Goodrich v. England

• Decision Date: 05 November 1958
• Docket Number: No. 15081,15501.,15081
• Citation: 262 F.2d 298
• Parties: Coy C. GOODRICH, Appellant, v. John M. ENGLAND, Trustee of the Estate of Goodrich Manufacturing Co., a co-partnership consisting of Coy C. Goodrich and Lulu Goodrich, bankrupts, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

262 F.2d 298 (1958)

Coy C. GOODRICH, Appellant, v. John M. ENGLAND, Trustee of the Estate of Goodrich Manufacturing Co., a co-partnership consisting of Coy C. Goodrich and Lulu Goodrich, bankrupts, Appellee.

Nos. 15081, 15501.

United States Court of Appeals Ninth Circuit.

November 5, 1958.

Howard B. Crittenden, Jr., San Francisco, Cal., for appellant.

Coy C. Goodrich, in pro. per.

Lloyd H. Burke, U. S. Atty., Marvin D. Morgenstein, Asst. U. S. Atty., San Francisco, Cal., for appellee.

Spicer & Whiting, San Francisco, Cal., amicus curiae.

Before DENMAN, BONE and ORR, Senior Circuit Judges.

DENMAN, Senior Circuit Judge.

Coy C. Goodrich, hereafter appellant, appeals from two adverse rulings of the District Court in an action for an arrangement with his creditors instituted by Goodrich under Chapter 11 of the Bankruptcy Act (11 U.S.C.A. § 701 et seq.). Appellant filed the petition for an arrangement on May 27, 1954, pursuant to 11 U.S.C.A. § 722. The petition was referred to a referee in bankruptcy in accordance with 11 U.S.C.A. § 731. Shortly thereafter, on June 29, 1954, appellant petitioned the District Court to dismiss the proceedings. The District Court referred the petition to the appointed referee and after extensive hearings the referee, on December 1, 1954, denied the petition.

On November 15, 1955, the District Court affirmed the referee's ruling and ordered that arrangement proceedings be continued. On December 13, 1955, appellant filed a notice of appeal to this court. Jurisdiction of this court was invoked under 11 U.S.C.A. §§ 716, 47, allowing appeals from interlocutory orders in proceedings under the Bankruptcy Act.

During pendency of the appeal from the District Court's order affirming the referee's denial of appellant's motion to dismiss, appellant failed to submit a satisfactory plan of arrangement. On April 25, 1956, the United States, as one of appellant's creditors, petitioned the referee to exercise his power to adjudicate Goodrich a bankrupt, pursuant to 11 U.S.C.A. § 776(2). That section provides:

"* * * if an arrangement * * is not accepted at the meeting of creditors or within such further time as the court may fix * * * the court shall * * * (2) * * enter an order * * * either adjudging the debtor a bankrupt and directing that bankruptcy be proceeded with * * * or dismissing the proceeding * * * whichever in the opinion of the court may be in the best interests of the creditors."

At a hearing held by the referee the United States, the California Labor Commission, and the attorney in fact for 51 creditors joined in urging that it would be "in the best interests of the creditors" that Goodrich be adjudicated a bankrupt. On May 18, 1956, the referee adjudicated Goodrich a bankrupt and ordered that bankruptcy be proceeded with. The District Court affirmed this order and Goodrich brought his second appeal to this court.

Appellant urges identical specifications of error as to each of the adverse orders below:

1) That the Bankruptcy Court lacked personal jurisdiction over him; 2) That his evidence established as a matter of law that he was fraudulently induced to initiate the arrangement proceedings; 3) That it was in the best interests of his creditors that the arrangement proceedings be dismissed and bankruptcy not be proceeded with. The appeals will therefore be treated as one.

I. Jurisdiction of the District Court over appellant.

The initial petition in this case was filed in the name of "Goodrich Manufacturing Company, a Partnership composed of Coy C. Goodrich and Lulu Goodrich." No partnership ever existed between appellant and his wife, Lulu Goodrich, and appellant was at all times the sole proprietor of the business known as the "Goodrich Manufacturing Company." Appellant testified that he intended by the petition to place his personal estate and debts before the lower court and that he erroneously described the Goodrich Manufacturing Company as a partnership upon advice of counsel, who apparently believed that such procedure was necessary in order to adjudicate whatever community property interest appellant's wife might have in the assets of the company. Appellant moved to dismiss the petition on grounds that it gave the lower court no jurisdiction over his personal estate and debts but that its jurisdiction was limited to the nonexistent debts and assets of a nonexistent "fictitious partnership."

