In re Valecia Condensed Milk Co.
| Decision Date | 19 April 1916 |
| Citation | 233 F. 173 |
| Parties | In re VALECIA CONDENSED MILK CO. |
| Court | U.S. District Court — Western District of Wisconsin |
Frank Winter, of La Crosse, Wis., for petitioners.
Sanborn & Blake, of Madison, Wis., for trustee.
Richmond Jackman & Swansen, of Madison, Wis., for interveners.
That the referee acquired jurisdiction to pass upon the validity of the bonds held by the bank does not, it seems to me, admit of serious controversy. The power to determine the extent character, or validity of claims or liens asserted against property in the hands of the bankruptcy court is necessarily broad; and when the trustee filed a petition upon which creditors claiming to hold liens were required to come in, to the end that the court determine whether the property be sold subject to or freed from liens, such broad jurisdiction not only attached against the bank, but was acceded to, because a statement of the nature of its claim was thereupon made; and subsequently, when the trustee, doubtless as a foundation for and an aid in discharging its duty to make distribution of the sale proceeds, filed a further petition, the bank again appeared, and throughout litigated with the trustee the one question respecting the validity of the bonds held by it. The determination of that question was therefore properly before the referee.
The one question is: Are the bonds valid? Section 1753 of the Wisconsin Statutes, as construed in the Pfister Case, 83 Wis 86, 53 N.W. 27, the Waukesha Canning Case, 211 F. 927, 128 C.C.A. 305, and the Oconto Water Case (C.C.) 52 F. 29, has not been impaired or repealed by the Negotiable Instruments Act (Laws 1899, c. 356), as suggested by counsel for the bank; nor has the recent ruling of the Court of Appeals for this circuit, in connection with the Carey & Guyon bonds growing out of the present bankruptcy (229 F. 698), had any such result; and I know of no authority to justify the contention that, as between a corporation bond obligor and its obligee, full effect must not be given to the requirement that 75 per cent. of par be exacted upon issue.
The facts, practically without dispute, fail to show compliance with the statute; and the order of the referee must be affirmed, unless the rule above can justifiably be departed from. Counsel strongly urge In re Progressive Wall Paper Co. (D.C.) 224 F. 143, in support of the suggestion that, because the bank loaned an amount equal to the face of the pledged bonds, or because it has offered in these proceedings to diminish its right to a 75 per cent. basis, the court should validate them accordingly. The lengthy opinion in that case comments on the Waukesha Canning Case thus:
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Whitaker v. Smith
...82 S.E. 320, Ann. Cas. 1917D, 695 [gaming]; Eskridge v. Thomas, 79 W. Va. 322, 91 S.E. 7, L.R.A. 1918C, 769 [usury]; In re Valecia Condensed Milk Co. [D.C.] 233 F. 173 [bonds made void by statute]; Williams v. Layes, 168 Ark. 675, 271 S.W. 11 [patent article], not citing the N.I.L.; Manufac......
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Whitaker v. Smith
... ... v. Thomas, 79 W.Va. 322, 91 S.E. 7, L.R.A. 1918C, 769 ... (usury); In re Valecia Condensed Milk Co. (D. C.) ... 233 F. 173 (bonds made void by statute); Williams v ... Layes, ... ...
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McCormick v. Fallier
... ... Eskridge v. Thomas, 79 W.Va. 322, 91 S.E. 7, L. R ... A. 1918C, 769 (usury); In re Valecia Condensed Milk Co ... [D. C.] 233 F. 173 (bonds made void by statute) ... "It ... is ... ...
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Fierman v. Seward Nat. Bank, 97.
...bonds to the bank was a voidable preference, for only by establishing this would he show any title in himself. See In re Valecia Condensed Milk Co., 233 F. 173 (D. C. Wis.); Logan v. Haynes, 11 F.(2d) 369 (C. C. A. 8). On the other hand, if he did not intervene, a decision awarding the fund......