In re McIntire

• Decision Date: 17 August 1903
• Docket Number: 173.
• Citation: 132 F. 295
• Parties: In re McINTIRE et al.
• Court: U.S. District Court — District of Montana

132 F. 295

In re McINTIRE et al.

No. 173.

United States District Court, D. Montana.

August 17, 1903

O. F Goddard and Norman Fetter, for petitioner.

Strevell & Porter, for claimant.

KNOWLES District Judge.

The First National Bank of Miles City, a creditor of said bankrupts, filed its claim against them for an overdraft and on 45 promissory notes (41 of which were collaterals) in the sum of $18,378.21, and for interest thereon at the rate of 10 per cent. per annum. The referee allowed the claim in the sum of $19,012.21, including $635.86 for interest. Thereafter the State National Bank of Miles City, Mont., a creditor of the bankrupts, filed its petition with the referee, in which it prayed that the claims of said First National Bank might be expunged and disallowed upon the ground that all of said claims were and are liabilities of H. W. McIntire and the McIntire Mercantile Company to said First National Bank which had been incurred and contracted prior to the formation of the partnership of McIntire & Middleton; that said notes were given in renewal of antecedent debts due said bank from H. W. McIntire and the McIntire Mercantile Company such notes being signed and indorsed by said H. W. McIntire in the name of the firm of McIntire & Middleton, without the knowledge and consent of Fred F. Middleton, his copartner, and not ratified subsequently by said Middleton, and that he has no knowledge of said liabilities of said McIntire and the McIntire Mercantile Company until the time of the filing of the petition in bankruptcy herein; that said Middleton never at any time assumed or consented to the assumption of said indebtedness, time assumed or consented to the assumption of said indebtedness, or of any part thereof, by the firm of McIntire & Middleton. Thereupon the referee made an order requiring said First National Bank to show cause before him why its said claims should not be expunged in accordance with the prayer of said petition. The First National Bank made answer to the petition, and, in substance, denied all of the allegations therein made, and affirmed that all of its claims as allowed by said referee were actual claims subsisting against said firm, and were just, and that said firm had received the entire proceeds thereof from said bank. Thereafter the matter was heard by said referee, and much testimony was taken, and after considering the same, the referee reduced the claim of the First National Bank from the sum of $15,920.84. In this ruling and decision of said referee the First National Bank acquiesced, but the State National Bank, being dissatisfied with the ruling and decision of the referee, prayed for a review, and brought the case to this court.

The testimony taken before the referee at the hearing on the order to show cause discloses the following: For a number of years prior to July 1, 1900, H. W. McIntire was engaged in business at Miles City, Mont. He afterwards adopted and used the trade name of McIntire Mercantile Company, and continued the use thereof, as its sole proprietor, and as the owner of its entire stock in trade, until the formation of the partnership between himself and Fred. F. Middleton. The new firm of McIntire & Middleton commenced to do business about July 1st, but the articles of partnership were not reduced to writing and executed between the parties thereto until July 10, 1900. The agreement of partnership was produced at the hearing and offered and received as evidence. From the terms thereof it will be found: That the partnership was to continue for a term of five years. That the firm name was to be McIntire & Middleton, and they were to engage in the business of buying, selling, and dealing in all kinds of merchandise in Custer county, Mont., at wholesale and retail. The common stock of the partnership consisted of money and merchandise to the full value of $30,000 of which each party has contributed and paid in a one-half part. Each of the partners was to bestow and give his full time, labor, skill knowledge, and services to the business of the firm. The shares of the partners in the profits or losses of the business were to be equal. At the time of the formation of this partnership the entire stock of goods, wares, and merchandise of the aforesaid McIntire Mercantile Company was the property of H. W. McIntire, its sole proprietor, and the same was to be taken over by the new firm of McIntire &amp Middleton. An inventory and valuation of this stock was to be made, and when so made and ascertained Middleton was to acquire a half interest therein by the payment of $2,500 in cash and executing to McIntire promissory notes for the remainder of the purchase price of said half interest. Middleton paid the $2,500 in cash, and the firm of McIntire & Middleton went into possession of the aforesaid stock of merchandise. An inventory of it was made, but the evidence is not clear as to whether or not it was valued, and its total value ascertained and extended on the inventory book. The book containing the inventory went into the possession of McIntire, and has never been produced. Middleton avers in his testimony that, owing to the total valuation of the stock never having been computed and communicated to him, he had failed to execute his promissory notes to said McIntire for the difference between his cash payment and the total amount of the purchase price of his half of the McIntire Mercantile Company's stock taken over by the firm, as contemplated at the time of the formation of the partnership. During the time while McIntire was engaged in business as H. W....