In re United Wireless Telegraph Co.

• Decision Date: 09 December 1912
• Docket Number: 268.
• Citation: 201 F. 445
• Court: U.S. District Court — District of Maine
• Parties: In re UNITED WIRELESS TELEGRAPH CO.

201 F. 445

In re UNITED WIRELESS TELEGRAPH CO.

No. 268.

United States District Court, D. Maine.

December 9, 1912

Howard H. Williams, of New York City, and Symonds, Snow, Cook &amp Hutchinson, of Portland, Me., for claimant.

Woodman & Whitehouse, of Portland, Me., for trustee.

HALE District Judge.

The certificate of the referee presents for consideration the correctness of his order rejecting the claim of Martin M MacRae. The proof of claim is as follows:

At the city of New York, state of New York, on the 11th day of January, 1912, came Martin M. MacRae, of No. 527 West 110th street, of New York, county of New York, state of New York and made oath and says:

That the United Wireless Telegraph Company, against whom a petition for adjudication of bankruptcy has been filed, was at and before the filing of said petition, and still is, justly and truly indebted to said deponent in the sum of two thousand two hundred twelve and 16/100 ($2,212.16) dollars.

That the consideration of said debt is as follows: Deponent was in the employ of the American De Forest Wireless Telegraph Company as and from on or about the 1st day of November, 1903, until on or about the 1st day of November, 1906. At the time that deponent left the employ of the said American De Forest Wireless Telegraph Company, that concern owed him for salary, in cash, the amount of, $1,177.94, which, with interest computed at the rate of 6 per cent. per annum to July 24, 1911, amounts to the sum of $1,512.47. And the said American De Forest Wireless Telegraph Company also owned deponent, at the time he left its employ as aforesaid, the sum of $544.93, which sum, however, was, according to agreement, to have been paid by the issuance and delivery to deponent of preferred stock of the American De Forest Wireless Telegraph Company, computed on the basis of the average or prevailing selling price for said stock. That said stock was never issued and delivered to deponent. Wherefore deponent claims he is entitled to be paid the said sum, which, with interest computed thereon at the rate of 6 per cent. per annum to July 24, 1911, amounts to the sum of $699.69, therefore making deponent's total claim herein, with interest due and payable on the 24th day of July, 1911, amount to the total sum of two thousand two hundred twelve and 16/100 ($2,212.16) dollars.

On information and belief, that after deponent withdrew from said American De Forest Wireless Telegraph Company, the United Wireless Telegraph Company, now bankrupt, took over said American De Forest Wireless Telegraph Company, assumed the latter's debts and liabilities, and applied its assets. That said United Wireless Telegraph Company called in the stock of said American De Forest Wireless Telegraph Company, and by due procedure issued stock of the United Wireless Telegraph Company in exchange to holders of the stock of the American De Forest Wireless Telegraph Company.

That deponent thereafter made demand upon the United Wireless Telegraph Company, and was assured by officers thereof that the same should and would be honored.

That no part of said debt has been paid.

That there are no set-offs or counterclaims to the same.

That deponent has not, nor has any person by his order, or, to his knowledge and belief, for his use, received any manner of security for said debt whatever.

That no note has been received therefor, nor any judgment rendered thereon.

The above claim was duly verified by oath.

1. Does the above instrument contain sufficient allegations to constitute, prima facie, a proof of claim under the Bankrupt Law?

A sworn proof of claim is prima facie evidence of its allegations, even in case the claim is objected to. Bankruptcy proceedings are somewhat summary in their character, and the proof of claim is regarded as a deposition rather than as pleading. It has the force of evidence. Whitney v. Dresser, 200 U.S. 532, 535, 26 Sup.Ct. 316, 50 L.Ed. 584; In re Sumner (D.C.) 101 F. 224; In re Shaw (D.C.) 109 F. 780; In re Cannon (D.C.) 133 F. 837; In re Carter (D.C.) 138 F. 846; In re Saunders, 2 Lowell, 444, 446, Fed. Cas. No. 12,371; In re Baumhauer (D.C.) 179 F. 966, 967. In the Castle Braid Co. Case (D.C.) 145 F. 224, 228, in discussing the force of allegations in proofs of claim, Judge Ray, of the Southern district of New York, said:

'The allegations of the proofs of claim are to be taken as true. If they set forth all the necessary facts to establish a claim, and are not self-contradictory, prima facie, they establish the claim, even in the presence of objections; and the objector is then called upon to produce evidence and show facts tending to defeat the claim, of probative force equal to that of the allegations of the proofs of claim. The burden of proof is always on the claimant; but, as probative force is given to the allegations of the proofs of claim, and no probative force is given to the objections, this must be met, overcome, or at least equalized, by the objecting party.'

The trustees contend that, while a proof of claim is prima facie evidence of its allegations, such allegations in the claim now in question are not sufficient to constitute a valid proof of claim, in that they fail to adequately state the claim and the consideration therefor, as required by section 57a of the Bankruptcy Act (Act July 1, 1898, c. 541, 30 Stat. 560 (U.S. Comp. St. 1901, p. 3443)).

Under the Bankrupt Law, creditors have an interest in each claim presented, and a right to know its nature. They can know this only through the proof of claim. The statement of the claim and of its consideration must be full and explicit, in order to enable creditors to investigate its adequacy. A claim cannot be said to be 'proved,' and entitled to allowance, unless the proof of it is properly verified, and gives sufficient facts to advise the creditor of its justice and legality, and the consideration for it. In re Coventry Evans Furniture Co. (D.C.) 166 F. 516. A claim for 'legal services performed during the year 1908' is held insufficient, because it is of a too general character, and affords no light to the parties in interest, in relation to the exact character of the services. In re Scott (D.C.) 93 F. 418. The Bankruptcy Law requires in a proof of claim more than a general allegation of the consideration. Such proof should inform the trustee with particularity in relation to the precise character of the services rendered and the consideration therefor. In re Stevens (D.C.) 107 F. 243.

In the first item of the...