Jurgenson v. National Oil & Supply Co.

• Decision Date: 24 February 1933
• Docket Number: No. 4952.,4952.
• Citation: 63 F.2d 727
• Parties: JURGENSON v. NATIONAL OIL & SUPPLY CO. et al. In re STAR SILK DYEING CO.
• Court: U.S. Court of Appeals — Third Circuit

63 F.2d 727 (1933)

JURGENSON v. NATIONAL OIL & SUPPLY CO. et al. In re STAR SILK DYEING CO.

No. 4952.

Circuit Court of Appeals, Third Circuit.

February 24, 1933.

Paul Rittenberg and Kimmel & Kimmel, all of Paterson, N. J., for appellant.

H. Kermit Green and Filbert L. Rosenstein, both of Paterson, N. J. (Nathan L. Jacobs, of Newark, N. J., of counsel), for appellees.

Before WOOLLEY, DAVIS, and THOMPSON, Circuit Judges.

THOMPSON, Circuit Judge.

This is an appeal from orders of the District Court for the District of New Jersey denying an application to dismiss an involuntary petition in bankruptcy and an application to vacate the appointment of a receiver.

On May 16, 1932, the National Oil & Supply Company, the Olive Oil Soap Company, and the Wollen Chemical & Supply Company (hereinafter designated Oil Company, Soap Company, and Chemical Company, respectively) filed, as creditors, an involuntary petition in bankruptcy setting out that the Star Silk Dyeing Company, alleged bankrupt, had made a general assignment for the benefit of its creditors within four months of the filing of the petition, and was insolvent. On May 18, 1932, upon petition of Oil Company, Judge Clark appointed a receiver pending the election and qualification of a trustee. On May 31, 1932, Adolph Jurgenson filed an intervening petition setting out that he was an unsecured creditor of the Star Silk Dyeing Company, that it had made preferential payments to Oil Company, Soap Company, and Chemical Company, the three petitioning creditors, and that they had not filed their petition in good faith. Jurgenson was allowed to intervene. On June 2, 1932, application was made on behalf of Jurgenson to dismiss the petition in bankruptcy upon the ground that each of the petitioning creditors had received a preference prior to the filing of the petition. On June 13, 1932, upon petition of Jacques Wolf & Co., Central Supply Company, Inc., and M. Goldberg & Sons, creditors, setting out that they had received no preferences within the meaning of the Bankruptcy Act (11 USCA), Judge Fake entered an order allowing them to join as intervening petitioning creditors. There being then three petitioning creditors against whom Jurgenson's objections did not apply, Judge Fake on June 22, 1932, denied Jurgenson's application for an order dismissing the petition. Meanwhile on June 7, 1932, Jurgenson had applied to Judge Fake for the vacation of the appointment of the receiver. The application was denied on June 22, 1932. On July 20, 1932, Jurgenson appealed without allowance by this court.

Error is assigned, first, to the overruling of the motion to dismiss the original petition in bankruptcy; and, second, to the overruling of the motion to vacate the order appointing a receiver. The motion to dismiss was based on the alleged fact that the original petitioning creditors had received preferences. This court held in Greenville Banking Company v. Selcow, 25 F.(2d) 78, that creditors who have received preferences are not thereby disqualified to become petitioning creditors, but that the only effect of the preference is to prevent allowance of their claims until the preference or security is surrendered. If, prior to adjudication, the original petitioners surrender their preference, the petition is valid. In the instant case, however, this question is immaterial, because four qualified creditors eventually joined and were permitted to intervene. Provision for the joinder of other creditors is contained in section 59f of the Bankruptcy Act (11 USCA § 95 (f). Under authority of Canute Steamship Company v. Pittsburgh Coal Company, 263 U. S. 244, 44 S. Ct. 67, 68 L. Ed. 287, additional creditors may join at any time before adjudication and be counted at...