Guterman v. Parker & Co., No. 3147.

• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)
• Writing for the Court: BINGHAM, WILSON, and MORTON, Circuit
• Citation: 86 F.2d 546
• Parties: GUTERMAN et al. v. C. D. PARKER & CO., Inc., et al.
• Docket Number: No. 3147.
• Decision Date: 20 November 1936

86 F.2d 546 (1936)

GUTERMAN et al.
v.
C. D. PARKER & CO., Inc., et al.*

No. 3147.

Circuit Court of Appeals, First Circuit.

November 20, 1936.

86 F.2d 547

Martin Witte, of Boston, Mass. (Harry N. Guterman, Harold Horvitz, and Guterman & Guterman, all of Boston, Mass., on the brief), for appellants.

David Stoneman, of Boston, Mass. (Emanuel Kurland, of Boston, Mass., on the brief), for appellee C. D. Parker Co., Inc.

Before BINGHAM, WILSON, and MORTON, Circuit Judges.

WILSON, Circuit Judge.

This is an appeal from a decree of the District Court for the District of Massachusetts dismissing an involuntary petition in bankruptcy for want of the requisite number of petitioning creditors entitled to file a petition.

On April 11, 1935, the superior court for the county of Suffolk in the commonwealth of Massachusetts, on a petition duly filed by the creditors of the C. D. Parker & Co., Inc., appointed a receiver of the property and assets of said C. D. Parker & Co., Inc. The receiver qualified and took possession of all the assets and property of the corporation, and has since been administering said estate and liquidating its assets under the supervision and direction of said superior court.

On August 10, 1935, one day before the four months' period had expired following the appointment of the receiver in the state court, Annie B. Gilberte, Russell T. Shay, and Daniel S. Santry, claiming to be creditors of the C. D. Parker & Co., Inc., and having provable claims amounting in the aggregate, in excess of any securities held by them, to more than the sum of $500, filed a petition in the bankruptcy court for the District of Massachusetts, praying that the C. D. Parker & Co., Inc., be adjudged a bankrupt.

On August 22, 1935, the C. D. Parker & Co., Inc., appeared and answered, denying that it had committed an act of bankruptcy as set forth in the petition of Annie B. Gilberte, Russell T. Shay, and Daniel S. Santry, petitioning creditors therein, or that they have provable claims against said C. D. Parker & Co., Inc., which amount in the aggregate, in excess of the value of securities held by them, to more than $500; but, on the contrary, the C. D. Parker & Co., Inc., alleged that none of the said petitioners were creditors of said C. D. Parker & Co., Inc., and further said that the above-named petitioning creditors did not sign said petition in good faith.

On August 30, 1935, one Harry N. Guterman filed his appearance in said bankruptcy court and a petition stating that he was a creditor of the above-named bankrupt, having a provable unsecured claim in the form of a promissory note for $600, and praying that said C. D. Parker & Co., Inc., be adjudged an involuntary bankrupt, and that he desired to join in the petition as an intervening creditor

86 F.2d 548

therein; whereupon the said Harry N. Guterman intervened and joined in said petition

On October 28, 1935, the H. J. Dowd Co., Inc., filed its petition setting forth that it was a creditor of C. D. Parker & Co., Inc., to the amount of $5.20 for merchandise sold and delivered, and that it desired to join as an intervener in the petition in bankruptcy filed in the bankruptcy court on August 10, 1935, praying that said C. D. Parker & Co., Inc., be declared a bankrupt; whereupon the said H. J. Dowd Co., Inc., intervened and joined in said petition.

On October 8, 1935, the issue of adjudication of said C. D. Parker & Co., Inc., was referred to a special master to ascertain and report facts. The report of said special master was filed January 22, 1936.

After prolonged hearings before the special master it was agreed by all parties, including counsel for the alleged bankrupt, that the assets of the alleged bankrupt would amount to less than $100,000, and that its liabilities would exceed $5,000,000; that an act of bankruptcy had been committed; and that the alleged bankrupt was insolvent at the time of the alleged act of bankruptcy. The alleged bankrupt, however, contended before the master that all the creditors, except the H. J. Dowd Co., Inc., were not creditors of the alleged bankrupt and that the petitioning creditors had not acted in good faith in presenting their petitions.

The special master found that Annie B. Gilberte had participated in the receivership proceedings in the state court to the extent of filing a petition for the reclamation of certain bonds which she claimed had been entrusted to the possession of the alleged bankrupt, which could be traced into its hands at the time of the receivership; but that there was on the books of the alleged bankrupt an entry disclosing that the bankrupt was indebted to the said Annie B. Gilberte in the sum of $381.24 for funds collected by the bankrupt in 1927, of which she was not notified and had no knowledge until approximately a month before the filing of the petition in bankruptcy.

The special master also found that Russell T. Shay and Daniel S. Santry were creditors of the alleged bankrupt and that Harry N. Guterman and H. J. Dowd Co., Inc., intervening creditors, also had provable claims against the alleged bankrupt.

As to the charge of bad faith and bad motives of the petitioning creditors, the special master held that bad faith on the part of the creditors was not shown and that bad motives of petitioning creditors were not a defense, unless, perchance, it amounted to fraud on the court, which did...