In re First Nat. Bank of Belle Fourche

• Decision Date: 19 March 1907
• Docket Number: 69.
• Parties: In re FIRST NAT. BANK OF BELLE FOURCHE et al.
• Court: U.S. Court of Appeals — Eighth Circuit

152 F. 64

In re FIRST NAT. BANK OF BELLE FOURCHE et al.

No. 69.

United States Court of Appeals, Eighth Circuit.

March 19, 1907

(Syllabus by the Court.)

A corporation which is principally engaged in building concrete arches and bridges and dressing stone is a manufacturing corporation, and may be adjudged a bankrupt under section 4b of the bankruptcy law (Act July 1, 1898, c. 541, 30 Stat. 547 (U.S. Comp. St. 1901, p. 3423) as amended by Act Feb. 5 1903, c. 487, Sec. 3, 32 Stat. 798 (U.S. Comp. St. Supp. 1905, p. 683)).

After verdict or judgment, an objection that the petition fails to state facts sufficient to constitute a cause of action is tenable only when the pleading fails to allege the substance or foundation of a cause of action, and it is impregnable to attack because it is otherwise defective, informal indefinite or incomplete, and was demurrable before answer or judgment.

Jurisdictional facts are those which condition the power of the court to decide some of the issues in the case, like the nature of the subjectmatter and the service of process. Other facts, which condition the character of the decree or the nature of the relief that should be granted or denied, are not jurisdictional, and final adjudications of issues relating to them conclusively estop the parties to the proceedings from again litigating them.

While the jurisdiction of the national courts is limited, they are not inferior courts, and their judgments possess every attribute of finality and estoppel appertaining to those of courts of general jurisdiction. The absence from their records of all appearance of jurisdictional facts is immaterial.

There was no abuse of discretion in a denial by a bankruptcy court of a motion by creditors to vacate the adjudication of the bankruptcy of a corporation and to permit them to answer and litigate the question whether or not the corporation was principally engaged in such a pursuit that it was subject to be adjudged a bankrupt, where the motion was first made 7 weeks after the petition was filed and receivers were appointed, and 5 weeks after the adjudication, when the creditors were aware of the filing of the petition within 4 hours thereafter, and the administration of the estate had proceeded without objection meanwhile.

Arnold L. Guesmer (Rome G. Brown, Charles S. Albert, and T. W. La Fleiche, on the brief), for petitioners.

Harrison L. Schmitt (John W. Schmitt, William A. Kerr, and Charles R. Fowler, on the brief), for respondents.

Before SANBORN, HOOK, and ADAMS, Circuit Judges.

SANBORN Circuit Judge.

This is a petition of creditors to revise in matter of law the proceedings of the District Court which resulted in a denial of their motion to vacate the order of adjudication of the bankruptcy of the Widell-Finley Company, a corporation, and to permit them to file an answer and to litigate the issue whether or not that corporation was principally engaged in any pursuit which subjected it to adjudication as a bankrupt. On February 14, 1906, certain creditors of the Widell Company filed a petition against it for such an adjudication, and on February 26, 1906, it was adjudged a bankrupt by default upon this petition. On the day the petition was filed receivers of its property were appointed, and thereafter proceeded to manage its estate, until on March 17, 1906, at the first meeting of creditors, a trustee was appointed. On April 9, 1906, the petitioners filed their motion. There was a hearing upon it on April 16, 1906, it was denied on May 11, 1906, and the order of denial is assailed by the petition for revision. Between the date of the filing of the petition and the date of the filing of the motion of the petitioners to vacate the adjudication, the receivers made agreements with certain parties, with whom the Widell Company had contracts, relative to the completion of unfinished work, which were approved by the court on February 19, 1906. The trustee was appointed and with the approval of the referee he sold and delivered to the purchasers the office furniture and stationery of the bankrupt in its main office.

On February 15, 1906, the petitioners knew that a petition in bankruptcy had been filed against the Widell Company, and before the 26th day of February, 1906, the day of the adjudication, they were aware that receivers had been appointed. But none of them took any steps to challenge or answer the petition in bankruptcy, or to oppose or avoid the adjudication, until the 9th day of April, 1906. They were creditors of the Widell-Finley Company. They knew, the next day after the 14th of February, that a petition in bankruptcy had been filed against it. The bankruptcy law prescribed the time within which they were permitted to challenge that petition for insufficiency in law or for misstatements of facts. Section 18b, 30 Stat. 551, c. 541 (U.S. Comp. St. 1901, p. 3429), as amended by Act Feb. 5, 1903, c. 487, Sec. 6b, 32 Stat. 798 (U.S. Comp. St. Supp. 1905, p. 685). That time expired on February 25th. They filed neither demurrer nor answer, and on the next day the corporation was adjudged a bankrupt. Their right to demur or answer to the petition then ceased, and their motion for a removal of their default and for leave to answer demanded the enforcement of no right, but merely invoked the judicial discretion of the District Court. The petition for revision does not invite the exercise of the discretion of this court; for the discretion to grant or refuse the motion was not intrusted to us, but to the court below, and in the absence of a manifest abuse of its exercise of that discretion it is not reviewable here.

