In re Bellah

• Decision Date: 25 February 1902
• Citation: 116 F. 69
• Parties: In re BELLAH.
• Court: U.S. District Court — District of Delaware

116 F. 69

In re BELLAH.

United States District Court, D. Delaware.

February 25, 1902

Syllabus by the Court.

An averment in a petition in involuntary bankruptcy that the defendant at a certain time received a specified sum of money from a specified source, which sum 'he has ever since concealed and secreted with intent to hinder, delay or defraud his creditors', is not defective for want of particularity; the manner and details of the concealment being matters of evidence and not of averment.

Fraudulent concealment may be shown as well by circumstantial as by direct evidence, and where the evidence is wholly circumstantial, it is impossible, and therefore unnecessary to aver in the petition the precise details of the act of concealment.

While a petition in involuntary bankruptcy must be signed and verified in duplicate by the petitioning creditors, or those authorized to represent them, the bankruptcy act does not provide or require that such petition shall be verified by a formal affidavit or an affidavit of any sort; the only provision applicable to the verification of such petition being that 'all pleadings setting up matters of fact shall be verified under oath.'

A corporation can act only through its officers, or agents, and where its name is subscribed by an individual to a petition in involuntary bankruptcy, and the petition purports to be verified by the same person, it is necessary that such person should set forth under oath or affirmation that he was authorized to sign and verify the petition on behalf of the corporation. The omission of such an averment, unless remedied, is fatal; but is not an incurable defect jurisdictional or otherwise.

A mere clerical error in the jurat of one of the duplicate originals of a petition in involuntary bankruptcy can be cured by amendment.

Rule 11 of the general orders in bankruptcy deals with amendments to a petition and schedules, but was not intended to abrogate or restrict the general power of amendment in other respects vested in the court.

In accordance with the elementary rule that in proceeding on a statute the pleader must negative an exception in the enacting clause, a petition in involuntary bankruptcy against an individual is defective if it omits to aver that the defendant was not a wage-earner nor a person engaged chiefly in farming or the tillage of the soil. Such a defect however, can be corrected by amendment.

Hench C. Conrad and Wm. S. Stenger, for creditors.

H. H Ward, J. E. Smith, and C. W. Smith, for bankrupt.

BRADFORD District Judge.

This is a motion for the dismissal of a petition in involuntary bankruptcy filed against Thomas S. Bellah, April 30, 1901. The first ground assigned in support of the motion is that 'said petition in bankruptcy doth not set forth any act of bankruptcy on the part of the said Thomas S. Bellah. ' The petition avers that the defendant is insolvent and that within four months next preceding its date he committed an act of bankruptcy.

-- 'in that he did heretofore, to wit, on the 31st day of December, A.D. 1900, have passed before the Register of Wills in and for the County of New Castle, State of Delaware, his own account as Administrator of the estate of Edward T. Bellah, deceased, whereupon he became entitled to, and did, receive from said estate as his own individual share of the same the sum of $29,453.25, which said sum of money he then and there, and has ever since, concealed and secreted, with intent to hinder, delay or defraud his creditors.'

