277 F. 668 (7th Cir. 1922), 2903,2917, In re Hoyne

• Docket Number: 2903,2917.
• Date: 03 January 1922
• Citation: 277 F. 668
• Parties: In re HOYNE. [*] v. HOYNE et al. WINSTON
• Court: U.S. Court of Appeals — Seventh Circuit

Page 668

277 F. 668 (7th Cir. 1922)

In re HOYNE. ^[*]

WINSTON

v.

HOYNE et al.

Nos. 2903, 2917.

United States Court of Appeals, Seventh Circuit.

January 3, 1922

Page 669

Carroll J. Lord, of Chicago, Ill., for petitioner, appellant.

John O'Connor, J. J. Healy, E. R. Johnston, T. M. Hoyne, and Henry Jackson Darby, all of Chicago, Ill., for respondents, appellees.

Before BAKER, EVANS, and PAGE, Circuit Judges.

EVANS, Circuit Judge.

Upon voluntary petition Eugene M. Hoyne and Eugene H. de Bronkhart, as the sole members of the firm of Eugene M. Hoyne & Co., a partnership, together with the partnership, were on April 8, 1920, adjudged bankrupts. On May 7th a petition was filed by Charles S. Winston, praying that the order of adjudication be vacated. This petition, as amended, put in issue the personnel of the copartnership of Eugene M. Hoyne & Co., petitioner alleging that, in addition to the aforementioned partners, there were William R. Moorhouse, Royal C. Vilas, Peter G. Thompson, Frank G. Hoyne, Thomas M. Hoyne, Maclay Hoyne, J. C. McCord, William Franz

Page 670

Anderson, Ward A. Vilas, T. H. Willis, Henry D. Sturtevant, Daniel J. Schuyler, R. T. Davis, and John D. Cory. Insolvency was denied, with these parties recognized as partners.

Issue was joined and the matter referred to a master to take proofs and report his conclusions and recommendations to the court. Testimony was thereafter taken before the special master, upon which he filed his report, finding that the firm of Eugene M. Hoyne & Co. consisted of Eugene M. Hoyne and Eugene H. de Bronkhart, and recommending that the Winston petition be dismissed, with costs. The master approached the question stating:

'I therefore determine that the hearing should be had on the sole question as to whether there was a partnership relation as claimed.'

He further said:

'It would seem that the business was unsuccessful, because none of these obligations were met out of any of the profits; that no profits were made, excepting for a short time, and not very large; and that none of the creditors who signed this agreement were paid anything on their respective claims, either on their original indebtedness or for money they advanced. The bankrupt firm owes unsecured creditors approximately $750,000; secured creditors, $2,600,000. The liabilities of Perry, Price & Co., which are involved in the contract, amount to about $720,000, and the loan by a few of the owners of those claims was about $12,000. The contract under which the firm of Hoyne & Co. took over the old business of Perry, Price & Co. is the basis of the claim that the partnership relation was created thereby and that the new creditors who were created by Hoyne & Co. in running the business are now creditors of all the parties to that contract. Attention is called to the fact that the petitioners allege that they did not know the facts on which they base the partnership till after bankruptcy, so they did not extend their credit based on any thought that anybody except de Bronkhart and Hoyne were liable.'

He further said, discussing the issue:

'Are these bankrupts partners as between themselves? The contract in question expressly states that those who are now sought to be charged as partners were merely creditors who postponed their day of payment until profits were earned in carrying on the business.'

And in conclusion:

'As first stated, I think the Illinois statute precludes the partnership idea; but aside from that I am of the opinion that the contract does not involve the partnership construction.'

This report was approved by the court.

Petitioner seeks to review this order dismissing his petition both by appeal and by a petition to review and revise. That the order under consideration is not appealable seems well settled. Brady v. Bernard & Kittinger, 170 F. 576, 95 C.C.A. 656; Hart-Parr Co. v. Barkley, 231 F. 913, 146 C.C.A. 109; In re Ives, 113 F. 911, 1 C.C.A. 541, B-R Electric & T. Mfg. Co. v. AEtna Life Ins. Co., 206 F. 885, 124 C.C.A. 545; In re Vanoscope Co., 233 F. 53, 147 C.C.A. 123; Plymouth Cordage Co. v. Smith, 194 U.S. 311, 24 Sup.Ct. 725, 48 L.Ed. 992; Brady v. Bernard & Kittinger, 217 U.S. 595, 30 Sup.Ct. 695, 54 L.Ed. 896; Armstrong v. Norris, 247 F. 253, 159 C.C.A. 347. Petitioner does not urge it in this court. His only way to review the order is by petition to review and revise, and therefore naught but questions of law may be considered. In re Caponigri,

Page 671

183 F. 307, 105 C.C.A. 519; In re Antigo Screen Door Co., 123 F. 249, 59 C.C.A. 248; In re Richards, 96 F. 935, 37 C.C.A. 634; Courier-Journal, etc., Co. v. Schaefer-Meyer Brewing Co., 101 F. 699, 702, 41 C.C.A. 614; In re Rosser, 101 F. 562, 41 C.C.A. 497; Stuart v. Reynolds, 204 F. 709, 123 C.C.A. 13. Our examination of the record convinces us that but one question of law is involved, viz. Is the report of the master wholly unsupported by testimony? Such a question is one of law. In re Kuhn, 234 F. 277, 148 C.C.A. 179; Good v. Kane, 211 F. 956, 128 C.C.A. 454; In re Knosher & Co., 197 F. 136, 116 C.C.A. 560; In re Cole, 144 F. 392, 75 C.C.A. 330.

Counsel for petitioner place much reliance upon the written agreement of the parties, but it is by no means all of the material evidence bearing upon this issue. Several witnesses, some of them parties to the written agreement, testified to facts which throw some light upon the construction which the court must give to the contract. Certainly all the facts and inferences favorable to the respondents must be unqualifiedly accepted under the aforementioned rule of law. The contract, material parts of which are set forth below, ¹ instead

Page 672

of recognizing the partnership status, describes the relationship of the parties as debtors and creditors. We might therefore from this fact alone, find support for the master's finding. True, the written agreement may not have embodied the true understanding of the

Page 673

parties; it may have been drawn for the purpose of defeating any liability arising out of the partnership relation, and may not have been expressive of the real intent of the parties; or the agreement may not have expressed the entire understanding of the parties. This may be conceded, but it does not derogate from the effect of the document, the recitals of which recognize the relation of debtor and creditor, and which therefore furnish...