In re Columbia Real-Estate Co.

• Decision Date: 01 June 1900
• Docket Number: 534.
• Citation: 101 F. 965
• Parties: In re COLUMBIA REAL-ESTATE CO.
• Court: U.S. District Court — District of Indiana

101 F. 965

In re COLUMBIA REAL-ESTATE CO.

No. 534.

United States District Court, D. Indiana.

June 1, 1900

Wilson & Quinn and Wilson & Townley, for petitioners.

Haywood & Burnett and Stuart, Hammond & Sims, for respondents.

BAKER District Judge.

On April 27, 1900, Spang, Chalfant & Co., a corporation of Pennsylvania, by leave of court filed its petition in the above-entitled cause, alleging that on the 2d day of March 1900, the Columbia Real-Estate Company was adjudged a bankrupt on a creditors' petition in involuntary bankruptcy, and on the answer of the defendant waiving process, entering appearance, and admitting the allegations of the petition to be true. The petition and answer were filed, and adjudication of bankruptcy entered on the same day. Spang, Chalfant & Co., claiming to be a creditor of said Columbia Real-Estate Company, petitions the court to vacate and annul the adjudication-- First. Because said corporation was not engaged 'principally in manufacturing, trading printing, publishing, or any mercantile pursuits,' within the meaning of the bankrupt law. Second. That while said corporation was organized under the law of Indiana, 'for the purpose of buying, holding, and selling real estate,' its real purpose was to acquire, own, operate, and lease a large tenement building or flat in the city of Lafayette that it did so acquire, own, and operate said building until a misunderstanding occurred among the stockholders, when one of them, namely, Oscar P. Benjamin, acquired and became the owner of all the stock of said company except one share which said Benjamin the corporation became embarrassed, and, determining to quit business, exchanged said tenement or flat for other property, and said corporation did not engage further in the real-estate business. Third. Because there was no directors' or stockholders' meeting of said Columbia Real-Estate Company for the purpose of assenting to said adjudication in bankruptcy; that said stockholders and directors never consented to the same, nor did they ever admit in writing their willingness to be adjudged a bankrupt, nor was there any evidence heard by the court concerning the insolvency of said corporation, or its willingness to be adjudged a bankrupt. Fourth. Because said creditors' petition does not allege that said Columbia Real-Estate Company was ever engaged principally in any manufacturing, trading, printing, publishing, or mercantile pursuits. The petition of Spang, Chalfant & Co. further alleges that it is interested in the matter of said adjudication, and claims to be a creditor of said Columbia Real-Estate Company by virtue of its claim to have a lien on certain real estate which it is advised is owned by said bankrupt, the legal title thereto being in O. P. Benjamin, which claim grows out of the following facts: That on September 19, 1899, the O. P. Benjamin Manufacturing Company, a corporation of which O. P. Benjamin was president and principal stockholder, being indebted to Spang, Chalfant & Co. for goods, wares, and merchandise theretofore sold in the sum of $2,621.52, said last-named company demanded payment. Thereupon said Benjamin, for himself and the O. P. Benjamin Manufacturing Company, requested an extension, which was granted upon the terms of the following written agreement:

'Lafayette, Ind., September 19, 1899.

'It is hereby agreed between Spang, Chalfant & Co., party of the first part, and O. P. Benjamin, of Lafayette, Ind., party of the second part, that the party of the first part is to accept a note for twenty-six hundred twenty-one 52/100 dollars, at thirty days, from the O. P. Benjamin Mfg. Co., indorsed by O. P. Benjamin, the same being in full of their claim. The party of the second part agrees that, if the said note is not paid at maturity, he will give the party of the first part a mortgage on his property.

'(Signed) Spang, Chalfant & Co.

'By Edw. W. Wright,

'(Signed) O. P. Benjamin.'

That thereafter, about November 29 or December 1, 1899, pursuant to said agreement, and upon failure of the makers of said note to pay the same, one Charles W. Bone, representing himself as agent of the said Benjamin and the said Benjamin Manufacturing Company, went to petitioner's business house in Pittsburg, and offered to deliver to said Spang, Chalfant & Co. a mortgage covering the individual property of O. P. Benjamin. That said mortgage, being defective, was not accepted by said Spang, Chalfant & Co. Thereupon, Bone representing that he had authority in the premises, the following agreement in writing was executed:

