Moulton v. Coburn

• Court: U.S. Court of Appeals — First Circuit
• Citation: Moulton v. Coburn, 131 F. 201 (1st Cir. 1904)
• Decision Date: 06 July 1904
• Docket Number: 521.
• Parties: MOULTON v. COBURN et al. In re GEORGE M. COBURN & CO.

131 F. 201

MOULTON v. COBURN et al.

In re GEORGE M. COBURN & CO.

No. 521.

United States Court of Appeals, First Circuit.

July 6, 1904

Lee M Friedman (Godfrey Morse, on the brief), for appellant.

Charles K. Cobb (William D. Whitmore, Jr., on the brief), for appellees.

Before COLT and PUTNAM, Circuit Judges, and BROWN, District Judge.

BROWN District Judge.

The original petition in involuntary bankruptcy was filed by a single creditor. It alleged as the sole act of bankruptcy an assignment for the benefit of creditors, and that there were less than twelve creditors. In fact, there were at the date of filing the petition about thirty creditors. An attempt was made to increase the number of petitioners in accordance with section 59d of the bankruptcy act (Act July 1, 1898, c. 541, 30 Stat. 561 (U.S.Comp.St. 1901, p. 3445)). The District Court held that there were but two proper petitioners, and more than twelve creditors, and dismissed the petition. The petitioner, Moulton, now appellant, contends that the dismissal of the petition was erroneous; claiming, first that there were three or more proper petitioners; second that at the date of hearing there were less than twelve creditors who could be counted, and therefore that a single petitioner was sufficient. We find no error in the ruling of the District Court that there but two proper petitioners.

After answer setting up the existence of some thirty creditors, the Tripp Giant Leveler Company, a corporation, on September 2 1903, filed an intervening petition praying 'that it may be allowed to adopt the allegations set forth in the petition in the above-entitled case, and join in said proceedings, and become a petitioning creditor therein. ' Subsequently, on September 28, 1903, it filed a second petition, asking 'that it may be allowed to withdraw its petition to join in the petition against the above-named bankrupts, and become one of the petitioning creditors. ' This petition was, by order of court, referred to a referee to ascertain facts and report thereon, under rule twelve of general orders in bankruptcy (89 Fed.Vii, 32 C.C.A. xvi). On November 13, 1903, the referee reported certain facts, with his conclusion that the first petition of the Tripp Giant Leveler Company was filed 'under mistake and misapprehension, as the company had already assented to the assignment in the manner above stated. ' The District Judge, upon consideration of the facts, held that the joinder in the petition was under a misunderstanding or mistake of fact; that the withdrawal was not necessarily governed by In re Cronin (D.C.) 98 F. 584; and, as an exercise of discretion, granted the petition to withdraw.

The appellant contends that the withdrawal of a petitioner should in no way invalidate the bankruptcy proceedings to which he has become a party, and cites In re Bedingfield (D.C.) 96 F. 190; In re Cronin (D.C.) 98 F. 584.

The present case, however, differs essentially from a case in which one of three original petitioners in involuntary bankruptcy seeks to withdraw, and thereby to impair the rights of his co-petitioners. There had been no express joinder in the original petition, but merely a petition that the Tripp Company be allowed to join, and a withdrawal of this petition before any final action of the court, making it a party to the original petition.

The right of the Tripp Company to become a petitioning creditor was not free from doubt, and was at least a contestable right. Before the filing of its intervening petition, the treasurer of the corporation had authorized Adams to assent to the assignment upon a condition which was complied with, and Adams on August 14, 1903, had signed a document on behalf of the corporation expressing its assent to the assignment. Forgetting or without bearing in mind his previous authorization of Adams, the treasurer authorized the filing of the intervening petition for leave to join in the original petition. Subsequently the corporation decided to adhere to the first action of its treasurer.

The appellant questions the legality and sufficiency of the authorization of Adams, and of the execution of the document expressing the assent of the corporation to the assignment. We do not consider it necessary to consider these questions, for, even were there a defect in the execution of the document, the circumstances were clearly of such a character as to justify the corporation in adhering to and ratifying the action of Adams, and to give the District Court discretion to permit the withdrawal of such an intervening petition as was filed by the corporation.

Fogg, assignee of the Manufacturers Die Company, was clearly not a qualified petitioner, since his assignor was not the real creditor. The Graton & Knight Manufacturing Company, assignor to Atherton, before the bankruptcy proceedings, had assented to the assignment.

Atherton therefore acquired only the rights of a creditor who had already assented to an assignment.

A creditor who has assented in writing to the terms of a common-law assignment for the benefit of creditors is not entitled ordinarily to join in an involuntary petition alleging, as the sole act of bankruptcy, the making of the general assignment to which he has expressly assented. This is not because he has ceased to be a creditor, but because having voluntarily elected that the bankrupt's estate shall be administered under the assignment, and having accepted the provisions of the deed of trust, he is thereby estopped from action inconsistent with the agreement. Lowell on Bankruptcy, Sec. 51. While special circumstances might entitled a creditor to repudiate his agreement, or relieve him from the consequences of an election, no such...