In re Columbia Real Estate Co.

• Decision Date: 08 January 1902
• Docket Number: 776.
• Citation: 112 F. 643
• Parties: In re COLUMBIA REAL ESTATE CO. v. TAYLOR et al. SPANG, CHALFANT & CO.
• Court: U.S. Court of Appeals — Seventh Circuit

112 F. 643

In re COLUMBIA REAL ESTATE CO.

SPANG, CHALFANT & CO. v. TAYLOR et al.

No. 776.

United States Court of Appeals, Seventh Circuit.

January 8, 1902

M. M Townley, for appellant.

Dan. W Sims, for appellees.

The Columbia Real Estate Company, an Indiana corporation, was adjudged a bankrupt on the petition of three creditors,-- Henry A. Taylor, the Burt-Terry Stationery Company, and the Henry Taylor Lumber Company,-- alleging the insolvency of the corporation, 'and that it has admitted in writing its inability to pay its debts and its willingness to be adjudged a bankrupt on that ground. ' An adjudication of bankruptcy was adjudged a bankrupt on that ground. ' An adjudication of bankruptcy was entered on March 2, 1900 being the same day the petition therefor was filed, and on April 27, 1900, the appellant, Spang, Chalfant & Co., a Pennsylvania corporation, with leave of the court, filed its intervening petition to have such adjudication vacated and set aside for alleged insufficiency of both petition and proofs upon which the same was granted, and for the further reason that the adjudication was premature. The intervener claims no indebtedness against the bankrupt corporation, but its petition sets forth a claim by way of security upon certain real estate of which the title was taken in the name of one Oscar P. Benjamin, but 'in equity said land is the property of the said Columbia Real Estate Company,' and avers the intention of the trustee in bankruptcy to 'take steps to recover said real estate,' and 'subject the same to the payment' of creditors of the bankrupt, if the bankruptcy proceeding is maintained. The nature of the appellant's claim of interest in, and security upon, the real estate, as stated, is substantially this: That O. P Benjamin was president and principal stockholder of the bankrupt corporation and of another corporation, O. P. Benjamin Manufacturing Company, and the real estate referred to was acquired in an exchange for property owned by the bankrupt corporation, but the title to the real estate thus acquired was taken in the individual name of O. P. Benjamin; that the O. P. Benjamin Manufacturing Company was indebted to the intervener company in the sum of $2,621.52, and payment thereof had been extended upon agreement by O. P. Benjamin that he would secure the same upon his real estate if not paid at the expiration of the extended time, in accordance with a note then made by the debtor corporation and indorsed by said Benjamin; that, such note being unpaid at maturity, an agreement was entered into December 1, 1890, through one Bone, who was agent of the debtors for the purpose, whereby new notes of the O. P. Benjamin Manufacturing Company, with Benjamin's indorsement, were made and accepted, and a written contract, executed by Spang, Chalfant & Co., of the one part, and such maker and indorser of the other part, which recites the purchase by the first party from O. P. Benjamin of the real estate described, and that the same is to be conveyed to a trustee named, and provides that the first party shall cause reconveyance of the real estate by the trustee to said Benjamin, if said O. P. Benjamin Manufacturing Company shall pay the said new notes at maturity. The petitioner further states that it had no information that the real estate was so held by Benjamin for the Columbia Real Estate Company; that, although no conveyance of the same by said Benjamin to the trustee, as recited, was made in fact, said Benjamin subsequently confirmed the arrangement and promised to execute to petitioner a formal mortgage or trust deed thereupon; and that he has since refused to perform, and the indebtedness is unpaid. The intervening petition, as finally amended, was dismissed on demurrer, and Spang, Chalfant & Co. appeal from the order entered thereupon.

Before JENKINS and GROSSCUP, Circuit Judges, and SEAMAN, District judge.

SEAMAN District Judge, after making the foregoing statement, .

This appeal is brought by the petitioner, Spang, Chalfant & Co., from an order of the district court dismissing its petition for intervention in bankruptcy proceedings against the Columbia Real Estate Company to set aside an adjudication of involuntary bankruptcy theretofore entered. The adjudication was unopposed, and is not reviewable on the present appeal, so that the only questions presented are (1) whether an appeal lies from the order dismissing the petition; and, if appealable, (2) whether the petition presents a case of absolute right to relief.

The question of jurisdiction of the appeal is not discussed in the arguments of counsel upon either side, but it clearly arises under the provisions for an appeal in sections 24 and 25 of the bankruptcy act, and unless the appeal is authorized thereby the various contentions of counsel respecting the nature or validity of the appellant's claim are not open to consideration, beyond such bearing as they may have upon the scope and effect of the order denying intervention in the bankruptcy proceedings. Section 25 of the act is obviously inapplicable, as the order is not included within either of the cases therein specified, namely, appeals to be taken within 10 days '(1) from a judgment adjudging or refusing to adjudge the defendant a bankrupt; (2) from a judgment granting or denying a discharge; and (3) from a judgment allowing or rejecting a debt or claim of five hundred dollars or over. ' The last-mentioned clause is probably applicable alone to a debt or claim against the bankrupt when presented for proof in due course, but it is not applicable here for the reason (hereinafter referred to) that this order does not in any sense operate as a disallowance or rejection of the petitioner's alleged equitable mortgage claim. The general provision for appeals, however, is contained in section 24a, which invests the circuit court of appeals 'with appellate jurisdiction of controversies arising in bankruptcy proceedings from the courts of bankruptcy from which they have appellate jurisdiction in other cases' and section 6 of the act creating the circuit court of appeals (26 Stat. 826-828)...