In re Smith

• Decision Date: 02 March 1899
• Docket Number: 159.
• Citation: 92 F. 135
• Parties: In re SMITH et al.
• Court: U.S. District Court — District of Indiana

92 F. 135

In re SMITH et al.

No. 159.

United States District Court, D. Indiana.

March 2, 1899

Griffiths & Potts and Cohen & Mach, for petitioning creditors.

Byron K. Elliott and W. F. Elliott, for respondent.

BAKERDistrict Judge.

On February 24, 1899, certain creditors filed their petition in involuntary bankruptcy against Aaron J. Smith and Josephus G Dodson, composing the firm of Smith & Dodson.The petition alleged the insolvency of said firm and of each member thereof, and stated a single act of bankruptcy.The allegation touching this act of bankruptcy is as follows:

'And your petitioners further represent that said Aaron J. Smith and Josephus G. Dodson, partners as aforesaid, are insolvent, and that within four months next preceding the date of this petition the said Aaron J. Smith and Josephus G. Dodson, partners as aforesaid, committed an act of bankruptcy, in that they did heretofore, to wit, on the 28th day of January, 1899, make a general assignment for the benefit of their creditors to Edwin F. Hedges, of Lebanon, in Boone county, state of Indiana.'

On February 25, 1899, said Smith and Dodson appeared in open court, in their own proper persons, and filed their written admission that they did on January 28, 1899, execute a deed of assignment for the benefit of their creditors, under the law of the state of Indiana, to Edwin F. Hedges, who, as such assignee, took possession of all their property, real and personal, and is now in possession of the same.Thereupon this court, as a court of bankruptcy, at once entered an order adjudging them bankrupts.As soon as such adjudication had been made, the petitioning creditors filed and presented to the court their petition against Edwin F. Hedges, as such assignee, asking that he be enjoined from disposing of or interfering with the assets and estate of the bankrupts, and that he show cause, if any he had, why he should not surrender and turn over to the receiver of this court the assets and estate of the bankrupts in his possession.This petition to show cause alleges, in substance, that on January 28, 1899, the bankrupts made a general assignment for the benefit of their creditors to said Hedges, who thereupon qualified as such assignee, and took possession of all the property of the bankrupts, and is now in possession of the same; that among the assets so in the assignee's hands are a valuable stock of general merchandise, accounts, notes and other evidences of indebtedness due and owing to the bankrupts, as well as a number of tracts of land and other real estate belonging to them; that the assignment for the benefit of creditors was and is illegal, fraudulent, and void, under the act of congress relating to bankruptcies, now in force, and in force on the day when said assignment was made; that, on proceedings duly had, said Smith & Dodson have been adjudged bankrupts, on their written admission that they were insolvent and had executed a deed of general assignment of all their property for the benefit of their creditors to said Hedges; that said Hedges is now in possession of said property of the bankrupts, without right, under said illegal and void assignment, and not otherwise.Prayer for a temporary restraining order, and that the assignee show cause why he should not surrender the property in his possession to the receiver of this court.On the filing and presentation of said petition the court issued a temporary restraining order, and an order to show cause, as prayed for.This order was duly served, and on the return day the assignee appeared, in person and by counsel, and admitted the matters and things set up in the petition to be true, and submitted the question whether, on the facts so admitted, the court could, in a summary manner, order a surrender of the property of the bankrupts in his hands as such assignee to a receiver appointed by this court.

The statute of this state (2 Burns'Rev.St. 1894, §§ 2899-2920, inclusive;Rev.St. 1881, §§ 2662-2683, inclusive) provides that any debtor or debtors in embarrassed or failing circumstances may make a general assignment of all his or their property in trust for the benefit of all his or their bona fide creditors, and all assignments hereafter made by such person or persons for such purpose, except as provided by the statute, should be deemed fraudulent and void.The debtor or debtors making a general assignment are authorized to select his or their trustee, who shall qualify and serve unless the creditors representing in amount one-half of the liabilities petition the court for his removal and the appointment of another trustee.The administration of the debtor's estate so assigned is placed under the control and jurisdiction...