In re Courtenay Mercantile Co.

• Decision Date: 27 March 1911
• Parties: In re COURTENAY MERCANTILE CO.
• Court: U.S. District Court — District of North Dakota

186 F. 352

In re COURTENAY MERCANTILE CO.

United States District Court, D. North Dakota.

March 27, 1911

A. E Boyesen and H. H. Flor, for petitioning creditors.

Geo. H Stillman, for bankrupt.

AMIDON District Judge.

This is an involuntary proceeding in bankruptcy against the Courtenay Mercantile Company, a corporation organized under the laws of North Dakota. The act of bankruptcy charged is the making of a general assignment for the benefit of creditors. The answer denies this charge. From a stipulation of facts it appears that the Mercantile Company, on the 10th day of November 1910, executed and delivered to Percival S. Preston a deed assigning to him all of its property of every kind and nature, and authorizing him to collect its debts and convert its property into money. The grant of power to apply this money is as follows:

'To pay and discharge in full all the debts and liabilities due or owing by the parties of the first part, including interest thereon, to those of its creditors who shall become parties hereto, by signing this agreement or a copy thereof, and who shall, in consideration of the promises, undertake and agree upon payment made, whether in whole or in part, as herein provided, to fully release, discharge, and absolve the party of the first part from and of all indebtedness to them, or either of them, now due or owing; and if said proceeds shall not be sufficient to pay said debts and liabilities and interest in full, then to apply the same so far as they will extend, pro rata, to the payment of said debts and liabilities and interest; and if, after payment as aforesaid, there shall be any surplus, to pay such surplus to the party of the first part, its successors and assigns.'

The trust was accepted by the assignee, who took possession of all the property of the corporation, and was proceeding to execute his trust, when this petition in bankruptcy was filed. Numerous creditors, holding claims amounting to $3,000, accepted the assignment; others, holding claims amounting to $7,000, declined to do so.

If the deed constitutes a general assignment for the benefit of creditors, within the meaning of section 3 of the bankruptcy act, it is conceded that an adjudication of bankruptcy should be entered; if it is not such an instrument, the proceeding must be dismissed. Counsel for the Mercantile Company contends that the restriction above quoted, limiting the creditors who shall...