In re Horgan

• Decision Date: 05 October 1899
• Citation: 97 F. 319
• Parties: In re HORGAN et al.
• Court: U.S. District Court — Southern District of New York

97 F. 319

In re HORGAN et al.

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

October 5, 1899

On August 3, 1899, a voluntary petition in bankruptcy was filed in this court by the firm of Horgan & Slattery, composed of the two partners Arthur J. Horgan and Vincent J. Slattery and the firm and its members were on that day duly adjudged bankrupts, and the case was referred to Stanley W. Dexter Esq., referee in bankruptcy. As bearing on the present question in the case, the referee certified that the following facts appeared in the proceedings had before him The partnership, composed of Horgan and Slattery, as above mentioned, was formed for the purpose of carrying on the business of architects and builders, but failed in 1894, with liabilities then amounting to about $190,000. Thereafter, for several years, the partners contained in the same business either under the name of a corporation called the 'Horgan & Slattery Company,' or in the names of their wives, in both cases drawing to their own use the entire net proceeds of the business. In 1898 a corporation was formed, for the practice of architecture as a profession, called 'Horgan & Slattery.' It was composed of Horgan and his wife, Slattery and his wife, and one James Slattery. Its capital was divided into 1,000 shares of $10 each. Of these Horgan, Slattery, and James Slattery each held one share, and the remaining 997 shares were in the names of the wife of Horgan and the wife of Slattery. The stated consideration for the issue of this stock to the wives was the conveyance by them to the corporation of the equity of redemption in a certain property, but no money was realized by the corporation on this transaction, and it was doubtful whether the property so conveyed was ever of any value, inasmuch as, when the mortgage was thereafter foreclosed, no surplus was realized on the foreclosure sale. Horgan and the two Slatterys each paid $10 in cash for his one share of stock. Horgan was president of the corporation, and Vincent J. Slattery, the other bankrupt, its secretary and treasurer, and they acted as its directors and had entire control of the management of its business and affairs. Since the formation of this corporation Horgan and Slattery had each drawn from it, in the way of salary and advances, about $10,000, and the other stockholders had never received any dividends.

At the first meeting of creditors, the referee made an order requiring the...