Leidigh Carriage Co. v. Stengel

• Decision Date: 02 May 1899
• Docket Number: 697.
• Citation: 95 F. 637
• Parties: LEIDIGH CARRIAGE CO. et al. v. STENGEL et al.
• Court: U.S. Court of Appeals — Sixth Circuit

95 F. 637

LEIDIGH CARRIAGE CO. et al. v. STENGEL et al.

No. 697.

United States Court of Appeals, Sixth Circuit.

May 2, 1899

This is an appeal in bankruptcy, brought by the Leidigh Carriage Company, the adjudged bankrupt, and Henry Coleman, a preferred creditor. On the 1st day of November, 1898, Stengel and others, creditors of the Leidigh Carriage Company, a corporation under the laws of Ohio, filed a petition in the district court of the Southern district of Ohio, in which they represented that they were creditors of the defendant company in an amount aggregating more than $500, and that they had no security for the same; that the defendant was a corporation organized and doing business in and under the laws of the state of Ohio, which had its principal place of business in the Southern district of Ohio, Western division at the city of Dayton; that the defendant was engaged in the business of making buggies; that it owed debts to the amount of more than $1,000; and that the number of all its creditors was more than 12. The petition further represented that within four calendar months next preceding the date of the filing of this petition, the defendant committed acts of bankruptcy, within the meaning of the act of bankruptcy passed July 1, 1898, in this, to wit: First. That being insolvent on the 12th day of July, 1898, it had permitted certain creditors to obtain preferences over other creditors by the confession of judgments in favor of the former; that executions were issued upon these several judgments out of the common pleas court of Greene county, Ohio, to the sheriff of Montgomery county, Ohio, and levied upon all the goods and chattels of the said defendant, and all interest in real estate of said defendant, located and situate in the city of Dayton; that said goods, chattels, and interest in real estate had been sold, and that the defendant made no effort at any time to have such preferences vacated or discharged. Second, that the Leidigh Company, on the 13th day of July 1898, made a general assignment of all its assets to Charles J. McKee for the benefit of its creditors. The Petition prayed that the Leidigh Carriage Company might be adjudged by the court to be a bankrupt, within the purview of said act that its estate might be distributed as provided by said act; and that such further proceedings might be had thereon as the law in such cases prescribed.

The petition was signed in the name of the creditors by Gottschall, Crawford & Lumbert, attorneys for the petitioners, and was accompanied by the following verification:

'United States of America, Southern District of Ohio.

'On this 31st day of October, 1898, before me personally appeared 'levi F. Limbert, who made solemn oath that he is a member of the firm of Gottschall, Crawford & Limbert; that Gottschall, Crawford & Limbert are the attorneys of record of the petitioning creditors mentioned and described in the foregoing petition; that he has read the foregoing petition in bankruptcy subscribed by said firm as such attorneys, and knows the contents thereof; that the same is true of his own knowledge, except as to matters therein stated on information and belief, and as to those matters he believes it to be true.

'Levi F. Limbert.

'Sworn to before me by the said Levi F. Limbert, and by him signed in my presence, this 31st day of October, A.D. 1898.

'(Seal). Rob't C. Georgi, deputy Clerk, U.S. District Court, S.D.O.'

On the same day an application was made by the petitioners for the appointment of a receiver. In this application the plaintiffs represented that after the judgments were taken, execution issued, and the assignment made, as set forth in the petition, under an agreement between the sheriff and assignee, the assets of the Leidigh Carriage Company were sold, and there came into the hands of the assignee the sum of $55,000, as proceeds thereof, for distribution under orders of the probate court; that McKee, the assignee, has filed an application in the probate court of Montgomery county, asking and praying that said court require said judgment creditors so named in the petition herein filed to set up their respective judgment liens, and praying for an order of distribution of the funds in his hands; that such creditors have set up their judgment liens, and have asked that they be paid in full; that, if such distribution takes place, great and irreparable injury will be done to the petitioners. Wherefore the petitioners prayed for an order restraining McKee, as assignee, from paying out any of the proceeds or assets of the said insolvent now in his hands until the further order of the court, and that a receiver be appointed to take charge of the assets of the defendant company, to hold the same until a trustee in bankruptcy be elected. A temporary restraining order and injunction was accordingly issued upon the giving of a bond. Thereafter, upon the application of the defendant, McKee, the assignee, Henry Coleman, and others were made parties and given leave to answer.

