In re Elmira Steel Co.

• Decision Date: 17 April 1901
• Parties: In re ELMIRA STEEL CO.
• Court: U.S. District Court — Northern District of New York

109 F. 456

In re ELMIRA STEEL CO.

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

April 17, 1901

The following is the report of Referee Moss:

The issues referred to me as special master, under district rule 30, to ascertain and report the facts, with my conclusions thereon, arise upon the involuntary petition of certain creditors praying that the Elmira Steel Company be adjudicated bankrupt, and the answers thereto of the alleged bankrupt and certain other creditors. For convenience and brevity of reference the several parties may be designated as hereinafter stated and the issues upon their respective pleadings may be briefly stated as follows:

(1) Richard G. Crawford, William T. Jones, James Bray, and Daniel F. Nelan, all of Elmira, N.Y. (hereinafter called the 'Elmira creditors,' or the 'petitioners') filed a petition in this court December 18, 1900, in involuntary proceedings against the Elmira Steel Company. The allegations of the petition will be more particularly discussed later. For the present it is sufficient to state that they alleged the Elmira Steel Company to be a corporation organized and existing under the laws of the state of New York, and engaged principally in manufacturing and selling steel billets and merchant iron, having its principal place of business in the Western district, at the city of Elmira; that the petitioners are creditors, their claims being for labor and services rendered to the corporation within three months prior to the filing of the petition; that the Elmira Steel Company was insolvent, and within four months prior to the filing of the petition committed acts of bankruptcy, in suffering judgments to be obtained against it and not having discharged the same within five days prior to a sale of its property under executions upon said judgments levied thereon.

(2) The Elmira Steel Company (hereinafter called the 'bankrupt,' which is sanctioned by Bankr. Act, Sec 1, and its definition of a 'bankrupt' as including before adjudication, a person against whom an involuntary petition has been filed), the alleged bankrupt, which filed an answer January 5, 1901, which, without denying any allegation of the petition, alleged that on the 3d day of January, 1901, there was filed in the district court of the United States for the Eastern district of Pennsylvania a petition against it, to which it made no defense, and upon which, on the 3d day of January, 1901, it was adjudged a bankrupt, and that upon the same day, in the said Eastern Pennsylvania district court, John N.M. Shimer and William H. Staake were appointed receivers of its properties; the answer concluding as follows: 'Your petitioner, showing to the court that it has already been adjudged a bankrupt as above set forth, humbly submits itself to the further order of your honorable court '. The answer is without indorsement, either of appearance by itself or by an attorney for it. There was no appearance for or on behalf of the bankrupt before me upon the trial of the issues referred.

(3) Solomon Morrison and Samuel Risman, trading under the firm name of Morrison & Risman, of Buffalo, N.Y. (hereinafter called the 'Buffalo creditors '), filed an answer January 7, 1901, which, stating that they were creditors of the bankrupt, denied that the Elmira Steel Company had committed the act of bankruptcy set forth in the petition, or that it was insolvent, and averred that it should not be declared bankrupt for any cause in said petition alleged, and concluding: 'This they pray may be inquired of by the court.'

