Cate v. Connell

• Decision Date: 29 October 1909
• Docket Number: 833.
• Citation: 173 F. 445
• Parties: CATE et al. v. CONNELL et al.
• Court: U.S. Court of Appeals — First Circuit

173 F. 445

CATE et al. v. CONNELL et al.

No. 833.

United States Court of Appeals, First Circuit.

October 29, 1909

Robert E. Goodwin (Carver, Wardner & Goodwin, on the brief), for appellants.

Robert A. Jordan, for appellees.

Before COLT, PUTNAM, and LOWELL, Circuit Judges.

LOWELL Circuit Judge.

On April 9, 1909, Connell and others filed a petition in involuntary bankruptcy against the Concord Motor Car Company a corporation established under the laws of Massachusetts 'to manufacture, purchase, sell, hire, lease, and operate automobiles, motor boats, and motor engines, and, further, to act as general or special agent of any individual, company or corporation now or hereafter engaged in the manufacture and sale of automobiles, motor boats, and motor engines ' Cate and others, being creditors of the respondent, duly intervened to resist the petition, and among other defenses set up that the respondent was not at the time of filing the petition engaged principally in manufacturing, trading, printing, publishing, or mercantile pursuits, within the meaning of the bankruptcy act (Act July 1, 1898, c. 541, 30 Stat. 544 (U.S. Comp. St. 1901, p. 3418)). The case was referred to the referee, under rule 12 of the General Orders in Bankruptcy (32 C.C.A.xvi, 89 F. vii), to ascertain the facts and report on the question of adjudication.

The referee found that the respondent corporation was organized in June, 1906, and from that time until January, 1908, was engaged in the business of buying and selling automobiles; that at about the last-mentioned date it added to its business a garage and a machine shop. Savell, the respondent's president and treasurer, testified that thereafter the respondent ceased the purchase and sale of automobiles, and this is implied in the referee's report, though not expressly stated. Savell also testified that from January 1, 1908, it carried on the business of a garage, and at the same time repaired automobiles and furnished them with supplies. These repairs and supplies were not confined to the automobiles regularly kept in the garage. The referee further found that at least 75 per cent. of the respondent's business was that of repairing and furnishing supplies. He was of the opinion that the respondent 'was engaged, not only in manufacturing, but also as a trader and in a mercantile pursuit,' and he recommended an adjudication of bankruptcy. The learned judge of the District Court agreed with the finding of the referee, and especially:

'That at least 75 per cent of its (the respondent's) business consisted in repairing automobiles and furnishing supplies of all sorts for them, and that making such repairs and furnishing such supplies were its principal and foremost business.'

He therefore decreed an adjudication.

The respondent's business, as stated in its charter, included some pursuits which are within and others which are without the operation of the bankruptcy act. We are here concerned, not with the broad limits of the respondent's charter, but with the nature of its business actually transacted at or about the time the petition in bankruptcy was filed. In re Kingston Realty Co., 160 F. 445, 87 C.C.A. 406; In re Quimby Co. (D.C.) 121 F. 139, s.c. on appeal 126 F. 167, 61 C.C.A. 111. The petitioners do not contend that the operation of the garage, pure and simple, is a pursuit within the purview of section 4 of the bankruptcy act. The referee and the learned judge of the District Court have agreed in finding that repairs and supplies constituted at least 75 per cent. of the respondent's business. Neither of them discriminates by any finding concerning the respective proportions of these two kinds of business, and we find no evidence in the record which enables us to separate the two. The objecting creditors do not deny that the furnishing of supplies is a trading pursuit, and so within the purview of section 4; but, inasmuch as there is no evidence that the furnishing of supplies alone constituted the principal part of the defendant's business, the petitioners, in order to maintain their case, must show that the repairing, as well as the supplying of automobiles, as carried on by the respondent, is within the purview of the bankruptcy act. To support their contention the petitioners do not rely upon any word in section 4 except 'manufacturing,' and so the decision of the case is made to turn upon the answer to this question: Was the repairing of automobiles, as performed by the respondent, a manufacturing pursuit?

The words descriptive of the various pursuits which bring a corporation within the scope of the bankruptcy act are words in common use and are to be given their everyday meaning. White Mountain Paper Co. v. Morse & Co., 127 F. 643, 62 C.C.A. 369. We do not think that the repairing of automobiles, as set out in the finding of the court below and in the evidence contained in the record, can fairly be described as a manufacturing pursuit. It seems to have been chiefly, if not altogether, the adjustment of automobile parts, bought from other persons, to existing automobiles. While no decided case is exactly in point, both the definitions of manufacture given by courts of authority and the decisions which those courts have rendered on particular facts are here persuasive against the petitioners. Hall & Kaul Co. v. Friday, 158 F. 593, 87 C.C.A. 23; In re T.E. Hill Co., 148 F. 832, 78 C.C.A. 522; In re Kingston Realty Co., 160 F. 447, 87 C.C.A. 406; In re First Bank of Belle Fourche, 152 F. 64, 81 C.C.A. 260. In so far forth, therefore, as the defendant's business was repairing, that business was outside the act. If this be true, there was no proof that the respondent's principal business was within the...