Bank of Reidsville v. Burton
| Decision Date | 28 April 1919 |
| Docket Number | 1694. |
| Citation | 259 F. 218 |
| Parties | BANK OF REIDSVILLE et al. v. BURTON. In re REIDSVILLE FERTILIZER CO. |
| Court | U.S. Court of Appeals — Fourth Circuit |
W. M Hendren, of Winston-Salem, N.C., W. R. Dalton, of Reidsville N.C., and A. B. Kimball, of Greensboro, N.C. (A. J. Burton of Lawton, Okl., and King & Kimball, of Greensboro, N.C., on the brief), for petitioners.
R. C Strudwick, of Greensboro, N.C. (P. W. Glidewell, of Reidsville, N.C., and Wm. P. Bynum, of Greensboro, N.C., on the brief), for respondent.
Before PRITCHARD and WOODS, Circuit Judges, and ROSE, District Judge.
The bankrupt, the Reidsville Fertilizer Company, was a copartnership, the partners in which were two other firms and one individual, trading in a partnership name. At the time of its bankruptcy it had outstanding promissory notes, signed not only by itself, but by the respective firm names of its partners. No attempt appears to have been made to secure the adjudication either of the member firms or of the individuals who composed them, nor strictly speaking were the estates of any of them administered in bankruptcy. In lieu of so doing the trustee brought suits in the state court against the individual members of Williams & Hopkins, one of the firms making up the bankrupt copartnership. The creditors of these individuals and of the firm of which they had been members intervened in the suits. A compromise was finally reached by which the defendants paid $7,500, $3,000 of which went to a creditor of one of the defendants in his individual capacity, and the remaining $4,500 was turned over to the trustee in bankruptcy under a stipulation reserving to all of the creditors of various classes the right to set up in the bankruptcy court whatever claims they might have against the fund so brought in.
The persons who hold the notes of the bankrupt upon which appears also the firm name of the copartnership from whose members the $4,500 came say they are entitled to have all of it applied to the payment of such notes, which amount to $10,000 or more, and in their view are obligations of that firm as well as of the bankrupt. The trustee contends that the creditors, having proved the notes against the bankrupt and having in common with its other creditors received a dividend of 20 per cent. thereon, cannot set up special rights in the fund on the theory that they are also creditors of one of the constituent...
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