In re Mason-Seaman Transp. Co.

• Decision Date: 30 September 1916
• Citation: 235 F. 974
• Parties: In re MASON-SEAMAN TRANSP. CO.
• Court: U.S. District Court — Southern District of New York

235 F. 974

In re MASON-SEAMAN TRANSP. CO.

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

September 30, 1916

Henry B. Twombly, of New York City, for Mason-Seaman Transp. Co.

William Lesser and James B. Stephens, both of New York City, for petitioning creditors.

MANTON District Judge.

This is an application by the alleged bankrupt for a dismissal of the petition filed against it on the 30th of May, 1916. On the 31st of March, 1916, in a creditors' action, a bill of complaint was filed in this court against the Mason-Seaman Transportation Company, and on said date an order and decree of this court was made, appointing two receivers, with full powers to administer all the property of said company, which they are now engaged in doing. Its business is operating taxicabs in the city of New York. One of the receivers appointed was a man of experience, who had formerly been associated in the operation of the business. The other receiver was appointed by the court as the 'ear of the court.' Subsequently a foreclosure action was brought by the Columbia Trust Company and participated in by the Empire Trust Company, and the same receivers were appointed in said action. A sufficient bond has been given by the receivers which indemnifies the creditors from loss through the receivers, and it would seem that the full protection has thus been accorded the creditors. Two months later three petitioning creditors, having an aggregate claim of $1,315, out of a list of creditors representing about $200,000, filed this petition in bankruptcy. These petitioning creditors represented about one-third of 1 per cent. of the total amount. The petition alleges:

'And petitioners further represent that the said alleged bankrupt is insolvent, and that within four months next preceding the date of filing this petition the said alleged bankrupt committed acts of bankruptcy while so insolvent as follows During said period said alleged bankrupt paid to certain creditors whose names are unknown to petitioners certain sums in cash and by check, the amounts of which are unknown to petitioners, in settlement or on account of antecedent indebtedness, with intent to prefer such creditors over and above other creditors of the same class. During said period said alleged bankrupt paid to the Broadway Trust Company, and other persons or parties whose names are unknown to your petitioners, but being parties who held certain notes or obligations of the above-named alleged bankrupt, the particulars of which are unknown to your petitioners, certain sums of money, amounting to the sum of $5,000 and upwards the exact amount of which your petitioners have been unable to ascertain in settlement of said notes and obligations of said alleged bankrupt, with intent to prefer the holders of said notes and obligations over and above other creditors of the same class, and also with intent on the part of said alleged bankrupt corporation to prefer William H. Barnard and J. W. Salisbury over and above other creditors of the same class, being, respectively, the president and treasurer of said alleged bankrupt corporation, who, at the time of said payments, were the indorsers or guarantors of said notes and obligations, and who, by the payment thereof to the holders thereof, were relieved from liability thereunder.'

An answer has been filed in which the foregoing allegations are denied.

This motion to dismiss seems to be the proper remedy. Matter of Mary Jones (D.C.) 209 F. 717, 31 Am.Bankr.Rep. 693. But it is urged on behalf of the petitioners that this application is late, and the right to make it has been waived by the alleged bankrupt. In support of this claim counsel cite In re Walter R. Cliffe (D.C.) 94 F. 354, and In re Rosenblatt, 193 F. 638, 113 C.C.A. 506, 28 Am.Bankr.Rep. 401.

In the first case, an answer was interposed, and there was a trial of the issues, after which a motion to dismiss was made. The court held the motion late and the petitioner guilty of laches. In the case at bar the case is but recently at issue and while it was noticed before the referee in bankruptcy, there have been no hearings. In fact, counsel for the alleged bankrupt did move, when the matter came up before the referee, to dismiss the petition, and it was not heard for the reason that the referee stated that he was without jurisdiction to hear it, and has resulted in this application. Section 59-- G of the Bankruptcy Act as amended in 1910 provides:

'A voluntary or involuntary petition should not be dismissed by the petitioner or petitioners or by consent of parties until after notice to the creditors, and to that end the court shall, before entering an application for dismissal, require the bankrupt to file a list, under oath, of all his creditors, with their addresses, and shall cause notice to be sent to all such creditors of the pendency of such application, and shall delay the hearing thereon for a reasonable time to allow all creditors and parties in interest opportunity to be heard.'

In the Rosenblatt...