(4) William T. Rainey and Charles R. Elliott, co-partners trading as William T. Rainey & Co., of Philadelphia, and George B. Newton & Co., incorporated, of Philadelphia (hereinafter called the 'Philadelphia creditors'), filed separate answers, but joined in their defense before me. The amended and supplemental answer of William T. Rainey & Co., filed January 29, 1901, by permission of an order of this court of that date, alleging that they were creditors of the bankrupt, alleged that the Elmira Steel Company had its principal place of business in the city and county of Philadelphia and state of Pennsylvania, within the Eastern district of Pennsylvania, for the greater portion of six months next preceding the filing of the petition in this court, and likewise next preceding the filing of the petition in said answer mentioned, in the district court of the United States for the Eastern district of Pennsylvania; 'and your respondents traverse the allegation in the petition filed in this court, to which this is an answer, that the said principal place of business had for the greater portion of six months next preceding the filing of the petition in this case been in the city of Elmira, Chemung county, New York.' The answer alleged affirmatively that the Elmira Steel Company was, on the 3d day of January, 1901, adjudicated an involuntary bankrupt by decree of the district court of the United States for the Eastern district of Pennsylvania, entered upon the petition of sundry creditors in that cause; that no appeal or bill of review had been taken from said adjudication, although more than ten days had elapsed since the adjudication was entered, and that said adjudication had then become a final adjudication of said court, fixing the questions of jurisdiction in the matter of the bankruptcy of Elmira Steel Company; that, although certain of the property of the Elmira Steel Company was in the said city of Elmira, and certain of its manufacturing operations were conducted there, its office and likewise its principal place of business were in the city of Philadelphia during the time aforesaid; and, further, that the officers resided and the board of directors held its meetings in the said city of Philadelphia, the company's books of account were kept in the said office, its manufacturing operations were directed from the said office, the products sold from there, and its moneys collected there. It alleged, further, the appointment on the 3d day of January, 1901, by the Eastern district of Pennsylvania court, of receivers of the estate of the bankrupt, and concluded as follows: 'Your respondents therefore show that the adjudication entered as aforesaid by the district court of the United States for the Eastern district of Pennsylvania vested all the property, both real and personal, and the assets of every description and wherever located, of the said Elmira Steel Company, bankrupt as aforesaid, in the custody, care, and control of the said district court of the United States for the Eastern district of Pennsylvania, and is effectual to stay all further proceedings in bankruptcy in this or any other court.' The answer of George B. Newton & Co., filed by permission of the same order January 29, 1901, alleging said defendants to be creditors of the Elmira Steel Company, contained no denial or traverse of any allegation of the petition in this case, but made substantially the same affirmative allegations as the amended and supplemental answer of William T. Rainey & Co. of the adjudication of the Elmira Steel Company bankrupt by the United States district court for the Eastern district of Pennsylvania, from which no bill of review had been taken, although more than ten days had elapsed since the adjudication was entered, and that said adjudication had become a final adjudication, fixing the question of jurisdiction in the matter of the bankruptcy of the said Elmira Steel Company, and the appointment by orders of that court of receivers. It alleged, further, that the adjudication by the district court of the United States for the Eastern district of Pennsylvania vested all the property, both real and personal, and the assets of every description and wherever located, of the Elmira Steel Company, in the custody, care, and control of the said district court of the United States for the Eastern district of Pennsylvania, and of the receivers by that court thereafter appointed, and was effectual to stay all further proceedings in bankruptcy in this court; that in consequence of its adjudication the district court of the United States for the Eastern district of Pennsylvania 'will proceed in due and orderly course to administer all the estate, both real and personal, and wherever situate, of the said bankrupt; and that, were your honorable court now to proceed further in the present cause, with the view of entering an adjudication and proceeding in like manner to administer thereunder all the estate, both real and personal, and wherever situate, of the said bankrupt, the result would be serious confusion and complication, conflicting claims of jurisdiction between the trustees asserting title under the proceeding wherein they were respectively elected, inability to give a clear and certain title to a purchaser at any sale of property ordered by the court, and an inevitable and irreparable loss to your respondent and to the other creditors of the bankrupt.' And the answer concluded as follows: 'Wherefore your respondent prays that it may be allowed to intervene in these proceedings based thereon, be dismissed, and all proceedings remitted to the control of the said district court of the United States for the Eastern district of Pennsylvania.'

These petitioners filed no replications to the answers, and it was conceded on the trial before me that it was unnecessary to do so; and the matters alleged by way of affirmative defense were controverted and litigated by proof before me. The evidence showed that the petition upon which the alleged adjudication of the United States district court for the Eastern district of Pennsylvania was made was filed in that court January 3, 1901, and was made by the Philadelphia creditors, above named, and the National Exchange Bank of...