In re Pickering Lumber Co.
| Citation | 1 F. Supp. 82 |
| Decision Date | 29 July 1932 |
| Docket Number | No. 9561.,9561. |
| Parties | In re PICKERING LUMBER CO. |
| Court | U.S. District Court — Western District of Missouri |
James B. Nourse, of Kansas City, Mo., for petitioning creditors.
William C. Michaels, Jesse Andrews, and Charles M. Blackmar, all of Kansas City, Mo., for George R. Hicks and Pickering Lumber Co.
The questions for consideration here are: (a) Objections to the filing of an amended involuntary petition in bankruptcy; and (b) the dismissal of the original involuntary petition heretofore filed. The latter will be considered first.
The said petition was filed May 11, 1931. It alleged insolvency and that the three petitioners were creditors of the alleged bankrupt "having provable claims against it." The averments as to the nature and amount of claim were substantially as follows: "H. N. Morgan, for moneys loaned, as evidenced by the written obligation of the alleged bankrupt, in the amount of one thousand dollars ($1,000) which, by reason of the acts of the alleged bankrupt, has become due and payable."
There was an identical allegation as to T. M. Bryant, and the averment as to I. M. Sydenstricker was the same only as to the amount. In her case the amount was $500. There were general allegations of acts of bankruptcy within four months before the involuntary petition was filed. The petition was verified by the attorney for the petitioners. This verification contained a recital "that he has read the foregoing Petition and knows the contents thereof, and that the same is true as he verily believes."
Prior to the filing of the involuntary petition in bankruptcy, a receiver in equity had been appointed for the alleged bankrupt, and at the time said petition was filed the receiver had charge of all of the assets of the alleged bankrupt. The receiver in equity had been appointed by this court.
The receiver has joined with the alleged bankrupt in its motion to dismiss the involuntary petition in bankruptcy. This motion, among other things, avers that the claims of the petitioners are not set out with that particularity required by law and prescribed by the General Orders in Bankruptcy. Moreover, the good faith of the petitioning creditors is challenged, and objection is made to the verification of the petition. Other objections to the petition were made, but the foregoing are deemed sufficient.
1. Section 95 (b), title 11, United States Code, 11 USCA § 95 (b), provides that "three or more creditors who have provable claims against any person which amount in the aggregate * * * to $500 or over; * * * may file a petition to have him adjudged a bankrupt."
This provision has been construed to mean that each creditor joining in the petition must be the owner of a demand or claim "provable" against the bankrupt within the provisions of the act. In re Howell (C. C. A.) 215 F. page 1. This means that the petition must make a prima facie showing of provability. In re Crafts-Riordon Shoe Co. (D. C.) 185 F. 931. The reason for this rule is that the existence of provable debts is jurisdictional, and therefore "the existence of such debts or claims and their nature should be alleged with such particularity and definiteness as will enable the court to find from the petition the essential jurisdictional facts."
The allegations in the instant case are that the petitioners held claims "for moneys loaned as evidenced by the written obligations of the alleged bankrupt." This is a vague and indefinite allegation, and is similar to an allegation condemned. In re Farthing (D. C.) 202 F. 557, loc. cit. 563.
2. The good faith of the petitioning creditors has been put in issue. On said issue testimony was taken. It appeared from such evidence that counsel for the petitioning creditors obtained three bonds in the aggregate of $2,500 from another practicing attorney in Kansas City.
This attorney either owned said bonds or represented a client who was the owner thereof. The name of this client was withheld.
Admittedly the attorney for the petitioning creditors distributed such bonds to said petitioning creditors. It appeared, therefore, that said petitioning creditors were not the owners of said bonds in good faith; that they had paid nothing for said bonds, and that delivery was made to them for the sole purpose of qualifying them for this action.
One of the bonds was owned by an unnamed woman, and there was no evidence that she had parted, or intended to part, with her right, title, or interest in said security. The testimony was overwhelming that the petitioning creditors were not the owners in good faith of the bonds upon which the petition was framed.
The court is not unmindful of the rule that the motive of a creditor in filing a petition in involuntary bankruptcy against a debtor is immaterial. In re Automatic Typewriter & Service Co. (C. C. A.) 271 F. 1. But that rule is based upon the assumption that...
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