Hamilton-Brown Shoe Co. v. Ben L. Berwald Shoe Co.

• Citation: 10 F.2d 275
• Decision Date: 19 January 1926
• Docket Number: No. 4603.,4603.
• Parties: HAMILTON-BROWN SHOE CO. et al. v. BEN L. BERWALD SHOE CO. et al. In re BEN L. BERWALD SHOE CO.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

10 F.2d 275 (1925)

HAMILTON-BROWN SHOE CO. et al. v. BEN L. BERWALD SHOE CO. et al.

In re BEN L. BERWALD SHOE CO.

No. 4603.

Circuit Court of Appeals, Fifth Circuit.

December 22, 1925.

Rehearing Denied January 19, 1926.

R. G. Storey and Fred J. Dudley, both of Dallas, Tex. (Burgess, Owsley, Storey & Stewart, of Dallas, Tex., on the brief), for appellants.

Emil Corenbleth, of Dallas, Tex., for appellees.

Before WALKER, BRYAN, and FOSTER, Circuit Judges.

FOSTER, Circuit Judge.

This is an appeal from an order approving an offer of compromise, made by a third party to the trustee on behalf of himself and the others, as well as the bankrupt. A motion was made to dismiss the appeal. It appears that the order appealed from was entered on March 2, 1925, and the motion for the appeal was not filed until June 1, 1925, nearly three months later.

Appellees contend that the case should have been removed to this court on petition to superintend and revise, for which our rules fix a limit of 30 days. See rule 38. As will subsequently appear, the case presented is not purely that of an administrative order, contemplated by section 24b, Bankruptcy Act (Comp. St. § 9608), nor an appeal, to be governed by section 25a of said act (section 9609). For the purpose of jurisdiction, and with regard to the delay allowed for removing it, the case must be considered as involving a controversy arising in a bankruptcy proceeding contemplated by section 24a, Bankruptcy Act, and appealable under the general equity jurisdiction of this court. So considered, the appeal was taken timely. The motion to dismiss will be denied.

Coming, now, to the merits, the material facts are these:

The Ben L. Berwald Shoe Company was adjudicated bankrupt and during the administration of its affairs Ben L. Berwald, who was the president and principal stockholder of the bankrupt corporation, made an offer in writing to the trustee to take over the assets of the bankrupt for an amount of cash sufficient to pay the unsecured creditors 55 per cent. of their claims. He was careful to stipulate that he did not submit himself to the jurisdiction of the court, and the offer contemplated the compromise of all claims of all unsecured creditors of the bankrupt against himself and the other officers and stockholders of the bankrupt, as well as the claims against the bankrupt corporation. To that effect a clause as follows was inserted:

"This offer is made with the understanding and for the express consideration that each and every unsecured creditor of said bankrupt will release the said bankrupt and all its officers and directors, and each and every one of them, from any and all liability of every character and description growing out of or incident to or connected with the operation of the said Ben L. Berwald Shoe Company prior to its adjudication in bankruptcy."

Before the offer was made the trustee contemplated suits against Berwald and his associates to recover unpaid stock subscriptions amounting to approximately $10,000, and also to set aside a preference of about $6,000. He recommended the acceptance of the offer. A hearing was had before the referee, and 62 out of 66 unsecured creditors agreed to the compromise. Appellants, who are 4 of the unsecured creditors, objected. They had previously filed suits in a state court to recover the full amounts of their claims from Berwald and the other officers and directors, on the grounds that the bankrupt...