In re Plymouth Cordage Co.

• Decision Date: 07 March 1905
• Docket Number: 40.
• Parties: In re PLYMOUTH CORDAGE CO. et al.
• Court: U.S. Court of Appeals — Eighth Circuit

135 F. 1000

In re PLYMOUTH CORDAGE CO. et al.

No. 40.

United States Court of Appeals, Eighth Circuit.

March 7, 1905

Syllabus by the Court

The federal courts have power to permit amendments of pleadings by the insertion or correction of jurisdictional as well as other averments.

Where a single creditor files a petition for an adjudication in bankruptcy, the averment that all the creditors of the alleged bankrupt are less than 12 in number does not condition the jurisdiction of the court.

A petition in bankruptcy may be amended by the insertion of averments that the alleged bankrupt is not a wage-earner or farmer, and that all his creditors are less than 12 in number.

The objection that a petitioner in bankruptcy failed to file a duplicate of his petition is waived by an answer by the bankrupt within four months of the alleged acts of bankruptcy without presenting the objection.

Creditors may join in a petition in bankruptcy at any time before the decision of the issue of bankruptcy, and be counted to make up the requisite number of creditors and amount of claims.

The time of the adjudication in bankruptcy, and not the time of the institution of proceedings in bankruptcy, is the time to test the sufficiency of the number of the petitioning creditors and of the amount of their claims to warrant the adjudication.

Notice to the creditors of the bankrupt of a proposed dismissal of the proceedings is indispensable, and an order of dismissal without notice is erroneous.

This is a petition to superintend and revise in matter of law the proceeding of the District Court of the Second Judicial District of the territory of Oklahoma in the county of Kingfisher upon a petition of the Plymouth Cordage Company, a corporation, for an adjudication that its debtor, J. A Smith, was a bankrupt. The petition for review was met in this court by a demurrer, so that all of its averments are admitted. They disclose these facts: The Plymouth Cordage Company had a provable claim against J. A. Smith for $4,430.25, and on October 31, 1901, it filed a petition in bankruptcy in the court below, in which it set forth this fact, the fact that Smith was insolvent, and that he had committed acts of bankruptcy within four months preceding the filing of the petition, and in which it prayed for an adjudication that he was a bankrupt. On November 12, 1901 Smith filed an answer, in which he denied that he had committed any of the acts of bankruptcy set forth in the petition, or that he was insolvent. His answer contained no other averment or denial. On January 30, 1902, other creditors of Smith filed a petition in the same court, in which they set forth the same acts of bankruptcy, and prayed that they might be permitted to join with the cordage company, and that a subpoena might be issued to Smith, and that he might be adjudged a bankrupt. On May 12, 1902, the court dismissed this petition on the ground that it was not properly verified, with leave to amend, and three of the petitioners made the requisite amendments on May 16, 1902. On the same day they made a motion to be permitted to join in the petition of the cordage company. On June 6, 1902, Smith filed an amended and supplemental answer, wherein he denied the acts of bankruptcy charged against him, and alleged that the original petition for bankruptcy was insufficient because it was a petition of but one creditor, and it failed to aver that the creditors of the alleged bankrupt were less than twelve in number; and that the second petition for bankruptcy was insufficient because the entire amount of the claims of those who verified it was less than $500. In June, 1902, the suit came to trial before a jury upon these issues, but reached no verdict, because the jury was discharged before the trial was completed. On August 2, 1902, the three creditors who had amended their verifications to the petition of January 30, 1902, made a motion to withdraw from the proceedings because Smith had paid their claims. On March 9 1903, the alleged bankrupt made a motion to dismiss the original petition, and presented with it a list of seventeen creditors, but did not specify their addresses. On April 6, 1903, three creditors presented to the court petitions in bankruptcy and prayed leave to join the Plymouth Cordage Company, and the latter presented an amended petition, prayed that it be permitted to file it, that the three other petitioning creditors be permitted to join with it, that the court cause all the creditors of the bankrupt named in the list filed on March 9, 1903, to be notified of the pendency of the petitions in bankruptcy, and that it delay the hearing upon such petitions and upon the motion to dismiss for a reasonable time to the end that parties in interest should have an opportunity to be heard. The court denied all the applications of the creditors, and dismissed all the petitions.

