In re Berkebile

• Decision Date: 24 February 1905
• Docket Number: 1,746.
• Citation: 144 F. 572
• Parties: In re BERKEBILE.
• Court: U.S. District Court — Western District of New York

144 F. 572

In re BERKEBILE.

No. 1,746.

United States District Court, W.D. New York.

February 24, 1905

The following is the substantial part of the report of William H Hotchkiss, to whom the petition was referred as special master:

'There was some discussion during the progress of this reference as to a defect in the original involuntary petition, in that it neither alleged affirmatively the business of the bankrupt nor negatives any of the exceptions stated in section 4b of the act (Bankr. Act July 1, 1898, c. 541, 30 Stat. 547 (U.S. Comp. St. 1901, p. 3423)). At the close of the creditors' case, the bankrupt moved to dismiss, on this, among other grounds, and decision was reserved. The alleged bankrupt failed to demur, answered on the merits and appeared by counsel and cross-examined the creditors' witnesses. She cannot now demur. It is not necessary to rule that her motion to dismiss on this ground is not a challenge to the jurisdictions. Courts must consider questions involving jurisdiction, even if overlooked or waived by the parties. Metcalf v Watertown, 128 U.S. 586, 9 Sup.Ct. 173, 32 L.Ed. 543.

'The question, therefore, arises whether, the petition being thus defective, the court has jurisdiction. As I view it, that depends on what is meant by jurisdiction. Thus, following the rule of pleading stated in Ledbetter v. U.S., 170 U.S. 606, 611, 18 Sup.Ct. 744, 42 L.Ed. 1162, it has been repeatedly held that, where such a denial of the statutory exceptions is omitted from the pleading, there can be no adjudication, and demurrers on that ground have been frequently sustained. In re Bellah (D.C.) 116 F. 69; In re Pilger (D.C.) 118 F. 206; In re Mero (D.C.) 128 F. 630; In re Callison (D.C.) 130 F 987. All, or nearly all, of these cases, however, hold that the defect is not so far fatal as to prevent amendment. An earlier case (In re Taylor, 102 F. 728, 42 C.C.A. 1) is much to the same effect, though silent as to the right to amend. A late case, however, (In re Stein (D.C.) 130 F. 377), holds that a similar defect cannot be cured by amendment. If this is the rule, the present proceeding must fall for want of jurisdiction. However, that the Stein Case does not voice the correct view seems clear. It had been well held (In re Columbia Real Estate Co. (D.C.) 101 F. 965, 970) that District Courts sitting in bankruptcy are not inferior courts, in the sense that jurisdiction must necessarily appear on the face of the record (citing cases). Indeed, the true distinction is indicated in Re Brett (D.C.) 130 F. 981, 983, and the cases there cited. The defect is jurisdictional, but only so far as it precludes the court from making an adjudication. Jurisdiction of the subject-matter is conferred by the statute itself, of the person by service of process and appearance. The court can therefore permit an amendment where the facts, as proven in this case, show that this debtor is neither a wage earner nor a farmer. A bankruptcy petition might, it is true, be so grossly defective in jurisdictional allegations that, by refusing to permit amendments, jurisdiction would be declined. That, however-- where jurisdiction of the person and the subject-matter exists-- is always for the court to say. On this phase of the case, therefore, I report that this petition is defective, in that it does not assert either the occupation of the alleged bankrupt or that she is not a wage earner or farmer; and that, on the ground, it should be dismissed, unless the creditors shall seasonably apply for and obtain an amendment as above indicated. The granting of an order of intervention to creditors who allege that the debtor is engaged principally in trading and mercantile pursuits is not, in my judgment, such an amendment.

'In the event that the amendment shall be granted, the facts as shown on this reference are as follows; the more salient can best be stated chronologically:

'April 21, 1903: Owen E. Berkebile, the alleged bankrupt's husband, entered into a written contract with the Reward Development Company for the construction of a house at No. 83 Altruria street, Buffalo; the contract price being $2,308.

'May 21, 1903: Owen E. Berkebile entered into a similar contract with the same company for the construction of a house at No. 88 Altruria street; contract price $2,350.

'June 22, 1903: Owen E. Berkebile entered into a contract with James P. Sweeney for the construction of two houses on Fulton and Perry streets Buffalo; contract price, $5,103.

'June 30, 1903: Owen E. Berkebile, by separate instruments, duly acknowledged, which were annexed to the original contracts, and, as so annexed, were apparently filed in Erie county clerk's office on July 1, 1903, assigned the two Altruria street contracts to his wife, Eppie B. Berkebile. Such assignments were not delivered to her, nor did she know of their existence until some time after.

'July 6, 1903: Owen E. Berkebile, by an instrument, duly acknowledged, which was then or later annexed to the original contract, and, as so annexed, was apparently filed in Erie county clerks's office July 20, 1903, assigned the Sweeney contract to Eppie B. Berkebile. Such assignment was not delivered to her, nor did she know of its existence until some time after.

'November 27, 1903: 'Eppie B. Berkebile, contractor,' and Owen E. Berkebile assigned to Bernard Brady the sum of $1,137.69, due or to become due 'on my contracts' for the Altruria street houses; and Brady, on the same day, filed a notice of such assignment in said clerk's office, specifying that the same was given for lumber furnished in the construction of such houses. This is the alleged act of bankruptcy.

'November 28, 1903: Eppie B. Berkebile and Owen E. Berkebile assigned to the United States Gypsum Company, one of the intervening creditors, the sum of $132.13, due on the same contracts, and such assignment seems to have been duly filed in such clerk's office on December 1, 1903.

'December 2, 1903: Eppie B. Berkebile assigned to Schreier & Voisard, by two instruments, each acknowledged before Harry N. Kraft, a commissioner of deeds, the sum of $414,34, due respectively on the Altruria street contracts.

'January 10, 1904: Eppie B. Berkebile and Owen E. Berkebile assigned to William Honsberger the sum of $31.30, due on the same contracts, and such assignment seems to have been duly filed in such clerk's office January 14, 1904.

'January 14, 1904: Eppie B. Berkebile and Owen E. Berkebile assigned to Bernard Brady, by two instruments, each acknowledged before Judson S. Rumsey, a commissioner of deeds, the sum of $125.14 and $153.26, deposited by the Reward Development Company to discharge alleged and avoid liens filed against the Altruria street houses by one August Burasch, which assignments seem to have been filed in such clerk's office January 15, 1904.

'March 25, 1904: Involuntary petition filed by August Burasch, Joseph Meyer, and Schreier & Voisard.

'April 5, 1904: Answer of alleged bankrupt filed.

'April 11, 1904: Order of reference to the undersigned.

'June 30, 1904: Intervening petition of William F. Koch, Arthur Brotherston, and United States Gypsum Company filed.

'November 25, 1904: Reference concluded.

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