Ensign v. Pennsylvania

Background

Two men who ran a private banking business in North East, Pennsylvania received a $1,000 deposit on February 12. They closed the bank on February 15, assigned their assets to pay creditors on February 17, and were soon placed in involuntary bankruptcy. The bankers filed written bankruptcy schedules and turned over their books to the bankruptcy trustee. They were later indicted under a Pennsylvania law for receiving deposits while insolvent. At their criminal trial the state introduced the written bankruptcy schedules and an expert accountant’s report based on the trustee-held books over the bankers’ objection.

Reasoning

The central question was whether the bankruptcy law’s protection that “no testimony given by him shall be offered in evidence against him in any criminal proceeding” bars the use of those written schedules and the accountant’s evidence in a state criminal case. The Court explained that the sentence protects testimony given orally at creditor examinations, not written schedules filed under a different clause of the Bankruptcy Act. The word “testimony” naturally refers to spoken answers at an examination, while the schedules are written filings prepared and sworn to in court. The Court also noted that a separate federal statute then in force that protected discovery evidence applied only to federal courts, not state courts. Applying that interpretation, the Court held that the schedules and expert analysis were admissible, and the state’s convictions were affirmed.

Real world impact

The ruling makes clear that bankruptcy schedules filed in writing can be used in state criminal prosecutions. It also allows expert accounting evidence based on books turned over to a trustee to be admitted against defendants in state trials.