Harris v. Mills Novelty Co., 1857.

• Decision Date: 24 October 1939
• Docket Number: No. 1857.,1857.
• Parties: HARRIS v. MILLS NOVELTY CO. et al.
• Court: U.S. Court of Appeals — Tenth Circuit

106 F.2d 976 (1939)

HARRIS v. MILLS NOVELTY CO. et al.

No. 1857.

Circuit Court of Appeals, Tenth Circuit.

October 24, 1939.

Keene Saxon, of Topeka, Kan., for appellant.

E. R. Sloan and Harold Doherty, both of Topeka, Kan. (Eldon R. Sloan, of Topeka, Kan., on the brief), for appellees.

Before LEWIS, BRATTON, and WILLIAMS, Circuit Judges.

BRATTON, Circuit Judge.

George Sardou, E. Maude Allen, and Mills Novelty Company filed an involuntary petition in bankruptcy against John W. Harris, hereinafter referred to as the bankrupt. It was alleged that the bankrupt was engaged in business under the trade name Harris Refrigerating Service, in Topeka, Kansas; that within four months preceding the filing of the petition and while insolvent, he transferred by assignment a portion of his property to a bank in Topeka, an unsecured creditor, with intent to prefer; that he transferred portions of his property to other creditors with intent to prefer by paying to such creditors their accounts in full; and that without consideration he transferred by assignment all of his remaining assets to his wife for the purpose of hindering and defrauding his creditors. The bankrupt filed a motion to dismiss the petition on the grounds that it was insufficient in itself to warrant a finding and an adjudication of bankruptcy, that it was improperly verified, and that he was a wage earner. At the same time he filed an answer in which he again challenged the sufficiency of the verification, and affirmatively pleaded that he was a wage earner. He further alleged that his father died testate; that under the terms of the will he was to receive one-third of the proceeds of the estate, after debts and expenses were paid; that the estate was still in process of probate in the State of Nebraska; that it was not subject to distribution; that he did not have possession or control of any part of it; and that it was not available to his creditors. A hearing was had before the court at which evidence was submitted. By order dated December 2, and filed December 15, 1938, the court found that the bankrupt was not a wage earner and denied the motion to dismiss; by order dated January 18, and filed January 30, 1939, the court denied the motion of the bankrupt for a rehearing on the motion to dismiss; and by order dated January 31, he was adjudicated a bankrupt. The appeal is from the respective orders of December 2 and January 18.

The petitioning creditors lodged in this court a motion to dismiss the appeal on two grounds. The first is that the appeal from the order of December 2, finding that the bankrupt was not a wage earner and denying the motion to dismiss the petition, was not taken within the time allowed by section 25 of the Bankruptcy Act, 11 U.S.C.A. § 48; and the second is that the order of January 18, denying the motion for rehearing, is not an appealable order. An order denying a motion to dismiss an involuntary petition in bankruptcy has been held reviewable in the manner provided by section 24(b) of the act, 11 U.S. C.A. § 47(b). In re Parker, 7 Cir., 283 F. 404. Here a motion to set aside the order dated December 2, and to grant a rehearing on the motion to dismiss the petition, was filed December 9, and not disposed of until January 18, 1939. Treating the order of December 2 as a reviewable order, we think the time within which to appeal therefrom was suspended during the pendency of the motion for rehearing. The appeal was seasonably perfected after the denial of that motion. But the motion for rehearing was addressed to the sound judicial discretion of the trial court, and its denial is not the subject of appeal. Wayne United Gas Co. v. Owens-Illinois Glass Co., 300 U.S. 131, 57 S.Ct. 382, 81 L.Ed. 557; Stradford v. Wagner, 10 Cir., 64 F.2d 749; Mintz v. Lester, 10 Cir., 95 F.2d 590.

The verification of the petition recited that it was made on information and belief. It is provided in Form 3 prescribed by the Supreme Court, following 11 U.S.C. A. section 53, that the verification of an involuntary petition in bankruptcy shall recite, among other things, "that the statements contained in the foregoing petition * * * are true." This verification was defective, but the defect was not jurisdictional and could have been cured by amendment. Sabin v. Blake-McFall Co., 9 Cir., 223 F. 501; In re Bieler, 2 Cir., 295 F. 78; Massagli v. T. I. Butler Co., 9 Cir., 39 F. 2d 346; Kattelman v. Madden, 8 Cir., 88 F. 2d 858; In re Farthing, D.C., 202 F. 557. It was agreed during the hearing, and the order denying the motion to dismiss so recites, that the only question presented was whether the bankrupt was a wage earner, and the attention of the court and counsel was thereafter addressed almost exclusively to that question. The contention respecting the sufficiency of the verification was thus waived and therefore is not open to review on appeal.

The finding that the bankrupt was not a wage earner is challenged. The contention is that the burden rested on the petitioning creditors to show that he was not a wage earner; that they failed to discharge such burden; and that the finding is not supported by substantial evidence. In addition to the...