Jackson v. Wauchula Mfg. & Timber Co.

• Decision Date: 01 March 1916
• Docket Number: 2756.
• Citation: 230 F. 409
• Parties: JACKSON v. WAUCHULA MFG. & TIMBER CO. et al.
• Court: U.S. Court of Appeals — Fifth Circuit

230 F. 409

JACKSON v. WAUCHULA MFG. & TIMBER CO. et al.

No. 2756.

United States Court of Appeals, Fifth Circuit.

March 1, 1916

Howard P. Macfarlane, of Tampa, Fla., for petitioner.

H. S Phillips and J. W. Frazier, both of Tampa, Fla., for respondents.

Before PARDEE and WALKER, Circuit Judges, and SPEER, District Judge.

WALKER Circuit Judge.

This is a petition to superintend and revise the action of the District Court in denying the motion of the petitioner William D. Jackson, to set aside an adjudication of bankruptcy rendered on an involuntary petition against the Wauchula Manufacturing & Timber Company, a corporation, and to permit the maker of the motion to resist such an adjudication by putting in issue the involuntary petition's allegations of insolvency and of acts of bankruptcy. The averments of the motion showed that, in a suit based upon a liability for a personal injury not 'willful and malicious' (Bankruptcy Act, Sec. 17) Jackson, after the involuntary petition was filed, but before the adjudication thereon, recovered a judgment against the alleged bankrupt; that the alleged bankrupt at the proper time pleaded to the petition against it, denying its allegations of insolvency and of acts of bankruptcy, but subsequently, after the rendition of the judgment in favor of Jackson, though the fact was that it was entirely solvent withdrew its valid and sufficient defense, and substituted therefor its unwarranted admission of insolvency, whereupon the adjudication of bankruptcy was made. The court's action on the motion was by it based upon the expressly stated ground:

'That movant was not a creditor within the meaning of the Bankruptcy Act at the time of the filing of the involuntary petition, and therefore has no standing to make this motion.'

By the record it is made to appear that the denial of the motion was due, not to a conclusion that there was any lack of timeliness in the application, but to the conclusion that it was beyond the power of the court to permit an involuntary petition in bankruptcy to be resisted by one whose relation to the debtor was that borne by the maker of the motion. The sought-for permission to continue a defense which unwarrantably had been abandoned by the alleged bankrupt was refused, not because the application was unseasonably made, but because the applicant 'was not a creditor within the meaning of the Bankruptcy Act at the time of the filing of the involuntary petition, and therefore has no standing to make this motion. ' Two propositions were involved in the ruling, viz.: (1) That the maker of the motion was not a creditor within the meaning of the Bankruptcy Act when the involuntary petition was filed; and (2) that only such a creditor may be permitted to resist such a petition.

The first proposition is supported by decisions which are entitled to much weight, among them the following, which were cited by the District Judge: Brown & Adams v. United Button Company, 149 F. 48, 79 C.C.A. 70, 8 L.R.A. (N.S.) 961, 9 Ann.Cas. 445; In re New York Tunnel Company, 159 F. 688, 86 C.C.A. 556; In re New York Tunnel Company, 166 F. 284, 92 C.C.A. 202. So far as we are advised, the proposition has not been definitely settled by the court whose decisions are controlling. summarized as follows: The liability adjudged in favor of the petitioner for revision, being for a personal injury which was not 'willful and malicious,' is one which a discharge in bankruptcy of the defendant in the judgment would release; and any demand founded on a liability subject to be so released may, when liquidated and fixed by a judgment, be proved and allowed against the...