The answer of the Leidigh Carriage Company is as follows:

'And now comes the defendant the Leidigh Carriage Company, and for answer to the petition and application for an injunction says: First. That said petition and application were filed on November 1, 1898, one day in advance of the date fixed by the bankrupt act. The said act was approved July 1, 1898. The petition and the application for an injunction were filed within four months, and should therefore be dismissed or stricken from the files. Second. The said petition and said application were signed and sworn to by the attorneys for the parties, when there is no provision in the act or under the rules whereby said petition or said application could be signed or sworn to by any one other than the petitioners. Third. And for a third defense denies that on the 12th day of July, 1898, the said the Leidigh Carriage Company was insolvent in the sense contemplated by said act; avers that said company, being a corporation, could not become a voluntary bankrupt, and said act was not in force for purposes of involuntary bankruptcy until November 2, 1898; and, further, that said act as to involuntary bankruptcy only takes effect, and affects preferences, from and after November 2, 1898. Fourth. An assignment having been made by said company by its deed to Charles J. McKee, at the county of Montgomery and state of Ohio, and which was filed in the probate court thereof, pursuant to law, the said plaintiffs appeared in said probate court, and in the common pleas court of said county, and there attacked the alleged preferences, consented to sales and confirmations, and prevented distribution, and placed themselves, in respect to the property and the liens, within the jurisdiction of said state courts, and thereby deprived themselves of the right to the jurisdiction of this court in bankruptcy respecting said assets and said liens. Said proceedings are all pending in the state courts. Wherefore the Leidigh Carriage Company prays that said petition be dismissed, that the injunction be dissolved, and the application be dismissed, and all necessary relief granted to it that its facts aforesaid will warrant, together with costs.

'The Leidigh Carriage Co., 'Per E. F. Gerber, Secy. & Treas., Respondent.

'Gunckel, Rowe & Shuey, Attorneys for the Leidigh Carriage Company.'

Henry Coleman filed an answer of the same tenor.

To these answers the petitioners filed a general demurrer. The demurrers were sustained; and thereupon the court adjudged, upon the petition of the plaintiffs, that the Leidigh Carriage Company was a bankrupt within the true intent and meaning of the laws relating to bankruptcy, from which the defendant and Henry Coleman appeal.

Gunckel, Rowe & Shuey (Edward L. Rowe, of counsel), for appellants.

Gottschall, Crawford & Limbert, for appellees.

Before TAFT and LURTON, Circuit Judges, and CLARK, District Judge.

TAFT Circuit Judge (after stating the facts).

The first objection to the action of the court below in adjudging the defendant to be a bankrupt, embodied in the first, fifth, and tenth assignments of error, is that the petition was prematurely filed. The petition was filed at 8:30 o'clock on the morning of November 1, 1898. Section 71 of the act of bankruptcy, approved July 1, 1898 (30 Stat. 544), provides as follows:

'This act shall go into full force and effect upon its passage: provided, however, that no petition for voluntary bankruptcy shall be filed within one month from the passage thereof, and no petition for involuntary bankruptcy shall be filed within four months of the passage thereof.'

It is contended that under this language no petition for involuntary bankruptcy could be filed before the 2d day of November, 1898. Nothing has been introduced into the record or otherwise brought to the attention of the court, to show at what hour of the day of July 1, 1898, the bankruptcy act was approved by the president. In the absence of such a showing, it is presumed to have been approved on the first minute of the day of July 1, 1898. Arnold v. U.S., 9 Cranch, 104; Lapeyre v. U.S., 17 Wall. 191-198; In re Welman, 20 Vt. 653; In re Howes, 21 Vt. 619; U.S. v. Norton, 97 U.S. 164; In re Richardson, 20 F. Cas. 699; Arrowsmith v. Hamering, 39 Ohio St. 573; Tomlinson v. Bullock, 4 Q. B. Div. 230. The case of Arnold v. U.S., supra, presented the question whether a law adding 100 per cent. to the existing duties upon imports approved upon a certain day should be applied to a cargo of dutiable goods brought within a port of entry upon that date. It was held by the supreme court that, by presumption of law, the act approved upon that day had been approved upon the first moment of that day, and...