by the Commission. We see no merit in the suggestion that the testimony of the reasonableness of the "specifics" was incompetent. Upon the issue of reasonableness, the propriety of each factor was both competent and material, notwithstanding in the proposed new tariff the rate was published as a through rate. What we have said about the specifics or proportionals north of the river applies equally to both South Atlantic and Gulf rates, so far as through rates were based thereon. Further, the Commission had before it, not only comparative distances from representative points of shipment in both South Atlantic and Gulf territory to destinations, including Kalamazoo, Grand Rapids, and such comparable points as Cincinnati, Chicago, Milwaukee, and Detroit, but tables showing ton-mile earnings and car-mile earnings from representative points of shipment, in both Gulf and South Atlantic territory, under both the old and the suspended tariffs, by the shortest workable routes to each of the destinations given immediately above."

[6] We think the rates here assailed must be sustained, unless unjustly discriminatory as against Kalamazoo and Grand Rapids, or both, or unless violative of the "long and short haul" clause (section 4) of the act (as Amended by Act Feb. 28, 1920, § 406 [Comp. St. Ann. Supp. 1923, § 8566]). By plaintiffs' brief in this court the charge of discrimination is, at best, faintly presented. The bill alleges generally that rates from the Gulf ports to Kalamazoo are higher than from the same point of origin to Chicago, although the latter is the longer haul; that the rates from Mississippi Valley territory to Grand Rapids are higher than the rates from the same points of origin to Milwaukee, "which is a longer haul," and, more specifically, that the rate to Cincinnati was described by the carriers at the suspension hearing to be the key rate to the territory beyond; that the distance from Cincinnati to Kalamazoo is less than to either Chicago or Milwaukee, and from Cincinnati to Grand Rapids less than to Milwaukee; that transportation conditions to Kalamazoo and Grand Rapids were not shown to be less favorable than to Chicago and Milwaukee, and thus that Kalamazoo is directly intermediate to Chicago and Milwaukee, and Grand Rapids directly intermediate to Milwaukee by way of various worked and workable routes.

5 See Commission's report in suit by plaintiffs against Director General. 91 Interst. Com. Com'n R. 224, 225.

It will be observed that no charge of discrimination in South Atlantic rates is made. Indeed, that rate to Kalamazoo is the same as to Chicago and Detroit, and 2 cents less than to Milwaukee, and to Grand Rapids is 1 cent less than to Milwaukee. From the Gulf territory, however, Kalamazoo's rate is the same as Milwaukee's, viz. 1 cent less than Detroit's, but 2 cents higher than Chicago's; and Grand Rapids' rate is 1 cent higher than Milwaukee's. But the direct and logical route from Cincinnati to Kalamazoo and Grand Rapids does not pass through either Chicago, Milwaukee, or Detroit. Nor does the direct and logical route from Chicago to Milwaukee pass through either Kalamazoo or Grand Rapids. Moreover, by one of the comparative earning schedules before referred to, the distance from Mobile' to the points involved here were to Cincinnati, 750 miles; Chicago (which is nearly 300 miles from Cincinnati), 858 miles; Milwaukee, 943 miles; Kalamazoo, 963 miles; Grand Rapids, 1,011 miles, and Detroit 1,021 miles. The Commission found that "because of the absence of routing instructions, Kalamazoo and Grand Rapids are technically intermediate to Chicago, Detroit, and Milwaukee by possible routes, although the record indicates that actual movement over such routes would be unusual." 91 Interst. Com. Com'n R. 225.

The Commission further found that the Illinois Central controls the rates from New Orleans to Chicago, and hence to Milwaukee, and that other carriers serving New Orleans and the other Gulf ports meet the New Orleans-Chicago rate so made. 91 Interst. Com. Com'n R, 226. We think that neither these findings nor the basing of the Mississippi Valley rate to Milwaukee upon the Chicago rate can be pronounced arbitrary or beyond the Commission's authority. It seems clear

Unless possibly as between Grand Rapids and Chicago. But, apart from the influence of the lower Gulf rates to Chicago, it is a mistake to say that the distance from Cincinnati to Grand Rapids is less than to Chicago. We are cited to no reference, and we know of none, supporting the statement in plaintiffs' brief that the Commission finds that "there is no justification for the through rate to Grand Rapids, which is higher than the rate to Chicago," if intended to refer to the new rate established by trary. 87 Interst. Com. Com'n R. at page 754; the Commission. Its findings are to the con91 Interst. Com. Com'n R. at page 227.

