In re Petronio

• Decision Date: 02 November 1914
• Docket Number: 2144.
• Citation: 220 F. 269
• Parties: In re PETRONIO et al. v. CENTRAL TRUST CO. OF ILLINOIS. E. PETRONIO & CO.
• Court: U.S. Court of Appeals — Seventh Circuit

220 F. 269

In re PETRONIO et al.

E. PETRONIO & CO. v. CENTRAL TRUST CO. OF ILLINOIS.

No. 2144.

United States Court of Appeals, Seventh Circuit.

November 2, 1914

Henry S. Blum, of Chicago, Ill., for petitioner.

Alvin H. Culver, of Chicago, Ill., for respondent.

Before BAKER, SEAMAN, and KOHLSAAT, Circuit Judges.

SEAMAN Circuit Judge.

The proceeding and orders of which review is sought by this original petition appear from the record to be of the summary nature in bankruptcy proceedings, defined in the recent opinion of this court in In re Morris Goldstein and Benjamin Moseson, Bankrupts, 216 F. 887, 889, 133 C.C.A 91, and not of the plenary class defined in the opinion handed down therewith, entitled In re Breyer Printing Co., Bankrupt, 216 F. 878, 133 C.C.A. 82, which is cited in support of respondent's motion to dismiss the petition for want of jurisdiction. This petitioner corporation was neither party to nor voluntary intervener in the bankruptcy proceedings, had no interest in the distribution of any estate vested in the bankrupts, and had filed no suit or petition in the District Court or before the referee for recovery of the property in controversy. Therefore, on the authority of the above first mentioned opinion and cases cited therein, the motion to dismiss its petition must be overruled.

The facts presented by the record are substantially these Proceedings in bankruptcy were instituted against the bankrupts individually, as members of E. Petronio & Co., a copartnership, on April 2, 1912, and adjudication ensued accordingly. A receiver appointed therein petitioned the court for an order upon 'E. Petronio & Co., a corporation,' and its officers, to turn over to such receiver personal property in its possession, averring in substance that the property referred to (mainly a stock of goods) was owned by the bankrupts in their copartnership business up to December 21, 1911; that on December 4, 1911 'while insolvent and with intent to prefer the Italian Swiss Colony over the rest of their creditors,' and 'without any present consideration' and for a pre-existing debt, the bankrupts made a mortgage in favor of such debtor (covering the above-mentioned property), which was duly recorded; that on December 21, 1911, the bankrupts (with two other parties who contributed nothing) incorporated under the same name used in their copartnership, with $2,500 as the amount of capital stock issued, in 250 shares; that the entire copartnership property above mentioned was transferred to such corporation, in payment for such capital stock, and the business was thereafter carried on under such incorporation managed by the bankrupts; that soon thereafter the stockholders deposited the shares of stock with a representative of the above-mentioned mortgagee, as further security for the mortgage, 240 of such shares having been issued to the bankrupt Zarosi; that such transfer to the corporation 'was fraudulent and void as to the creditors of said copartners,' and 'no title passed to the corporation,' but remains in the bankrupts; that such corporation was formed at the instance and request of such mortgagee; that both mortgage and incorporation were made for the purpose of preferring the mortgagee over other creditors, and to hinder, delay, and defraud the other creditors of the bankrupts; that the mortgagee threatens prosecution of the receiver in the event of his taking possession of the property; and that it is necessary for preservation of the estate that the receiver 'be allowed to take possession of the property which is now claimed to belong to the corporation. ' The District Court cited the corporation to appear and answer the petition, and its special appearance and answer are exhibited, challenging jurisdiction 'over the respondent or any of its assets,' with averments of possession and valid title to the property vested in the corporation from and after December 21st, and that its business was carried on...