In re Mercur

• Decision Date: 12 May 1903
• Docket Number: 29.,28,27
• Citation: 122 F. 384
• Parties: In re MERCUR. v. PENNSYLVANIA INST. FOR INSTRUCTION OF THE BLIND et al. LUDOWICI ROOFING TILE CO.
• Court: U.S. Court of Appeals — Third Circuit

122 F. 384

In re MERCUR.

LUDOWICI ROOFING TILE CO. v. PENNSYLVANIA INST. FOR INSTRUCTION OF THE BLIND et al.

Nos. 27, 28, 29.

United States Court of Appeals, Third Circuit.

May 12, 1903

M Hampton Todd, for appellants.

Alex Simpson, Jr., for appellees.

Before ACHESON, DALLAS, and GRAY, Circuit Judges.

GRAY Circuit Judge.

Prior to December 20, 1898, James Watts Mercur and Ulysses Mercur were copartners, carrying on the business of building contractors, under the firm name of J. W. Mercur & Co., and at that time were, among other things, engaged in erecting a building for the Pennsylvania Institution for Instruction of the Blind. Various payments were made, during the course of construction, to the contractors, and some time prior to the date mentioned, a sum in excess of $37,000 became due, and remained due, as the final installment under the contract from the said institution to the said contractors. On November 28, 1898, the firm of J. W. Mercur & Co. delivered to S. C. Purvis & Co. an order on the Pennsylvania Institution for Instruction of the Blind, for the payment of $8,000 to them out of this final installment, payable under its contract with J. W. Mercur & Co., for the erection of its building. Notice of this assignment was duly given to the institution. By a similar assignment, dated December 12 1898, the sum of $3,413.76 was directed to be paid to R. A and J. J. Williams out of the same fine, and of this assignment, due notice was also given. On December 20, 1898, James Watts Mercur and Ulysses Mercur, individually and as partners, trading as J. W. Mercur & Co., made a voluntary assignment for the benefit of creditors, to Ezekiel Hunn, Jr., who qualified and entered upon his duties. On March 24, 1899, separate petitions were presented to the court, praying that each of the partners be declared bankrupts, and on July 31, 1899, an adjudication of bankruptcy was made against each of the partners composing the firm of J. W. Mercur & Co. On June 1, 1899, the Vulcanite Paving Company, and other creditors of the firm of J. W. Mercur & Co., presented their petitions for leave to join in the original proceedings against the individual partners. The granting of these petitions was resisted by the alleged bankrupts, on the ground that they were partnership and not individual creditors. This objection was overruled by the District Court, on the ground that the creditors of the partnership are also creditors of each individual member, and have a right to petition against him as well as against the firm, and adding:

'How far the partnership creditors may be entitled to share in the distribution of the separate property of each member, is a distinct question, which can only be determined hereafter, when the estates come to be marshalled.'

On December 20, 1899, after hearing, the court ordered the discharge of each of the bankrupts 'from all debts and claims which are made provable by said acts against his estate, and which existed on the 24th day of March, A.D. 1899. ' On January 17, 1900, Charles F. Gummey, trustee in bankruptcy of each of the bankrupts, obtained a rule on Ezekiel Hunn, Jr., assignee for the benefit of creditors, to show cause why he should not turn over the property in his hands (which included the said fund of $37,000 and upwards, due the said firm as aforesaid), both firm and individual, to the said Gummey, as trustee in bankruptcy. On December 11, 1901, the Vulcanite Paving Company, as a creditor of the firm of J. W. Mercur & Co., presented its petition for an adjudication of bankruptcy of the firm of J. W. Mercur & Co., nunc pro tunc. On March 15, 1900, a bill in equity was filed by the Ludowici Tile Company against the Pennsylvania Institution for the Instruction of the Blind, and against the partnership and individual partners of J. W. Mercur & Co., against Ezekiel Hunn, Jr., assignee for creditors, and Charles F. Gummey, trustee in bankruptcy of J. Watts Mercur and Ulysses Mercur, respectively, praying for an adjudication of their rights as creditors of Mercur & Co., and that the said Pennsylvania Institution be restrained from paying to Ezekiel Hunn, Jr., assignee as aforesaid, out of the said sum due from the Pennsylvania Institution, any part of the sum of $7,000 assigned by said Mercer & Co. to the complainant, and that the said Pennsylvania Institution be ordered to deliver unto the complainant the said sum under the assignment to it of February 7, 1898.