7 Mobile would seem to me a fairly representative Gulf port. The Commission says that "distances are stated by the parties to have. been computed by the shortest workable routes." 91 Interst. Com. Com'n R. 225.

that by neither the old nor the later suspend

In re STEIN.

Air Line Ry. v. United States, 254 U. S. 5762, 41 S. Ct. 24, 65 L. Ed. 129.8

We see no basis for the contention that the rates established by the Commission violate the fourth section of the act. The Commission found that the suspended rates did have that effect, and in canceling those rates and ordering new rates denied applications for relief from fourth-section departures, with leave later to apply for relief where ground should exist therefor (87 Interst. Com. Com'n R. 756), and in modifying the rate from Milwaukee as before referred to, by reason of a charge of discrimination as against Kalamazoo and Grand Rapids, permitted, without requiring, the carriers to keep open routes from points in the eastern portion of the New Orleans group through Grand Rapids to Milwaukee by reducing the Grand Rapids rates from such points (89 Interst. Com. Com'n R. 637); and in its later order dismissing plaintiffs' complaint, which asked injunction against the rate adjustment (91 Interst. Com. Com'n R. 226227), the Commission said, not only that "the new adjustment will result generally in the removal of the existing fourth-section departures in the origin territory," but "it is understood that the routing under the new adjustment will be so restricted as to remove the technical fourth-section departures with respect to destination points hereinbefore referred to," which were Chicago, Milwaukee, Kalamazoo, and Grand Rapids.

It results that the application for injunction must be denied. At the hearing counsel for both parties orally expressed willingness that the final decree be made upon the record already submitted and the arguments made upon the motion. Should counsel still be so minded, they may file stipulation to that effect.

8 By the old established Gulf port tariffs, rates to Cincinnati, Chicago, and Milwaukee were, in the order above given, 27 cents, 30 cents, and 33 cents; by the suspended rates they were, respectively, 33 cents, 37 cents, and 40 cents;

while Kalamazoo's rate was 34.5 and 47.5. The rates from South Atlantic ports to

20, 1925.) No. 13967.

1. Contempt 70, 79-Sentence is for punishment or coercion, and for coercion should be for imprisonment until performance.

The exercise of the power to punish for contempt, given by Judicial Code, § 268 (Comp. St. § 1245), has a twofold aspect: First, the proper punishment of the guilty party for disrespect to the court; and, second, to compel performance of some act or duty required by the court which he refuses to perform, in which case the sentence should be coercive, by im

prisonment until he performs or shows his in

ability to do so.

Willful refusal to 2. Bankruptcy 241 (2) answer questions required by referee is "criminal contempt."

Willful refusal by bankrupt or other witness to answer questions required by a referee in an examination under Bankruptcy Act, § 21(a), being Comp. St. § 9605, constitutes a "criminal contempt."

[Ed. Note.-For other definitions, see Words and Phrases, First and Second Series, Criminal Contempt.]

3. Bankruptcy 241(2)-Bankrupt held guilty of contempt for refusal to answer questions.

Bankrupt, indebted $43,000 for merchandise purchased within six months, who on his exdeficiency of $38,000 in merchandise, stating amination persisted in refusing to account for a

that it was "impossible," that he did not know, held chargeable with contempt.

4. Bankruptcy 228-Observation of witness by referee adds weight to finding.

The opportunity of a referee to observe a witness while testifying before him adds

weight to his finding that the witness was not

telling the truth.

In Bankruptcy. In the matter of Nathan Stein, bankrupt. On referee's certificates Nathan Stein and Jake Aurabach were cited for contempt. Both respondents adjudged in contempt.

Order reversed F. (2d)

Henry Ach, of San Francisco, Cal., for referee and creditors.

Hilton & Christensen, of San Francisco, Cal., for respondent Stein.

Otto G. Kuklinski, of San Francisco, Cal., for respondent Aurabach.