Counsel for the petitioners insist that the court below abused this discretion (1) because the petition for the adjudication failed to show that the Widell Company was one of the class of corporations judicable in bankruptcy, but disclosed the fact that it was not so and hence they insist that the court was without jurisdiction; (2) because the record after the adjudication disclosed the same state of facts, and hence, as they contend, that the judgment was vulnerable to collateral attack and everywhere void; and (3) because the answer alleged that the Widell Company was not judicable in bankruptcy, and hence, as they insist, that the court was without jurisdiction. 'Any corporation engaged principally in manufacturing, trading, printing, publishing, mining or mercantile pursuits, owing debts to the amount of one thousand dollars or over may be adjudged an involuntary bankrupt upon default. ' Bankr. Act July 1, 1898, c. 541, Sec. 4b, 30 Stat. 547 (U.S. Comp. St. 1901, p. 3423), as amended by Act Feb. 5, 1903, c. 487, Sec. 3, 32 Stat. 797 (U.S. Comp. St. Supp. 1905, p. 683).

The pertinent averment of the petition for the adjudication was that the Widell Company 'is, and during all said time has been, engaged in the business of manufacturing concrete arches and bridges, manufacturing and dressing stone and selling the same, and railroad and ditch contracting. ' The word 'manufacturing' is a generic term of broad significance, advisedly used by Congress to include many species of corporations, and its comprehensive meaning ought not to be whittled away by fine distinctions. Derivatively meaning making with the hand, its ordinary significance is producing a new article of use or ornament by the application of skill and labor to the raw materials of which it is composed. Pin makers, pen makers, shoe makers, furniture makers, lumber makers, steel makers, boot makers, rail makers, engine makers, cement makers, are undoubtedly engaged in manufacturing, and the cogency of the argument that a corporation which makes a pin is manufacturing, while one which makes a bridge is not, fails to appeal to our judgment with convincing force. The latter may make the cement or the steel it uses in its structure. If so, it is engaged in manufacturing the cement or the steel, and, whether it makes them or not, it produces a new and useful article, a bridge, when by the application of skill and labor to the materials of which it is composed it constructs it.

As usual in respect to every question which involves the construction or operation of the bankruptcy law, there is a conflict of authority. Butt v. C. F. MacNichol Const. Co., 140 F. 840, 72 C.C.A. 252; In re Minnesota & A. Const. Co., 60 P. 881, 7 Ariz. 137; In re Smith, 2 Lowell, 69, Fed. Cas. No. 12,981; In re Tontine Surety Co. (D.C.) 116 F. 401. But the more persuasive reasons and the weight of the decisions support the view, and our conclusion is, that a corporation principally engaged in constructing concrete arches and bridges and in dressing and selling stone is engaged in a manufacturing pursuit and subject to adjudication in bankruptcy upon an involuntary petition. Columbia Iron Works v. National Lead Co., 127 F. 99, 102, 62 C.C.A. 99, 102, 64 L.R.A. 645; In re Niagara Contracting Co. (D.C.) 127 F. 782; In re Marine Const., etc., Co., 130 F. 446, 64 C.C.A. 648; In re Matthews Consolidated Slate Co., 144 F. 737, 738, 75 C.C.A. 603; In re Quincy Granite Quarries Co. (D.C.) 147 F. 279; In re H. R. Leighton & Co. (D.C.) 147 F. 311, 313; In re Troy Steam Laundering Co. (D.C.) 132 F. 266; White Mountain Paper Co. v. Morse & Co., 127 F. 643, 644, 62 C.C.A. 369, 370.

The concession is freely made that a demurrer or an objection to evidence, before the adjudication, upon the general ground that the petition for it did not contain a clear averment that the corporation was principally engaged in manufacturing concrete arches and bridges and dressing stone, would have been well taken. But, if either of them had been made and sustained, the petition would have been immediately amendable. In re Plymouth Cordage Co., 135 F. 1000, 1003, 68 C.C.A....