The rule on Hunn, to deliver the assets of the firm to the trustee in bankruptcy, and the petition for adjudication of bankruptcy against the firm, nunc pro tunc, and the suit in equity just mentioned, of the tile company against the Pennsylvania Institution et al., were argued together before Judge Archbald, who made an order, discharging the rule on Hunn, as to firm assets, refusing the petition of the Vulcanite Paving Company, as to an adjudication of the firm as bankrupts, and in the tile company's case in equity, awarding the payment, among others, of the orders in favor of S. G. Purvis & Co. and R. A. and J. J.

Williams, and the balance of the fund to Hunn, as assignee for the benefit of the firm creditors. (C.C.) 116 F. 661.

The principal question involved in the appeal of Charles F. Gummey, trustee in bankruptcy of James Watts Mercur and Ulysses Mercur, respectively, in the equity case, is admittedly determined by the court below in the bankruptcy matters, and as this court, upon the appeals from the orders made by the court below in these matters, agrees with and adopts the opinion, reasoning and decision of the District Court (116 F. 655), it will be only necessary to recite that opinion as its own. It is as follows:

'In December 20, 1898, James Watts Mercur and Ulysses Mercur, his brother, both individually and as partners, trading as J. W. Mercur & Co., made a voluntary assignment for the benefit of creditors to Ezekiel Hunn, Jr., who qualified and entered upon his duties in accordance with the state law. Within four months afterwards, on March 24, 1899, proceedings were instituted in this court to have the two Mercurs declared bankrupts, and on July 31, following, an adjudication was made against them, and subsequently Chas. Francis Gummey was appointed their trustee. A rule was thereupon taken on the assignee to turn over the property in his hands, both firm and individual. This he resists, and the question is whether he can be compelled to do so. Taking the case as it stood when the rule was entered, it is clear that, so far as firm property is concerned, it cannot be maintained. The proceedings against the two bankrupts, as we shall see more fully later, while begun and carried on simultaneously, are distinct and several.

'There has been no adjudication against the firm, and the trustee was not appointed to represent it, but only the two members who happened to compose it in their separate and individual capacity. Under such circumstances the trustee has no authority to demand or interfere with the firm assets. This is settled by the case of Amsinck v. Bean, 22 Wall. 395, 22 L.Ed. 801, where it was held that, while the assignee (trustee) in bankruptcy of the joint stock and property of a partnership is required by the statute to administer the separate estate of the individual members as well as that of the firm, there is no reciprocal regulation with regard to the estate of the partnership, where an individual member of it has alone been adjudged a bankrupt. In conformity with this it was also decided that where one of two partners had transferred to the other all his interest in the firm assets to be applied to the payment of the firm debts, upon the subsequent bankruptcy of the liquidating partner, his assignee (trustee) was not entitled to the firm assets so transferred to him as against an assignment for the benefit of creditors of the firm under the state law. In re Shepard, 3 Ben. 347, Fed. Cas. No. 12,754. These cases arose and were decided, it is true, under the bankruptcy act of 1867 (Act March 2, 1867, 14 Stat. 517, c. 176), but they are equally applicable to the one now in force. The decision of this court, in Re Stokes, 6 Am.Bankr.R. 262, 106 F. 312, is in entire harmony with this ruling, the facts being materially different. The firm in that case had been thrown into bankruptcy, on the strength of which an order was made on the assignee for the benefit of creditors of the individual partners to turn over to the trustee of the firm the individual property in his hands, to be administered by the trustee along with that of the partnership. This is the express requirement of the bankruptcy act, Sec. 5 (Act July 1, 1898, 30 Stat. 547, c. 541 (U.S.Comp.St. 1901, p. 3424)), and the propriety of the order cannot be questioned. But, as is pointed out in Amsink v. Bean, supra, there is no such corresponding provision where the converse is the case, and the members of the firm, as here, have alone been brought into court. To remedy this obvious difficulty, on

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