KERRIGAN, District Judge. Nathan

by the Commission, were the same as to Cincinnati, viz. 33 cents; while the Gulf rates were, in the case of Louisville 1 cent, and in the case of Cairo 5 cents, less than to Cincinnati, apparently due to the influence of the Illinois Central rates from New Orleans. 87 Interst. Com. Com'n R. 754.

before this court on an order to show cause why he should not be punished for contempt, because he has refused to be examined according to law under section 21 (a) of the Bankruptcy Act (Comp. St. § 9605), regarding certain matters in connection with the

administration of the business of the bankrupt prior to the date of bankruptcy.

One Jake Aurabach, a witness called by the trustee of the estate of said bankrupt, to be examined under the provisions of the same section, has in like manner been cited before this court for contempt in refusing to be examined according to law.

The facts in each case have been sufficiently set out in the referee's certificates, and are not such as to require restatement. Attention, therefore, will be given only to the alleged contumacious behavior of respondents in failing to be examined as provided by the section of the Bankruptcy Act referred to. It appears from the certificate on contempt of the bankrupt that, after full and complete examinations before the referee, among others the following questions were put to him by counsel for the trustee, and the following answers returned:

"At the present time and at the date of your bankruptcy, according to your schedules, you were owing for merchandise on credit some $43,489.59; to that I add $17,000 in assets, excluding the fixtures you had, making an aggregate of $60,489.59. You were in business alone for part of the month of June, and up to November 27, 1924, a little less than six months; and your return of merchandise on hand aggregates less than about $22,000; leaving a deficiency of $38,489 and some odd cents in that short period of six months or less. I want you to account for that deficiency at this time? Answer: It would be impossible for me to do it.

"Question: You cannot do it at all? Answer: For me it is absolutely impossible.

"The Referee: The trustee has pointed out to you that there is a shortage, therefore, of approximately $38,000. The trustee has now asked you to explain how that shortage has come about, and you have answered, as I understood you, that you cannot explain it. Is that your answer? Answer: That is my answer. The reason I say that is because I really don't know.

"The Referee: The referee is pretty well satisfied that your shortage was due to the merchandise that was received by Paul Schainman, Henry Cohn, and Jake Aurabach. While Mr. Brill may have acted in a measure as manager for you, the referee is of the opinion that you do know more than you have disclosed in this court,

and the referee instructs you to disclose the truth respecting this.

If you have anything further to say, you may state it. Answer: There is nothing I can disclose any more than I have told."

[1] Section 725 of the Revised Statutes gives the United States courts power to punish for contempt, both by fine and imprisonment. Judicial Code, § 268 (Comp. St. § 1245). The exercise of this power has a twofold aspect; namely: First, the proper punishment of the guilty party for his disrespect to the court; and the second, to compel his performance of some act or duty required of him by the court, which he refuses to perform. In the former case the court must judge for itself the nature and extent of the punishment, with reference to the gravity of the offense. In the latter, the party refusing to obey should be fined and imprisoned until he performs the act required of him or shows that it is not in his power to do it. In re Chiles, 89 U. S. (22 Wall.) 157, 168, 22 L. Ed. 819; Gompers v. Bucks Stove & Range Co., 221 U. S. 418, 441, 31 S. Ct. 492, 55 L. Ed. 797, 34 L. R. A. (N. S.) 874; Clay v. Waters, 178 F. 385, 389, 101 C. C. A. 645, 21 Ann. Cas. 897; Merchants' Stock & Grain Co. v. Board of Trade of the City of Chicago, 187 F. 398, 399, 109 C. C. A. 230; Bessette v. W. B. Conkey Co., 194 U. S. 324, 328, 24 S. Ct. 665, 48 L. Ed. 997; In re Kahn, 204 F. 581, 583, 123 C. C. A. 107; 13 C. J. 86.

If imprisonment be imposed in a proceeding of the latter kind, it must be coercive in its nature. When inflicted in one of the other category, it is fixed and certain as a punishment for a completed disobedience of orders, or for other past wrongdoing. In re Kahn, supra. In this class of cases the sentence is entirely within the discretion of the trial court. Judicial Code, § 268; Creekmore v. United States, 237 F. 743, 105 C. C. A. 497, L. R. A. 1917C, 845.