By section 3a(1) of the bankruptcy act the concealment by a person, within the class of those who may be declared involuntary bankrupts, of any part of his property with intent to hinder, delay or defraud his creditors or any of them is made an act of bankruptcy; and by section 1(22) of the act it is provided that "conceal' shall include secrete', &c. The defendant contends that there is no sufficient averment of an act of bankruptcy, because, in the language of counsel, 'there is a total failure to specify any particular act of concealment, and to show how, when, or where such concealment was effected'. Some color is given to this contention by certain dicta in one or more of the cases cited on the part of the defendant; but a brief review of the cases will disclose that, with possibly one exception none of them, so far as the points actually decided are concerned, can be considered authoritative on the question now under discussion. In the case of In re Beardsley, Fed. Cas. No. 1,183, a specification in opposition to the discharge of a bankrupt 'that he has concealed and covered up his property, for the purpose of defrauding his creditors existing at the time of filing his petition', without specifying what property had been so concealed and covered up, was held bad as being too vague and general. So, in the case of In re Butterfield, Fed. Cas. No. 2,247, 5 Biss. 120, it was held that a specification that a bankrupt 'has given a fraudulent preference, contrary to the provisions of the act', without showing what property was the subject-matter of the preference, was bad; the court saying that it lacked a specification in detail, 'which would be necessary to enable the party to plead it in bar.' So, also, in the case of In re Rathbone, Fed. Cas. No. 11,580, 2 Ben. 138, a specification that a bankrupt 'has been guilty of fraud in covering, concealing, and distributing his property' was held bad as being too general. Again, in the case of In re Mawson, Fed. Cas. No. 9,318, 2 Ben. 332, the court held a specification too vague and general which stated with respect to the bankrupt, that 'in contemplation of becoming bankrupt, he has made a transfer or conveyance of part of his property, for the purpose of preventing the same from coming into the hands of the assignee, and of being distributed according to law in satisfaction of his debts'; the court saying 'the third specification should state what part of his property he has so transferred'. In the case of In re Carrier (D.C.) 47 F. 438, specifications were filed, of which the first averred that after adjudication in bankruptcy and the choice of assignees, the bankrupt refused to surrender to the assignees the papers relating to his estate, and concealed from the assignees "certain papers' relating to judgments obtained against him prior to his adjudication, 'the papers' so concealed being a receipt of one Alexander Smith for the notes upon which the judgments were recovered. The court held that the charge of concealment contained in the first specification was bad as not being sufficiently specific. Whether the cases cited in the opinion support the conclusion which was reached may admit of grave question. But however this may be, In re Carrier cannot, in view of the authorities and considerations hereinafter referred to, be treated as controlling the case in hand. All the cases above cited related to the sufficiency of specifications or allegations impeaching the validity of a discharge in bankruptcy. In the case of In re Cliffe, 2 Am. Bankr. R. 317, 94 F. 354, a petition in involuntary bankruptcy averred that the defendant was insolvent and charged as an act of bankruptcy that he 'on the twenty-seventh day of January, 1899, suffered, while insolvent, other creditors to obtain a preference through legal proceedings, and not having at least five days before sale or final disposition of his property affected by such preference vacated such preference'. There was no specification of the details of the alleged preference. The court stated that objection on the ground of such omission, if seasonably made, would have been good, but that it was made too late. In the case of In re Nelson (D.C.) 98 F. 76, the petition alleged that the defendant had within four months next prior to the filing of it 'transferred, while insolvent large amounts and values of his property to one or more of his creditors, with an intent to prefer said creditors over his other creditors'. On a motion to dismiss, this allegation was held insufficient, as lacking reasonable certainty; but leave to amend was granted. It has been held that specifications in opposition to a discharge in bankruptcy must in point of certainty and particularity of averment conform to the requirements of criminal pleading. Assuming that this rule applies as well to the averment in a petition of an act of bankruptcy as to specifications in opposition to a discharge, the sufficiency of such averment is to be determined by the same rules relating to certainty and particularity which would apply if the act of bankruptcy as averred in the petition were charged in an indictment as a punishable offence. Treating, then, the alleged act of bankruptcy as a criminal offence set forth in an indictment, the charge in effect is that the defendant having on a specified day within four months next preceding the filing of the petition, namely, December 31, 1900, passed before the Register of Wills of New Castle county, Delaware, his account as administrator of a specified estate, namely, the estate of Edward T. Bellah, deceased, and having then and there become entitled to and received from that estate a specified sum of money, namely, $29,453.25, as his individual share of such estate, then and there and ever since concealed and secreted the sum of money so received by him with intent to hinder, delay or defraud his creditors. The source, identity, amount and receipt by the defendant of the fund are distinctly and with particularity pointed out. It is only the generality of the charge of concealment or secretion that is objected to by the defendant; and this objection is based solely on the ground that the petitioners have failed to specify any particular act of concealment or to show...