Lowenstein v. Henry McShane Mfg. Co.

• Court: U.S. Court of Appeals — Fourth Circuit
• Citation: Lowenstein v. Henry McShane Mfg. Co., 130 F. 1007 (4th Cir. 1904)
• Decision Date: 07 July 1904
• Parties: LOWENSTEIN et al. v. HENRY McSHANE MFG. CO.

130 F. 1007

LOWENSTEIN et al. v. HENRY McSHANE MFG. CO.

United States District Court, D. Maryland.

July 7, 1904

Carrington & Carrington, Edward G. Rosenheim, and Wm. Ewin Bonn, for petitioning creditors.

William P. Whyte, Arthur George Brown, J. Hanson Thomas, and Williams, Thomas & Williams, for bankrupt.

MORRIS District Judge.

This petition was filed March 26, 1904, and the act of bankruptcy charged is that, because of insolvency, receivers had been put in charge of the property of the corporation by a decree of the circuit court No. 2 of Baltimore City, dated November 27, 1903. There were three petitioning creditors who joined in the original petition, viz., Lowenstein, whose claim is $6,335.82; N. Frank & Sons, whose claim is $1,962.18; and the Electrical Material Company, whose claim is $578.63.

As to Lowenstein and N. Frank & Sons, it is objected that, by their participation in the receivership proceedings in the state court, they have elected to proceed in that forum, and are estopped from petitioning in bankruptcy. It appears that Lowenstein and N. Frank & Sons on November 28, 1903 intervened in that case on the day after the receiver was appointed, and filed petitions in the circuit court No. 2 praying that court to appoint a co-receiver. These petitions came on for hearing on March 24, 1904, and a co-receiver was appointed by the court, although not the one urged by the petitioners.

This action, it seems to me, was an election by those two creditors to avail of the proceedings in the state court, and it appears that, during the period between their intervention in that case and their filing the petition in bankruptcy much was done by the receivers in the state court. The large business of the corporation was carried on, money was, by the orders of court, expended in the repairs of buildings, and leases to quite a number of tenants were effected at very renumerative rents, and sales of property have been negotiated. It seems to me that equitably, after four months' participation, these creditors should be held to be estopped from taking this proceeding, which would be destructive of the acts of the receivers. Simonson v. Sinsheimer, 95 F. 948, 37 C.C.A. 337.

The Electrical Material Company, which had a claim of $578.63 joined in the petition in a somewhat peculiar manner. The claim had been filed in the receivership case, but, on the day this petition was filed, one of the counsel for the other petitioners offered to buy the claim at its full value for the Assets Realization Company, provided the Electrical Material Company would join in the petition and make the required oath. This was done, and the money was immediately paid. The claim was the claim of the Assets Realization Company, a corporation of Illinois, at the time it was filed, because that corporation had made a binding contract to purchase and pay for it, and did immediately pay for it. About two months afterwards the said Assets Realization Company, having bought up 17 other claims, amounting in all to over $10,000, intervened and joined in the original petition. Henry J. Kennedy also about the same date, having had assigned to him the claim of Ball...