752,

[2] The question thus presented is: Are these proceedings to punish civil or criminal contempts? The recent case of Davidson v. Wilson (C. C. A.) 286 F. 108, 110, is almost directly in point. There, as here, the matter complained of was distinctly one of the things forbidden by section 41 of the Bankruptcy Act (Comp. St. § 9625). As was done in this case, the matter was officially brought before the district judge by the referee on certificate, as provided by that section. In neither case was there a prayer for civil relief. On the authority of In re Kaplan Bros., 213 F. 753, 757, 130 C. C. A. 267, it was there held that the entitling of the papers in the bankruptcy proceeding

could not be decisive. The holding was that the proceedings, being for contempt of the judge's order to testify as the Bankruptcy Act required, were criminal in their nature. We think that to be the fact in this case.

[3] It remains to be decided whether or not the bankrupt's disclaimer of knowledge and his continued assertion of inability to answer questions constituted a contempt of court. Ex parte Hudgings, 249 U. S. 378, 382, 39 S. Ct. 337, 339, 63 L. Ed. 656, 11 A. L. R. 333, has been relied on as establishing the proposition that in such cases the only offense committed is that of perjury. Such, however, was not the decision there rendered. "That the contumacious refusal of a witness to testify may so directly obstruct a court in the performance of its duty as to justify punishment for contempt," said Chief Justice White in his opinion, "is so well settled as to need only statement." The point decided was simply that "there must be added to the essential elements of perjury under the general law the further element of obstruction to the court in the performance of its duty." (Italics ours.)

The law is, in fact, well settled that a witness in bankruptcy proceedings may be guilty of a criminal contempt by giving willfully evasive testimony and exhibiting a manifest determination to conceal the truth. 7 Remington on Bankruptcy, 8 3027, and cases cited; In re Kaplan Bros., 213 F. 753, 757, 130 C. C. A. 267; In re Schulman, 177 F. 191, 193, 101 C. C. A. 361; ·Davidson v. Wilson (C. C. A.) 286 F. 108, 110; Haimsohn v. United States (C. C. A.) 2 F. (2d) 441, 442. In most of the cases referred to persistence in such answers as "I don't know," and "I don't remember," made under circumstances rendering the truth of those statements highly improbable, was held to constitute a contempt of court.

In that of In re Rosenblum (D. C.) 268 F. 381, which is closely in point, a bankrupt had bought goods in excess of $23,000 during the last four or five months preceding his bankruptcy, and had only $3,500 on hand at the time of his failure. As in the present case, he was examined at considerable length,. and gave answers which were totally unsatisfactory and ineffective. In further similarity to the case before us, his own admissions showed that he had delivered, claiming to have sold, considerable quantities of goods to other dealers. In adjudging him guilty of contempt, the court used language which we think applicable in its

entirety to the case of Nathan Stein: "Making all allowances for ignorance and imperfect and unsystematic business methods, the court cannot shut its eyes to the fact that the bankrupt belongs to a shrewd business class, which is not given to dissipating its property or giving it away to others, without compensation, and without heed to its destination."

[4] The naked words which the referee has certified, in and of themselves, are sufficient proof of the falsity of the statements which this bankrupt has made in a transparent and obvious effort to defraud his creditors and to use the Bankruptcy Act as an instrument of fraud. Nor is the fact to be lost sight of that, as pointed out by the Circuit Court of Appeals in Re Schulman, supra, however disingenuous a bankrupt's testimony appears when read, it is obvious that the opportunity to "watch" him gave the referee a very marked advantage in determining whether he was acting honestly. "The testimony of a witness may sound plausible when read afterwards from a printed book and yet his conduct on the stand may have been such that no one who heard him testify believed that he was telling the truth."

For this reason alone we would hesitate to overrule the finding of contempt in this case, made by the referee after observing the witness for hours on the stand. But here on the face of the certificate itself there is no room for doubt. As in United States v. Appel (D. C.) 211 F. 495, 496, the witness was being asked regarding transactions directly within his knowledge and facts which he must have known. When, therefore, he answered repeatedly, "I don't remember," it is obvious that he was deliberately withholding information to which the trustee was entitled. In effect his attitude was one of defiance. The bankrupt is then convicted of contempt of court.

With regard to the case of Jake Aurabach it is sufficient to say that under the principles above set forth he clearly was guilty of such misconduct during his examination before the referee as to amount to a willful obstruction of the bankruptcy court in the performance of its duty. Ex parte Hudgings, supra. He also must be held guilty of contempt before the referee, and accordingly, under the express terms of section 41(b), punishable upon the same conditions as if the failure to give proper testimony had occurred in the presence of this tribunal.