In re Silver
| Decision Date | 01 May 1953 |
| Docket Number | No. 3767-D.,3767-D. |
| Parties | In re SILVER et al. |
| Court | U.S. District Court — Eastern District of Illinois |
C. E. Tate, Champaign, Ill., for petitioning creditors.
John M. Mitchem, Urbana, Ill., for bankrupt.
Meyer & Franklin and John L. Franklin, all of Champaign, Ill., for one creditor.
An involuntary petition by three creditors was filed in this court on June 17, 1952 to adjudge bankrupt Harold A. Silver and John A. Silver, individually and as a partnership, doing business as Silver Brothers and Company. Motion to dismiss was filed by the alleged bankrupt and one creditor. The petitioning creditors on August 25, 1952 filed an amended involuntary petition. Silver Brothers and one creditor have again filed a motion to dismiss the amended involuntary petition. The essential grounds of the motion are: (1) That the allegations of the additional act of bankruptcy having not been alleged in the original petition cannot be alleged in the amended petition to set aside a preference which occurred more than four months prior to the filing of the amended petition; (2) That the claims of petitioning creditors are not fixed as to liability nor liquidated as to amount; and (3) That the amended petition fails to state any facts showing a preference to have been made or accomplished for the reason the claim of the Commodity Credit Corporation is a prior claim entitled under the law to priority.1
The first ground for the dismissal of the amended petition is in fact a motion to strike therefrom the second act of bankruptcy. The original petition alleged as an act of bankruptcy that within four months next preceding the filing of the petition the alleged bankrupt committed an act of bankruptcy in that with intent to prefer Commodity Credit Corporation, on the 18th day of February, 1952 they made, executed, and delivered to Thomas A. Hagan, of Champaign, Illinois, a chattel mortgage to secure an antecedent debt of more than $300,000 to the Commodity Credit Corporation, and thereby preferred the said Commodity Credit Corporation to the amount of said mortgage. The mortgage was caused to be recorded in Champaign County, Illinois, on February 20, 1952. Petitioners in their amended petition added the fact that Silver Brothers and each of them were insolvent at the time of the transfer. An additional act of bankruptcy was stated, viz.: That Charles H. Willard on the 29th day of May, 1952 did cause a judgment to be taken against Harold A. Silver and John A. Silver, a partnership doing business as the Silver Brothers, while insolvent, said judgment being taken in the amount of $19,975 and costs, and that Silver Brothers permitted an execution to issue and did not cause the removal of said lien or discharge thereof within 30 days, and that they thereby did prefer said creditor.2
Amendments to an involuntary petition in bankruptcy relate back to the date of the filing of the petition where the bankruptcy is imperfectly alleged in the petition. Rule 15(c), Federal Rules of Civil Procedure, 28 U.S.C.A.; General Order in Bankruptcy 37, 11 U.S.C.A. following section 53; In re Claudon, 7 Cir., 73 F.2d 876; In re Yellow Motor Co., 8 Cir., 34 F.2d 118. However, a new act of bankruptcy may not be added by amendment to deprive a creditor of a lien or preference acquired more than four months prior to the date of such an amendment. National Refining Co. v. Pennsylvania Petroleum Co., 8 Cir., 66 F.2d 914; Dworsky v. Alanjay Bias Binding Corporation, 2 Cir., 182 F.2d 803; Collier on Bankruptcy, 14th Ed., Vol. 2, Sec. 18.26.
In the instant case Silver Brothers, individually and as a partnership, were adjudicated a bankrupt on September 27, 1952, on a voluntary petition filed that day. The purpose of the adjudication sought on the amended involuntary petition is to prevent the preference, if any, obtained by the Commodity Credit Corporation's chattel mortgage. The amendment on August 25, 1952, adding a new act of bankruptcy, cannot be permitted to relate back to the date of the filing of the original petition to invalidate this transfer which occurred more than four months earlier.
The second ground presented by the motion to dismiss presents the problem as to whether there are three petitioning creditors who have claims fixed as to liability and liquidated as to amount. The amended petition alleges the petitioners' claims as follows:
The claim of J. E. Reeser and Son is based upon an open account for work, labor, and services performed by the said creditors and furnished to the alleged bankrupt in the construction of an elevator building at Myra Station, Urbana, Illinois. It was completed on the 10th day of November, 1949. There is due and owing J. E. Reeser and Son the sum of $23,619.62.
The claim of R. W. Beeson is based upon the fair, cash, market value of the grain which was delivered by R. W. Beeson to the elevator of the alleged bankrupt at Urbana, Illinois, under an agreement whereby the grain would be stored until Beeson elected to sell the same. It consisted of 839.68 bushels of oats, 393.33 bushels of beans, 237.80 bushels of wheat. After delivery and prior to the 20th day of February, 1952, the alleged bankrupt converted the grain to their own use and sold the same, and thereby became indebted to the claimant for the fair, cash, market value of said grain in the amount of $2,551.25 and the indebtedness has so continued.
