Simonson v. Sinsheimer

• Court: U.S. Court of Appeals — Sixth Circuit
• Citation: Simonson v. Sinsheimer, 95 F. 948 (6th Cir. 1899)
• Decision Date: 05 July 1899
• Docket Number: 716.
• Parties: SIMONSON v. SINSHEIMER et al.

95 F. 948

SIMONSON v. SINSHEIMER et al.

No. 716.

United States Court of Appeals, Sixth Circuit.

July 5, 1899

This is an appeal from an adjudication in bankruptcy against the three partners of the firm of Simonson, Whiteson & Co. The appeal is prosecuted by one of the partners. The defendants tendered an answer to the petition some days after the time in which they were required to file one, and on motion for leave to file the same the court considered the question whether the answer contained a sufficient defense to the charge of bankruptcy, and found that it did not. The defendants then filed a motion to dismiss the petition on the ground that it was not properly verified. The motion was denied. The questions on this appeal arise upon the verification of the petition and the sufficiency of the answer. The petition filed on February 14, 1899, after setting forth the necessary jurisdictional facts as to the residence and occupation of the defendants, averred that the three petitioning firms were creditors of the defendants, on account of goods sold them, in the aggregate sum of $10,000 and that defendants had debts amounting to at least $20,000. The petition further averred that within four months next preceding the filing of the petition the defendants, as partners, committed an act of bankruptcy, in making on the 5th day of December, 1898, an assignment to their bookkeeper one Leonard Comingor, for the benefit of their creditors that the firm was then insolvent; that said Comingor on the 5th day of December, 1898, accepted the trust created in said deed of assignment, duly qualified as such assignee, and entered upon the discharge of his duties as such; that he sold stock belonging to the estate of the firm, and had in his hands as the proceeds of the sale of said goods the sum of about $70,000. T. W. Spindle, as attorney, verified the petition as follows:

'Commonwealth of Kentucky, County of Jefferson. I. T. W. Spindle, do hereby make solemn oath that I am a member of the firm of Kohn Baird & Spindle, and that the said Kohn, Baird & Spindle are solicitors for all of the petitioners above named, and that all of the statements contained in the foregoing petition are true, so far as the same are stated of my own personal knowledge, and those matters which are stated therein on information and belief are true, according to the best of my knowledge, information, and belief; and I do further state that all of the said petitioners and all of the officers and agents of the said Sinsheimer, Levenson & Company are now absent from the state of Kentucky.

T. W. Spindle.

'Subscribed and sworn to before me by T. W. Spindle, this fourteenth day of February, 1899.

Sam'l A. Lederman, N.P., J. Co., Ky.

'My commission expires January, 1900.'

Thereafter the Louisville Banking Company, on the 13th of March, 1899, filed a petition against the same defendants, in which it set out an indebtedness of $17,000 due to the bank. This petition was verified and signed by the Louisville Banking Company, by Theodore Harris, president, and was verified as follows:

'Theodore Harris says that he is president of the Louisville Banking Company, the petitioner herein, and he does make solemn oath that the statements contained in the foregoing petition subscribed by him are true.

'Before me, Ben C. Weaver, Jr., this 13th day of March, 1899.

'Ben C. Weaver, Notary Public, Jefferson Co., Ky.

'My commission expires January 12, 1902.'

The plea and answer tendered by the defendants denied that the petitioners, or either of them, were creditors in the manner and form alleged in their petition, but averred that several months before the proceeding was instituted, on December 8, 1898, there was an agreement of composition offered by defendants to their creditors, including the petitioners, at 50 cents on the dollar, which proposition was accepted by petitioners and almost all of the creditors of defendant, and that as between defendants' firm and petitioners the original indebtedness and obligation was by said agreement of composition terminated; that the right of petitioners against said defendants' firm was no longer upon the original accounts, sale or delivery of goods and original indebtedness, but upon the composition.