'This agreement made this first day of December, 1899, between Spang, Chalfant & Co., of Allegheny county, Pennsylvania, parties of the first part, and the O. P. Benjamin Mfg. Co., by Charles W. Bone, their agent, of Tippecanoe county, Indiana, parties of the second part, witnesseth: That whereas, the said Spang, Chalfant & Co. have this day purchased from O. P. Benjamin lots numbers 110, 111, 112, 122, 123, 175, 176, 188, 190, 191, 192, 194, 195, 196, 248, 251, 252, 254, 255, 256, 258, 259, 260, 262, 263, 264, 266, 267, 268, 270, 271, 272, 275, 276, 320, 322, 323, 324, 326, 327, 328, 331, 332, 339, 342, 343, 344, 346, 347, 348, 349, 354, 392, 393, 394, 395, 396, 397, 398, 400, 403, 405, 404, 406, 407, 408, 409, 410, 411, 412, 413, 414, 415, 416, 417, 419, 420, 421, 464, 465, 466, 467, 468, 469, 470, 471, 472, 473, 474, & 475 in the Phillips Land & Gas Co.'s First addition to the city of Alexandria, Madison county, Indiana, and the same is to be duly conveyed to Henry Chalfant, trustee, by warranty deed: Now, it is agreed that if the said O. P. Benjamin Mfg. Co. shall pay to the said Spang, Chalfant & Co., within the period of five and one-half months next ensuing, the sum of $2,652.98, evidence by five notes, to be paid as follows, to wit: $500.00, January 1, 1900; $500.00, February 15, 1900; $500.00, March 15, 1900; $500.00, April 15, 1900; & $652.98, May 15, 1900,-- all payable to the order of Spang, Chalfant & Co., with interest thereon at the rate of 6% per annum,-- the said Spang, Chalfant & Co. agree that they will cause the said Henry Chalfant, trustee, to resell and reconvey the said real estate above described to the said O. P. Benjamin, upon receipt of the sums of money named herein, and that they will not incumber the above-described real estate during the period of five and one-half months next ensuing. If the said notes named herein or any of them are not paid when due, then all are to become due and payable. This agreement is enforceable without relief from valuation or appraisement laws.

'Witness our hands and seals December 1st, 1899.

'Spang, Chalfant & Co.

'(Signed) Edward W. Wright.

'O. P. Benjamin Mfg. Co. and O. P. Benjamin,

'(Signed) By Charles W. Bone, Agent.

'Witnesses: Ralph A. Heiber. 'Hugh B. Morrow.

'Executed in Duplicate.'

It is further alleged that, pursuant to said agreement, the five notes therein described were executed by the O. P. Benjamin Manufacturing Company and O. P. Benjamin, payable to the latter, and were by him indorsed to Spang, Chalfant & Co., and the 30-day note for $2,621.52 was thereupon surrendered by the said Spang, Chalfant & Co. to the said O. P. Benjamin Manufacturing Company, but that the deed of trust mentioned in said agreement of December 1, 1899, was never executed,-- Benjamin, on December 2, 1899, and thereafter, writing letters to Spang, Chalfant & Co. offering various excuses therefor; that the first note for $500 has been paid, but all the balance of said notes are unpaid. The petitioner further alleges that since the adjudication of bankruptcy herein it has been informed that the real estate described in the agreement of December 1, 1899, is owned by the bankrupt, the Columbia Real-Estate Company, having been acquired in exchange for the flat building heretofore described, but that the title thereto was taken in the individual name of O. P. Benjamin, and such was the fact at the dates of the two agreements of September 19 and December 1, 1899, and that the creditors of said Columbia Real-Estate Company are about to cause proceedings to be instituted to recover said real estate in behalf of the bankrupt's estate; that petitioner had no notice or knowledge of the facts last above recited; that it understood and believed that the real estate described in the agreement of December 1, 1899, was the individual property of Oscar P. Benjamin, and not otherwise, and that it made the agreements and did the acts described in good faith, and in reliance upon the ownership of said Benjamin as aforesaid. Prayer, that said adjudication of bankruptcy be vacated because made without jurisdiction, and for all proper relief.

The petitioning creditors have interposed a demurrer to this petition upon the following grounds: (1) The facts stated are insufficient to entitle the petitioner to the discovery and relief sought and prayed; (2) the intervening petitioner has not shown any claim, or right, title, or interest, against the bankrupt, or in, to, or against its estate; (3) the petitioner has an adequate remedy at law; (4) the petition is without equity; (5) that the statements and allegations of said petition do not invoke the jurisdiction of the court to hear and determine the matters therein set forth and alleged.

The petitioner's right to maintain the present proceeding which is a bill or petition to review and set aside the judgment of this court, wherein the Columbia Real-Estate Company was adjudged a bankrupt, depends upon its interest in the subject-matter of that proceeding. The bankruptcy act provides that, 'upon the filing of a petition for involuntary bankruptcy, service thereof, with a writ of subpoena, shall be made upon the...