In re Bedingfield

• Court: U.S. District Court — Northern District of Georgia
• Citation: In re Bedingfield, 96 F. 190 (N.D. Ga. 1899)
• Decision Date: 17 May 1899
• Parties: In re BEDINGFIELD.

96 F. 190

In re BEDINGFIELD.

United States District Court, N.D. Georgia.

May 17, 1899

Maddox & Terrell, for petitioning creditors.

Jas. L Key, for bankrupt.

NEWMAN District Judge.

A petition in involuntary bankruptcy was filed against W. H Bedingfield. The petitioning creditors amount to $505.70. Very soon after the petition was filed, Carlton & Smith, a mercantile firm, having a debt of $77.08, which firm had joined in the petition in bankruptcy against Bedingfield gave notice to counsel employed in the case that they desired to withdraw from the bankruptcy proceeding. There is no doubt but that they joined in the employment of counsel, and one of the firm-- Mr. Smith-- made oath to the correctness of the petition. It seems that a very short time-- an hour or so-- before the petition was filed, probably, the claim of Carlton & Smith was transferred to Fain & Stamps, presumably in the interest of Kelly Bros., who obtained the preference which is the act of bankruptcy alleged. They also notified counsel for the petitioning creditors within a short time after the petition was filed that they did not desire to participate in the same. The question is whether or not this withdrawal should be allowed. It seems to me that it would be very bad practice to countenance such a transaction. If creditors having, as in this case, a number of small claims, amounting to something over $500, join in a petition for involuntary bankruptcy, where there has been a transfer of property and a preference in violation of the bankrupt act, and one of the petitioning creditors can withdraw in order to reduce the amount of the petitioning creditors' debts below $500, it would open the way for debtors giving such a preference, and the person preferred to settle with a portion of the creditors, and thereby defeat the proceeding, however palpable the preference might be. The bankrupt act has an express provision against any such proceeding. Section 59, cl. g, is as follows: 'A voluntary or involuntary petition shall not be dismissed by the petitioner or petitioners or for want of prosecution or by consent of parties until after notice to the creditors. ' Where a creditor joins in a proceeding in involuntary bankruptcy, and allows the petition to be filed, and afterwards obtains a settlement in some way, it is too late to withdraw from the proceeding in the way attempted here. On the face of the papers, this is a clear preference of one creditor. It appears that the entire property of Bedingfield was transferred to one creditor for an antecedent debt, leaving nothing whatever to the other creditors. If, by the aid of third parties, the debt of one of the creditors can be bought up, so as to reduce the amount below $500, it will enable the debtor to protect his preference, and defeat the whole purpose of the bankrupt act.

Another question involved here is this: The petitioning creditors took to themselves a transfer of the taxes due by Bedingfield, and used that to make up the $500 necessary to file the petition in involuntary bankruptcy. There is grave doubt, under the facts shown, as to their right to do...