Friday v. Hall Kaul Company

• Decision Date: 21 February 1910
• Docket Number: No. 68,68
• Citation: 30 S.Ct. 261,216 U.S. 449,54 L.Ed. 562
• Parties: J. H. FRIDAY et al., Petitioners, v. HALL & KAUL COMPANY
• Court: U.S. Supreme Court

216 U.S. 449

30 S.Ct. 261

54 L.Ed. 562

J. H. FRIDAY et al., Petitioners,

v HALL & KAUL COMPANY.

No. 68.

Argued January 10, 1910.

Decided February 21, 1910.

The Monongahela Construction Company, a corporation organized under the law of Pennsylvania, was, in an involuntary proceeding, adjudged a bankrupt in the district court for the western district of Pennsylvania. Upon a petition for review, filed by a judgment creditor, the adjudication was set aside upon the ground that the construction company was not 'a corporation engaged principally in manufacturing,' as found by the bankrupt court. The opinion of the circuit court of appeals is reported in 87 C. C. A. 23, 158 Fed. 593.

From the agreed statement of facts it appears:

1st. That the Monongahela Construction Company's charter sets out that it was organized 'for the purpose of constructing, erecting, and repairing railroads, traction lines, duly incorporated, and streets, roads, buildings, structures, works or improvements of public or private use or utility.'

2d. That its principal business had been 'making and constructing arches, walls, and abutments, bridges, buildings, etc., out of concrete.'

3d. That, 'in carrying on its business, it buys and combines together raw materials, such as cement, gravel, and sand in the making of concrete, and supplies labor, machinery, and appliances necessary for the proper carrying on of said business, of constructing and erecting concrete arches, piers, buildings, and structures, and excavating therefor at such time and place as its contracts call for.'

4th. It has no permanent shop or factory, but has a warehouse.

Messrs. Alexander J. Barron and Richard A. Ford for petitioners.

[Argument of Counsel from page 451 intentionally omitted] Messrs. George l. roberts and Eugene H. Baird for respondent.

Statement by Mr. Justice Lurton:

Mr. Justice Lurton, after stating the facts as above, delivered the opinion of the court:

Section 4 of the bankrupt act, as amended by the act of February 5, 1930 [32 Stat. at L. 797, chap. 487, U. S. Comp. Stat. Supp. 1909, p. 1309], reads thus:

'Any natural person, except a wage earner, or a person engaged chiefly in farming or the tillage of the soil, any unincorporated company, and any corporation engaged principally in manufacturing, trading, printing, publishing, mining or mercantile pursuits, owing debts to the amount of one thousand dollars or over, may be adjudged an involuntary bankrupt upon default or an impartial trial, and shall be subject to the provisions and entitled to the benefits of this act. Private bankers, but not national banks or banks incorporated under state or territorial laws, may be adjudged involuntary bankrupts.'

The single question is whether the Monongahela Construction Company, upon the facts stated above, was a corporation principally engaged in the business of 'manufacturing,' within the meaning of the act. If it was, the adjudication should stand.

The corporate powers of the company were very broad. It is possible that it might have so limited its functions as not to have come under any reasonable definition of manufacturing; but at last the question of whether it was principally engaged in manufacturing must turn more upon what it was actually doing than upon what it was authorized to do.

It must be conceded that the word 'manufacturing,' as used in the bankrupt act, has no definite legislative meaning by reason of adoption from other bankrupt acts, as is the case with the words 'trader' or 'trading,' and perhaps other words with wellunderstood common-law meanings.

Though British bankrupt acts were in existence from the time of Henry VIII.; they applied only to 'traders' until 1860, when they were extended to other persons. Our own original act, that of 1800 [2 Stat. at L. 19, chap. 19], applied only to traders, bankers, brokers, and underwriters. The act of 1841 [5 Stat. at L. 440, chap. 9] added 'merchants.' The act of 1867 [14 Stat. at L. 517, chap. 176] extended practically to all persons and corporations. That of 1898 [30 Stat. at L. 544, chap. 541, U. S. Comp. Stat. 1901, p. 3418] limited the wide application of the act of 1867 to the class of business coporations enumerated. Thus it is that the words 'manufacture' and 'manufacturing' have no meaning derived from adjudications of any former law.

Undoubtedly Congress intended that that class of business corporations engaged in any class of manufacturing, as its principal business, and not as a mere minor incident to some larger work, should be subject to the law; and this...