As another defense defendants averred as follows: 'These defendants further say that several months before this proceeding was instituted, on December 8, 1898, an action in equity was instituted in the circuit court for the county of Jefferson and state of Kentucky, at Louisville, in and by which the defendant L. Comingor, as trustee, was plaintiff, and these defendants and all creditors of these defendants were defendants, in which said Comingor set forth the assignment for the benefit of creditors, and sued for a settlement of his trust as assignee thereunder, and that in that settlement suit all of the petitioners in this proceeding, long before the institution of this proceeding, were parties defendant, and entered their appearance and filed their claims therein, and have ever since such entry of their appearance been at all times, and are now, parties to said settlement suit in said circuit court of Jefferson county, Kentucky, therein suing, and seeking in the state court to recover their proportion, as creditors of defendants' firm, of the assets of defendants' firm so assigned, which proportion would be the same proportion that they would obtain if said estate were distributed in bankruptcy in this court; that they have never dismissed their proceeding in said court, but were, at the time of the institution of this proceeding, and still are, seeking to recover in said action their proportionate share of the proceeds of said estate as creditors thereof; and that before the service of process or any notice or information of this proceeding the defendant L. Comingor, as assignee of these defendants, under orders of the Jefferson circuit court, which had jurisdiction of the estate, the parties, and the action at that time, paid into court, into the hands of the receiver of the court, and deposited in court in said action, all of the funds in his hands, to wit, all of the proceeds of the estate of these defendants so assigned to him for the benefit of creditors, and all of said funds have been ever since, and now are, in said court in said action, in the actual control and custody of the court for distribution therein, and, but for the proceeding in this court, would be ready now for prompt distribution among the creditors in the same proportion and in the same manner that they would be distributed here, without the extra costs of the proceedings in this court; and these defendants rely on and plead said other action, suit, and proceeding in the circuit court of Jefferson county, in the state of Kentucky, in bar and estoppel of petitioners' claim herein, and as a good and valid defense to said receivership. * * * Defendants further say that in said proceeding the petitioners herein as parties to said suit in the Jefferson circuit court joined therein and united in an order entered in that action, referring said action to the commissioner of said court as a commissioner in chancery to make a settlement of the accounts to said Comingor as assignee, and a distribution among the creditors.'

The assignments of error are as follows: '(1) The court erred in refusing to sustain the motion of the defendants Simonson, Whiteson & Co. to dismiss the petition herein. (2) The court erred in refusing to allow the defendants Simonson, Whiteson & Co. to file the answer tendered by them herein, and being the same answer made part of the record by the said decree of March 28, 1899. (3) The court erred in holding that the petitioners herein had debts against the firm of Simonson, Whiteson & Co., either sufficient in amount or of the character which would entitle them to prosecute their petition herein. (4) The court erred in failing to hold that the petitioners had estopped themselves from prosecuting their petition herein on account of the execution by the said Simonson, Whiteson & Co. of the alleged deed of assignment.'

A. P. Humphrey, for appellant.

D. W. Baird, for appellee.

Before TAFT and LURTON, Circuit Judges, and CLARK, District Judge.

TAFT Circuit Judge (after stating the facts as above).

The objection to the petition that it was not properly verified was waived by a tender of the plea and answer on the merits. It is true that the plea and answer were not permitted to be filed, but they were offered and considered on their merits for the purpose of filing, and we think this is quite sufficient to hold that there was a waiver of defect in the form of the petition. The defect alleged certainly does not affect the jurisdiction. Carriage Co. v. Stengel, 95 F. 637.

The second defense to the answer is that of a composition of debts of the bankrupts. The district court held this defense to be insufficient on the ground that there was no accord and satisfaction shown. To this it is replied that the composition itself is a substitute for the original debt, and in that sense is a satisfaction. We do not propose to enter upon a discussion of this not altogether clearly defined execution to the strict rule of accord and satisfaction. It is sufficient for us to say that this petition in bankruptcy is not a suit upon the original debt. It is a proceeding to have the committed an act of bankruptcy. The proceeding has to be instituted by three creditors with debts of a certain amount. The petitioning creditors are three in number, and have set out their debts; and the defendants seek to impeach their right to have an adjudication of bankruptcy by saying 'We only owe you one-half as much as you say, because you have agreed to reduce...