In re Louisell Lumber Co.

• Citation: 209 F. 784
• Decision Date: 26 December 1913
• Docket Number: 2,523.
• Parties: In re LOUISELL LUMBER CO. v. MILLER et al. ARMOUR & CO.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

209 F. 784

In re LOUISELL LUMBER CO.

ARMOUR & CO. v. MILLER et al.

No. 2,523.

United States Court of Appeals, Fifth Circuit.

December 26, 1913

T. C Hannah and John T. Haney, both of Hattiesburg, Miss., for petitioner and appellant.

E. J Bowers and V. A. Griffith, both of Gulfport, Miss. (Hanun Gardner, of Gulfport, Miss., on the brief), for respondents and appellees.

Before PARDEE and SHELBY, Circuit Judges, and BURNS, District Judge.

SHELBY Circuit Judge.

Armour & Co. brought an attachment suit in a Mississippi state court against the Louisell Lumber Company, a corporation, for $2,835.51, and obtained by levy a lien on the company's property, including its general stock of merchandise. The levy on the merchandise occurred on June 24, 1911; other levies having been made before that date. Subsequently, these levies being deemed insufficient, the sheriff took into his possession by virtue of the attachment $1,500 in cash, the property of the Louisell Lumber Company. On October 3, 1911 which was less than four months of the date of the levy of the attachment, three creditors of the corporation filed in the court below a petition to have the corporation adjudicated a bankrupt. This petition contains allegations of the company's indebtedness to the petitioners and an elaborate allegation of the company's insolvency, and prayed that it be adjudicated a bankrupt. The petition was fatally defective in this: It contained no statement whatever that the corporation had committed any one of the five acts of bankruptcy. Bankruptcy Act, Sec. 3. It did not contain any attempt or defective effort to state any one of such acts of bankruptcy. It was an absolute blank so far as such allegations are concerned. On February 21, 1912, about eight months after the levy of the attachment and the fixing of the lien in favor of Armour & Co., the petitioning creditors were allowed by the court below to amend the petition by inserting the following:

(A) 'The said Louisell Lumber Company has transferred while insolvent a portion of its property to one or more of its creditors with intent to prefer such creditors over its other creditors.'

(B) 'The said Louisell Lumber Company is not only insolvent and has wholly suspended payment for more than two months prior to the filing of said petition, but has admitted in writing its inability to pay its debts, and by the action of its board of directors taken on the-- day of February, A.D 1912, has confessed itself a bankrupt, signified its willingness to be adjudged a bankrupt, as will appear by copy of proceedings to be filed herein with reference to said matter.'

The amendment marked 'A' is defective in not alleging that the transfer was made within four months before the petition was filed.

Bankruptcy Act, Sec. 3b. The act of bankruptcy stated in amendment marked 'B' is alleged to have been committed about four months after the petition was filed and about eight months after the levy of the attachment.

On February 3, 1912, the District Court appointed T. J. B. Kellier receiver of the Louisell Lumber Company. On February 21, 1912, the District Court ordered the sheriff to surrender to T. J. B. Kellier, receiver, all the assets held by him under the attachments issued by the state court. On the same day the Louisell Lumber Company was adjudicated a bankrupt. The assets so held by the sheriff were surrendered by him to the receiver.

Thereupon Armour & Co. filed their petition in the court below, alleging the foregoing facts, and others not material to be now stated, and asserted the prior lien of the attachment and levies. Their contention, in brief, is that, although the defective petition of the creditors seeking to have the Louisell Lumber Company adjudicated a bankrupt was filed within less than four months after the levy of the attachment, the amendments setting out acts of bankruptcy were not made till after the expiration of more than four months from the levy of the attachment and the fixing of the lien thereby, and that therefore the lien of the attachment was not dissolved by the proceedings in bankruptcy. The referee found, as matter of law, that the amendment filed and allowed February 21, 1912, related back to the filing of the original defective petition on October 3, 1911, and that therefore the levies of the attachment were within four months of the filing of a sufficient petition in bankruptcy, and that 'said levies fell and were ousted' by the proceedings in bankruptcy. On petition for review, the District Court affirmed this finding, and Armour & Co. bring the case here both by appeal and by petition to revise.

From the foregoing statement, it appears that the question to be decided is: Did the amendment to the original petition in bankruptcy relate back to the date of the filing of the...