In re Desrochers
| Decision Date | 04 January 1911 |
| Docket Number | 3,789. |
| Citation | 183 F. 991 |
| Parties | In re DESROCHERS. |
| Court | U.S. District Court — Northern District of New York |
Muhlfelder & Illch, for trustee.
W. E Ward, for certain creditors.
Benj. Terk, for petitioning creditor for appointment of receiver.
Wm Dewey Loucks, attorney for receiver.
Del B Salmon and Geo. G. Schieffelin, appraisers in person.
On the 2d day of February, 1910, Octavius B. Desrochers, the above-named bankrupt, through Mr. Norton of Troy, N.Y., a reputable attorney, filed with the clerk of this court his voluntary petition and schedules in bankruptcy. On the evening before filing such petition he closed and locked his stores, one in the city of Troy, N.Y., and the other in the city of Schenectady, N.Y. He left the stock of goods in each store as they had been while conducting business, and neither removed any of such goods, nor did anything indicating, or that could give rise to a suspicion, that goods were being removed or would be removed from said stores, or either of them, and nothing was done by any person indicating that any removal was going on, or that indicated in any way that the stock of goods or property in either store was being disturbed or in any way interfered with. At the time of filing his said petition Desrochers had not been sued or threatened with any legal proceedings or suits, except it may be inferred that his landlord, one McDonald, intended dispossession proceedings or a suit as he had given until February 2, 1910, for payment of rent.
On February 2, 1910, the same morning said voluntary petition in bankruptcy was filed, Samuel Levy, William Dewey Loucks, and Benjamin Terk, all of the city of Schenectady, were in the city of New York. All three are attorneys of the Supreme Court, state of New York, and of this court, and were ignorant of such bankruptcy proceedings, and of the fact that said Desrochers was in any way financially embarrassed. Neither of them was in any way interested in said matter, nor did they or either of them at that time represent any person interested in the affairs of said Desrochers as creditor or otherwise. The Schenectady store of said Desrochers was nearly opposite the law office of Del B. Salmon, formerly a partner of said Samuel Levy, and on the morning of February 2, 1910, he noticed that said store was closed, or at least not opened. Thereupon Salmon at Schenectady called up Levy in New York by telephone, but, Levy not being present to answer the call and Loucks and Terk being there, Loucks answered the call, and the matter of getting business out of the Desrochers matter was discussed. Terk, at the suggestion of Loucks, or at least with his knowledge and assent, called up the clerk of the district court at Utica, and learned that a petition in bankruptcy had been filed, but that no receiver had been appointed. Thereupon Loucks drew up in his own handwriting a petition for the appointment of a receiver and also a bond for costs, etc., in case the petition should be dismissed, in which bond the names of Loucks and Terk were inserted as sureties by Loucks himself, a blank space being left in both petition and bond for the name of a petitioning creditor for the appointment of a receiver when one should be found. In the meantime Terk and Loucks were engaged in concert in an effort to find some one who would be willing or consent to act as a petitioner for the appointment of a receiver of the property, etc., of said Desrochers. Neither had any knowledge or information tending to indicate any necessity for the appointment of a receiver in the case. Some of these efforts were made in New York City, but, failing to find any one there who would act as a petitioner on such an application, Loucks and Terk, by telephone, requested one George W. Donnan, who, while an attorney at law, was employed in Terk's law office at Schenectady to go to New York City; the intention being to have him act as petitioner in case a claim should be secured. Donnan went to New York City, arriving there on the morning of February 3d. The same day, February 2d, Loucks returned home to Schenectady, where he arrived after 11 o'clock p.m. Thursday morning, February 3d Loucks reached his office in Schenectady at about 7:30 a.m., and Henry R. Gifford, a clerk in his office, arrived a few minutes thereafter. Loucks then made efforts to find a creditor of Desrochers who would assign his claim to Donnan. He applied to four such creditors, but three of them refused to assign their respective claims, and the claim of the other was too small to be of use. Finally, the Atwood Suspender Company was applied to by Loucks. This company declined to become a petitioner itself, but, having a claim of $23.38 against Desrochers, assigned it to Donnan by written assignment prepared by Loucks, and sent by him to said company by said Gifford for execution, who also took along and delivered the check of said Loucks for $23.38 in payment for such claim. It is at once apparent who the real owner of this claim was. The legal title, however, was in Donnan, as it was assigned to him. Loucks then telephoned what had been done to New York City, and the name of Donnan was inserted in the blank space in the petition for a receiver and affidavit of verification thereto, and the date of such verification was changed from February 2d to 3d. The bond had been executed the day before-- that is, February 2d-- so far as appears on its face. It recites:
'Whereas a petition has been filed by the above-named bankrupt praying that he be adjudicated a bankrupt and an application has been made by George W. Donnan asking for the appointment of a receiver therein: Now, therefore, we, George W. Donnan of Schenectady, New York City, N.Y., as principal,' etc.
It is certified by Hazel K. Grandin, a notary public of New York City, under her seal to have been acknowledged by Donnan on the 2d day of February, and to have been subscribed and sworn to as to qualification as sureties by Loucks and Terk on the same day. On that day Donnan was not a creditor or a petitioner. He had no claim against and no interest in the estate of Desrochers. That petition reads as follows, and shows that the name 'George W. Donnan' was inserted wherever it occurs after the remainder thereof, except signatures 'Geo. W. Donnan' and 'Narciso C. Donato,' and figures '$2338' and words 'for goods sold and delivered and holds no security' had been written by Loucks and written by him before he returned to Schenectady and before Terk returned there from New York, viz.:
Geo. W. Donnan, Petitioner.
'Benjamin Terk, Atty. for Petitioner,
'Orpheum Theatre Bldg., Schenectady, N.Y.
'State of New York, County of New York-- ss.:
'I, George W. Donnan the petitioner mentioned and described in the foregoing petition do hereby make solemn oath that the statement of fact therein contained are true according to the best of my knowledge, information and belief.
Geo. W. Donnan.
'Sworn to before me this 3rd day of February, 1910.
'Narciso C. Donato, Notary Public, N.Y. Co.'
The blanks in the petitioner were filled and the additions made by Terk. The figures '$2338' are in a large bond hand, but on close inspection and with special attention called it can be seen that there is a very fine dot under the lower curl of the second figure '3.' The stock of merchandise exceeded $5,000 in value. The statement in said petition is as follows:
'That a number of creditors have sued the said bankrupt as your petitioner is informed and believes, and about to levy on the said stock of goods, and the said bankrupt has carried away and is carrying away said property for the purpose of concealment.'
The only ground stated which could justify the judge in appointing a receiver was wholly false and untrue, and there was no ground of belief that it was true. When that petition was drawn, neither Loucks nor Terk had any information whatever that Desrochers was in serious financial difficulty, and only by the telephone communication from Salmon did they suspect it and by communicating with the clerk's office at Utica only did they learn that a petition had been filed.
This petition for a receiver was presented to the district judge on the 3d day of February, 1910, at his chambers in the city...
To continue reading
Request your trial