In re Hewitt Grocery Co.
| Decision Date | 03 June 1940 |
| Docket Number | No. 19861.,19861. |
| Court | U.S. District Court — District of Connecticut |
| Parties | In re HEWITT GROCERY CO. |
Benjamin M. Chapnick, of New Haven, Conn., for objecting creditors.
William J. Larkin, of Waterbury, Conn., for receiver.
This matter came into this court by an involuntary petition filed April 4, 1940. On April 10, 1940, one Schick, alleging that he had theretofore been appointed receiver for the alleged bankrupt by the Superior Court for New Haven County, moved to dismiss the involuntary petition, and on April 12, 1940, a formal appearance herein was entered for the state court receiver.
Thereafter at the request of counsel for the petitioning creditors the receiver's motion to dismiss was assigned for hearing, at which no one appeared to support the motion to dismiss. An order was accordingly entered on May 4, 1940, denying the receiver's motion to dismiss by default and, no answer having been filed to the involuntary petition, an adjudication entered.
Thereafter, by motion dated May 8, 1940, counsel for the state court receiver moved to vacate and for a hearing on the merits of the receiver's motion that the involuntary petition be dismissed.
At the hearing it developed that counsel for the petitioning creditors had failed to notify counsel for the receiver of the hearing assigned for April 29, 1940, upon the motion to dismiss; instead counsel for the petitioning creditors had sent a letter to the receiver personally notifying him of the assignment. This notice did not comply with Federal Rules of Civil Procedure, rule 5(b), 28 U.S.C.A. following section 723c, which provides "whenever under these rules service is required or permitted to be made upon a party represented by an attorney the service shall be made upon the attorney unless service upon the party himself is ordered by the court." This rule is applicable here under General Order in Bankruptcy 37, 11 U.S.C.A. following section 53.
Perhaps counsel's failure to comply with the rule was due to misunderstanding. For when he applied to me for an assignment on the receiver's motion, after making the assignment I cautioned him orally that he should of course notify the alleged bankrupt and its receiver. However, I did not mean thereby to authorize an omission of notice to the receiver's counsel and now that it appears that the default was due to the receiver's assumption that his counsel would have independent notice of the hearing, I feel that the rulings entered by default should be vacated and that the receiver's motion should be heard on its merits. Especially is this so in view of the fact that the receiver's motion to vacate was promptly filed before any steps had been taken to administer the estate in bankruptcy.
Coming then to the merits, it appears from the face of the involuntary petition that the only act of bankruptcy relied upon was the appointment of a receiver when the alleged bankrupt was insolvent. The evidence shows that the temporary receiver was appointed November 23, 1939; that at that time the temporary receiver was ordered to notice all creditors and stockholders by mail and publication on or before December 18th of a hearing upon the confirmation of his appointment; and that on January 5th, 1940, the receiver qualified as a permanent receiver. Thus the only question is whether the appointment of the temporary receiver was an "appointment" within the meaning of Section 3, sub. a(5) of the Act, 11 U.S.C.A. § 21, sub. a(5), if so, the involuntary petition was brought more than four months after the appointment and should be dismissed.
According to the weight of authority and reason, the appointment of the temporary receiver constitutes an act of bankruptcy. Blue Mountain Iron & Steel Co. v. Portner, 4 Cir., 131 F. 57; In re Detroit Transportation Trucking Co., D.C., 276 F. 757; In re William S. Butler & Co., 4 Cir., 207 F. 705, at page 711; In re Luxor Cab Mfg....
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