Resisting appellant's petition to dismiss, the United States moved that the original petition be amended to show that it was the petition of Coy C. Goodrich, an individual, doing business as the Goodrich Manufacturing Company. The lower court ruled that the referee should "proceed with the administration of the estate of Coy C. Goodrich * * * with or without amendment to the petition." This order in effect granted the motion to amend and made it clear that the court was henceforth asserting jurisdiction over appellant's personal estate. On remand to the referee, the proceedings were continued as though amendment had been made, although the pleadings and the title of the cause were never actually amended. While this failure to effectuate the grant of amendment might be grounds for attack by one of Goodrich's creditors, we do not feel that Goodrich himself was prejudiced by the technical omission.

The question thus presented to this court is whether the District Court properly granted the motion to amend.

Appellant contends that the lower court had no power to substitute his name for that of the partnership by amendment because it had no jurisdiction over him personally. This same jurisdictional objection was raised in Missouri, Kansas & Texas Railway Co. v. Wulf, 1913, 226 U.S. 570, 33 S.Ct. 135, 57 L.Ed. 355. In that case, plaintiff instituted in her own name an action against defendant Railway Company for the death of her son. The Supreme Court held that it was proper to permit amendment four years after commencement of the action, to show that plaintiff was in fact suing as executrix on behalf of her son's estate, and that the amendment dated back to the date of commencement, thus defeating the statute of limitations.

The Court stated at page 575 of 226 U.S., at page 137 of 33 S.Ct., that the controlling consideration was that "aside from the capacity in which the plaintiff assumed to bring her action, there is no substantial difference between the original and amended petitions" and that the amendment, "without in any way modifying or enlarging the facts upon which the action was based, in effect merely indicated the capacity in which the plaintiff was to prosecute the action." The argument that the amendment brought before the Court a new cause of action which required a fresh assertion of jurisdiction was rejected. This decision was followed in the similar case of Salyer v. Consolidation Coal Co., 6 Cir., 246 F. 794.

In the instant case, appellant sought to put before the Court his personal estate and debts. His petition and schedule describe no debts of a "fictitious partnership", but exclusively those of himself as an individual. Thus "there is no substantial difference between the original and the amended petitions."

There have in addition been numerous cases which have ruled on the permissibility of amendment to correct an error in the designation of a party defendant. Amendments have been permitted to change the name of one corporate defendant to that of another allied corporation;¹ to show that the defendant was an individual doing business under a firm name instead of a corporation;² to show that the defendant was a partnership instead of a corporation;³ and to show that the subject of an involuntary bankruptcy proceeding was an individual instead of a partnership.⁴ In these cases there have been two controlling considerations: First, what entity did the plaintiff intend to bring before the court?⁵ And second, was the party resisting amendment sufficiently apprised of the pendency of the action and adequately served with process?

In the instant case it is undisputed that appellant intended to obtain the benefits of an arrangement for his personal estate and debts. Moreover, it cannot be argued that he was unaware of the proceedings or that it would be unjust to him to amend the title to the action to comply with his own intentions. We hold that the appellant in his individual capacity was at all times subject to the jurisdiction of the District Court and that the Court properly granted the motion to amend.

II. Did the Lower Court Err in Refusing to Dismiss Appellant's Petition for Arrangement?

Once a petition for an arrangement has been filed, it may be withdrawn only with the permission of the Court. There is no absolute right to dismissal. 11 U.S.C.A. § 712 is as follows:

"Jurisdiction, powers, and duties. Where not inconsistent with the provisions of this chapter, the jurisdiction, powers, and duties of the court shall be the same — * * *.

"(2) Where a petition is filed under section 722 of this title as if a voluntary petition for adjudication in bankruptcy had been filed and a decree of adjudication had been entered at the time the petition under this chapter was filed."

It is clear that there is no right to withdraw a voluntary petition for bankruptcy after adjudication. In re Weare, D.C.S.D.N.Y.1949, 87 F.Supp. 413. This section, read in conjunction with 11 U.S.C.A. § 776(2) of Chapter 11, which gives the court power to adjudicate the petitioner a bankrupt should his arrangement be withdrawn or abandoned prior to acceptance, makes it clear that the lower court has discretion to refuse to dismiss arrangement proceedings where dismissal is not in the best interests of petitioner's creditors.⁶

Fraud and Coercion.

Appellant...