Jones v. Clower
| Decision Date | 01 November 1927 |
| Docket Number | No. 5033.,5033. |
| Parties | JONES et al. v. CLOWER. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Jacob A. Walker and R. B. Barnes, both of Opelika, Ala., and S. Holderness, of Carrollton, Ga. (Richard H. Cocke, of Opelika, Ala., and G. J. Sorrell, of Dadeville, Ala., on the brief), for appellants.
John V. Denson and N. D. Denson, Jr., both of Opelika, Ala., for appellee.
Before WALKER, BRYAN, and FOSTER, Circuit Judges.
The W. A. Handley Manufacturing Company was adjudged bankrupt under an involuntary petition filed on March 4, 1922. On July 3, 1922, W. H. Knight filed with the referee proof of his claim against said bankrupt for an amount approximating $175,000, based on a number of promissory notes executed by the bankrupt and payable to said Knight; one of those notes being dated November 10, 1921, payable November 10, 1926, for $27,940.50, with interest from date, payable annually. Under an involuntary petition filed on September 4, 1922, said Knight was adjudged bankrupt on September 26, 1922, and appellee was appointed and qualified as trustee in bankruptcy of Knight's estate. Pursuant to a petition filed by appellee in the Handley Manufacturing Company bankruptcy proceeding, appellee, as such trustee, on October 16, 1922, was substituted as a creditor of W. A. Handley Manufacturing Company in lieu of said Knight, succeeding to the latter's claim.
On December 11, 1922, the appellants, as trustees of the estate of Z. J. Wright, deceased, filed in the W. A. Handley Manufacturing Company bankruptcy proceeding a claim, based upon a note which was the same as to the names of the maker and payee, as to dates of execution and maturity, as to amount of principal, and as to provision for interest as the above-described note included in the claim filed by Knight; but the copy of the note filed by appellants contained on its back an assignment by W. H. Knight to Mrs. Ida T. Wright, dated January 4, 1922. On December 11, 1922, the referee indorsed on that claim that it was allowed. The proof of that claim did not, in respects hereinafter mentioned, comply with the requirement of paragraph 3 of General Order in Bankruptcy 21.
On April 4, 1923, the appellee filed in the W. A. Handley Manufacturing Company bankruptcy proceeding a petition, praying that said claim filed by appellants be reexamined, that the same be expunged from the list of claims allowed in that proceeding, or that the allowance of said claim be revoked and set aside. In substance that petition stated the following grounds for granting the relief sought:
(1) That the note forming the basis of the challenged claim was the same as the above-mentioned note, which in part was the basis of Knight's previously allowed claim, and therefore the claim of appellants is a duplication in part of a claim previously proved and allowed in the same proceeding.
(2) That the proof of the challenged claim failed to show that the alleged assignment by Knight was prior to the commencement of the W. A. Handley Manufacturing Company bankruptcy proceeding, and was not accompanied by the deposition of the owner of that claim at the commencement of said bankruptcy proceeding; appellee's petition alleging that, if there was an assignment of the note which was the basis of that claim, that assignment was made after the commencement of the proceeding in which that claim was filed and allowed.
(3) That the claim proved and allowed in favor of the appellants was the same as part of the claim previously proved and allowed in favor of said Knight, being based on the same note, and no proof of the assignment of that claim by Knight or his trustee in bankruptcy to appellants, or either of them, had been made, and no deposition of the owner of the claim at the time of the commencement of the bankruptcy proceeding against the maker of that note, setting forth the true consideration of the debt, had been filed with the proof of appellants.
(4) That, if said note was assigned by Knight to appellants, that assignment was a preference, which was voidable at the instance of appellee as trustee in bankruptcy of Knight's estate. The allegations with reference to this ground are not mentioned, because the party making those allegations admits that a material part of them was not sustained by evidence.
Without raising any objection to appellee's petition on the ground that it was filed by the holder of a claim, and not by the trustee in bankruptcy of the Handley Manufacturing Company, the appellants filed a written answer to that petition, denying the allegations made in the first ground stated therein, and alleging that the assignment by Knight of the note which was the basis of appellants' claim was made on the day of its date, January 4, 1922, and that appellants had had uninterrupted physical possession of that note since that date, and also orally made a motion to strike appellee's petition, on the ground that that petition sought a determination, as between the...
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