The claim of Richard Phillips is based upon 1900 bushels of corn which were delivered by Richard Phillips to the elevator of the said Silver Brothers at Urbana, Illinois, under an agreement that the said grain would be stored until the said Phillips elected to sell the same. The petition alleges as a conclusion that the three creditors have provable claims against the alleged bankrupt, fixed as to liability and liquidated in amount in excess of the value of securities held by them in the amount of $500 or more.
Section 59 of the Bankruptcy Act, 11 U.S.C.A. Ch. 6, § 95, sub. b reads:
The existence of such debts and their nature must be alleged with particularity and definiteness so as to enable the court to find from the petition the essential jurisdictional facts. In re St. Lawrence Condensed Milk Corp., 2 Cir., 9 F.2d 896, 899. Also see In re Adams, D.C., 53 F.Supp. 982, 983. It requires no citation for the rule that where a motion to dismiss is presented the facts well pleaded in the petition are taken to be true. Prior to the Bankruptcy Act of 1938 a creditor with a provable claim, though unliquidated, could qualify as a petitioning creditor. The Act of 1938, which amended Section 59, sub. b, required that the claim be "liquidated as to amount". Collier on Bankruptcy, 14th Ed., Vol. 3, Sec. 59.14, page 583.
It must be determined whether the petition sets forth three claims liquidated as to amount. The court said, In re Cook, D.C., 298 F. 125, at page 126:
In Clark, Jr. v. Dutton, 69 Ill. 521, 523, the court, in discussing the liquidation of account, said:
Vol. 2 Bouvier's Law Dictionary, Rawle's Third Revision, page 2026, defines Liquidated Demand:
"A demand the amount of which has been ascertained or settled by agreement of the parties, or otherwise."
The Silver Brothers have converted the grain and the petitioning creditors have provable claims, but it would require proof to ascertain the liquidated amount of these claims.3 Both Beeson and Phillips would have an action in trover for the conversion of the grain. Yockey v. Smith, 181 Ill. 564, 54 N.E. 1048; Mayer v. Springer, 192 Ill. 270, 61 N.E. 348. In National Bank of Republic v. Wells-Jackson Corp., 358 Ill. 356, 368, 193 N.E. 215, 221, 98 A.L.R. 618, the court said:
"The measure of damages for conversion of personal property is the value of the property at the time of the conversion."
It is clear that the Phillips and Beeson claims are for unliquidated damages. Evidence as to the date of the conversion and also the market value of the grain on that date must be introduced to fix the amount of the claims. In Illinois, damages are said to be liquidated when they can be determined from the contract itself or from the contract and rules of law applicable thereto, and where it is necessary to introduce evidence before the plaintiff can prove his case the damages are said to be unliquidated. Lepman & Heggie v. Inter-State Produce Co., 205 Ill.App. 270. The court, in determining whether a claim of a debtor was liquidated in In re Beechwood, D.C., 36 F.Supp. 140, said at page 142:
In the instant case it is not the taking of money but the conversion of grain which would require a juridical award to have a liquidated amount due.4 Therefore, the claims of Beeson and Phillips, as alleged in the petition, cannot be considered in determining whether there are three petitioning creditors.5
While the court will not, as a general rule, look outside the record and take judicial notice of any facts, it may...
To continue reading
Request your trial
-
In re Trimble Company, 14787.
...180-182 (D.C.N.J.1919), aff'd 265 F. 133 (3 Cir. 1920); Williams v. Bank of America Nat. Ass'n, 55 F.2d 884 (2 Cir. 1932); In re Silver, 109 F.Supp. 200 (E. D.Ill.), aff'd 204 F.2d 259 (C.A.7, 1953). The district court made no findings regarding this element because under its view of the la......
-
In re Gibraltor Amusements, Ltd.
...v. Lubasch, 1945, 186 Misc. 182, 58 N.Y.S. 2d 695. There is no question that the claim is "liquidated as to amount" (In re Silver, D.C.Ill.1953, 109 F.Supp. 200, 203-204, affirmed 7 Cir., 1953, 204 F.2d 259), the only question being whether the claim is "contingent as to liability", which d......
-
In re Christian and Porter Aluminum Company
...months previous to such amendment. In re Inland Discount Corporation, 247 F.Supp. 335, 338-339 (E.D. Mo.1965). See also In re Silver, 109 F. Supp. 200, 202 (E.D.Ill.1953), aff'd, 204 F.2d 259 (7th Cir. 1953); In re International Hatters Supply Co., 46 F.Supp. 909, 910 (S.D.N.Y.1942). This s......
-
In re Walton Plywood, 50795.
...accountant for the value of services rendered, In re Garrett, supra; an unadjudicated claim for conversion of grain, In re Silver, 109 F. Supp. 200 (E.D.Ill.1952), aff'd 204 F.2d 259 (7th Cir. 1953); an unadjudicated general claim of fraud, In re Lawton, supra, are insufficient to qualify p......