Edwin A. Krauthoff (Patrick S. Nagle, W. A. McCartney, J. V. C. Karnes, and Alexander New, on the brief), for petitioners.

W. W. Noffsinger (J. C. Robberts, on the brief), for respondent.

Before SANBORN and VAN DEVANTER, Circuit Judges, and PHILIPS, district judge.

SANBORN Circuit Judge, after stating the case as above.

The course of this proceeding in bankruptcy in the court below has been tedious, tortuous, and confusing, and 27 alleged errors are presented for our consideration. It is, however, necessary to consider but one question, and that is, was the petition of the cordage company properly dismissed? The grounds relied upon in this court to sustain this dismissal are (1) that the petition was not filed in duplicate; (2) that it was not duly verified; (3) that it contained no averment that the defendant was not a wage-earner, or a person chiefly engaged in farming; (4) that it contained no averment that the alleged bankrupt had only twelve creditors; and (5) that some of the creditors who sought to join in the petition of the cordage company on April 6, 1903, were parties to the petition of January 30, 1902, who failed to amend their verifications.

The first reason for the dismissal of the petition is untenable, because it is not founded in fact. The cordage company, in its petition for review, avers, and the demurrer of the respondent admits, that the original petition of the cordage company was filed in duplicate. Moreover, the bankruptcy act shows that the only purpose of filing in duplicate is to furnish one copy for the clerk and one for service on the bankrupt. Act July 1, 1898, c. 541, Sec. 59c, 30 Stat. 561, 562 (U.S.Comp.St. 1901, p. 3445). There are decisions in In re Stevenson (D.C.) 94 F. 110, 115, and in In re Dupree (D.C.) 97 F. 28, that, when the duplicate is not filed within four months of the alleged act of bankruptcy, its absence is not waived by the general appearance of the respondent, and that the petition should be dismissed for want of jurisdiction. But the alleged bankrupt appeared and answered in the case in hand within four months of the alleged acts of bankruptcy, and without objection on the ground that the petition was not filed in duplicate. The copy for service on the bankrupt is for his benefit. The only object of requiring its filing is to give him a copy of the petition, in order to enable him to answer it. The right to it is a personal privilege, which he may demand and secure or may renounce and waive. As the only benefit of the privilege is to enable him more speedily and conveniently to answer the petition, an answer without a demand of the privilege is a waiver of it. It estops the bankrupt from thereafter insisting upon it, because it leads the petitioner to proceed and to incur expense in reliance upon the renunciation of the privilege which has become functus officio by the answer. For a like reason the second ground for the dismissal of the petition-- the defect in its verification-- was waived by the repeated answers of the alleged bankrupt. Leidigh Carriage Co. v. Stengel, 95 F. 637, 37 C.C.A. 210; Roche v. Fox, Fed. Cas. No. 11,974; In re Vastbinder (D.C.) 126 F. 417, 418.

The fact that the petition contained no averment that the alleged bankrupt was not a wage-earner or farmer was remediable by amendment. Rules in Bankruptcy, 11, 89 F. vii, 32 C.C.A. xiv; In re Pilger (D.C.) 118 F. 206; In re Bellah (D.C.) 116 F. 69; Beach v. Macon Grocery Co., 120 F. 736, 57 C.C.A. 150; In re Brett (D.C.) 130 F. 981, 983; In re Mero (D.C.) 128 F. 630, 633.

But it is earnestly and persistently contended that the want of the averment that all of the creditors of Smith were less than twelve in number in the original petition of the cordage company was fatal to the jurisdiction of the court, and could not be cured by amendment. There are, however, several answers to this proposition, which appear to us to be conclusive. In the first place, the uniform practice of the federal courts, founded on the public policy of the nation evidenced by acts of Congress and the rules of the Supreme Court, is to permit amendments in all judicial proceedings where they are necessary to enable parties to reach the merits of the controversy they attempt to present, and where the allowance of such amendments will work no injustice to any one. The act of September 24, 1789, c. 20, Sec. 32, 1 Stat. 91 (U.S.Comp.St. 1901, p. 696, Sec. 954), which has remained in force for more than a century, and has inspired this practice, provides that no proceedings in civil causes in any court of the United States 'shall be abated arrested, quashed or reversed for any defect or want of form; but such court shall proceed and give judgment according as the right of the cause and matter in law shall appear to it, without regarding any such defect, or want of form, except those which, in cases of demurrer, the...