summary of the evidence relating thereto, and the finding and order of the referee thereon." When the petition to review is lodged with the referee, it becomes his duty to *22 prepare and certify his return as above prescribed, and to it alone the District Court should look in disposing of the petition.

We are not disposed to press too hard upon the necessity of a "summary" of the evidence. Crim v. Woodford, 136 F. 34, 68 C. C. A. 584 (C. C. A. 4); In re Taft, 133 F. 511, 66 C. C. A. 385 (C. C. A. 6). But it was wholly unjustifiable to include any part of the colloquy of counsel, unless it is a concession, or stipulation in open court. A frequent practice, as in the case at bar, has been merely to return uncertified the whole of the stenographer's minutes with the referee's order. This is irregular, and actually prevents us from observing the limitations imposed upon our jurisdiction. Section 39 (5), in allowing the parties to stipulate as to the "substance" of the evidence, does not permit them to include what is not evidence at all, or relieve the referee of his duty to supervise the return and excise what should not appear. If the return is not satisfactory to either party, his remedy is to apply to the District Court to compel a fuller return. We trust that the District Courts will insist upon compliance by referees with the provisions of law as above set forth, and refuse to consider petitions unless properly prepared.

Order reversed, and cause remanded to the referee for further proceedings in conformity with this opinion.