In re Gerson

• Decision Date: 07 January 1901
• Docket Number: 4.
• Citation: 105 F. 891
• Parties: In re GERSON.
• Court: U.S. District Court — Eastern District of Pennsylvania

105 F. 891

In re GERSON.

No. 4.

United States District Court, E.D. Pennsylvania.

January 7, 1901

Jos. L Greenwald and Clinton O. Mayer, for trustee.

J. B McPHERSON, District Judge.

The report of the referee raises again the question that I had occasion to consider recently in Re Schaefer (D.C.) 104 F. 973, but presents it from a different point of view. Schaefer's case was put to me simply upon the proposition that a contract of indorsement that had not become absolute before the petition in bankruptcy was filed was not a fixed liability, within clause 'a' (1) of section 63, and could not be proved against the estate under that clause. I thought then, and I still think, that the proposition was sound; but I was not asked to consider, and did not consider,-- the oversight was, no doubt, my own fault,-- whether such a contract might not be provable under clause 'a' (4) of the same section. This is the point now presented for decision, and, in my opinion, the ruling of the referee allowing proof to be made was correct.

A debt is defined by section 1 of the act to be 'any debt demand or claim provable in bankruptcy'; and section 63 sets forth in detail the classes of provable debts. They are (1) Certain fixed liabilities (2 and 3) certain liabilities for costs; (4) any debt, claim, or demand 'founded upon an open account, or upon a contract, express or implied'; and (5) provable debts reduced to judgment after the filing of the petition. It is the scope of clause 4 that is now in controversy, and this, I think, is broad enough to include a claim founded upon the contract of indorsement, even before the liability under such a contract has become fixed. The indorser's engagement may not be a 'debt,' strictly so called, until there has been demand and notice of nonpayment; but, even before demand and notice there is certainly a contingent liability, and this may fairly be embraced within the words 'demand or claim.' I did not consider this clause of the section when I decided Schaefer's Case; but, now that it has been brought to my attention, I cannot avoid the conclusion that clause 4 ought to have been applied in that decision, and, if applied, should have brought me to the conclusion that a contract of indorsement is a provable debt, even if the note does not fall due until after the petition is filed. It is provable, not under clause 'a' (1), but under clause 'a' (4). The contract of indorsement is an...