Syracuse Engineering Co. v. Haight

Decision Date13 June 1938
Docket NumberNo. 320.,320.
Citation97 F.2d 573
PartiesSYRACUSE ENGINEERING CO., Inc., et al. v. HAIGHT.
CourtU.S. Court of Appeals — Second Circuit

Laurence Sovik, of Syracuse, N. Y., for appellant.

Lionel O. Grossman and Stewart F. Hancock, both of Syracuse, N. Y. (Morris Berman, of Syracuse, N. Y., of counsel), for appellees.

Costello, Cooney & Fearon, of Syracuse, N. Y., for Keith F. Driscoll.

Albert J. Oot, of Syracuse, N. Y., for trustee as amicus curiæ.

Before MANTON, L. HAND, and AUGUSTUS N. HAND, Circuit judges.

L. HAND, Circuit Judge.

This is an appeal from an order in bankruptcy adjudging one, Brown, a bankrupt; the appellant is not Brown himself, but Haight, the receiver of the Salt Springs National Bank, who attached all Brown's property on April 9, 1936, and got judgment on May 20th. The act of bankruptcy alleged was Brown's suffering this attachment while insolvent, and failing to discharge it within thirty days thereafter. Section 3a (4) of the Bankruptcy Act, 11 U.S.C.A. § 21(a) (4). Three creditors filed the petition on May 22, 1936; Brown answered, and Haight intervened pro interesse suo and also answered (there has been some question whether Brown did not withdraw his answer, but that is irrelevant). Two issues alone are involved: whether the three petitioners were creditors, and whether Brown was insolvent on April 9, 1936. The record is very confusing. The judge wrote no opinion and made no findings — supposing that the parties would not appeal — and the statement of evidence was very irregularly "approved". However, we have concluded that he really meant to "approve it" under Equity Rule 75(b), 28 U. S.C.A. following section 723; having jurisdiction in any event, we can proceed. Nevertheless Haight will not recover his disbursements for printing that part of the record which was not necessary to the determination of the relevant issues.

There was no proof that any of the petitioners were creditors. As to the first one — Syracuse Engineering Company which alleged that it was a creditor for labor and materials in the sum of $2,478.95 — the only pretence of evidence is an entry in Exhibit I of a joint claim of C. F. Stanton Engineering Co. and G. Norman Knaus for labor and materials in the sum of $3,122.84. Exhibit I was a sworn statement of Brown's assets and liabilities, prepared in his lawyers' office on February 7, 1936 as of February 1; its purpose and use are not disclosed, and it was plain hearsay and therefore incompetent against Haight, whose interest was not the same as Brown's. The attempted defence of its introduction is that it was a declaration against Brown's interest, but Brown was alive, and death, or at least inaccessibility, is a condition upon this exception to the hearsay rule, Wigmore, § 1456. Nevertheless, Haight did not challenge it as hearsay, when it was offered; he said that there had been "no proper foundation laid" — whatever that might mean — that it did "not purport to show the values of certain properties", and that it spoke from February 1st instead of from April 9th. These objections were meaningless, so far as we can see, and the judge was right to admit it. But when admitted, it did not prove that the Syracuse Company was a creditor; the only apparent connection between that company and the C. F. Stanton Engineering Company and G. Norman Knaus was that Knaus verified the petition for adjudication as to the petitioner's president. The names and amounts were substantially different; and Knaus may well have shared a claim personally with the Stanton Company, in which the Syracuse Company had no interest whatever. The next petitioner, I. Fleischman & Sons, alleged that it was a creditor for merchandise in the sum of $12,242.22. Exhibit I contained an entry of a debt to "Jacob Fleischman for merchandise, $16,272.92", and although the amounts were far apart, the names were closely alike. Perhaps because of the following testimony of Brown we should hold that Fleischman was a creditor, but the amount remains wholly uncertain. Brown swore: "I owe Fleischman a small bill * * * I couldn't state the amount * * * I couldn't state without having the bills on it". Twelve or sixteen thousand dollars is scarcely a "small bill". The last petitioner, Larned, alleged that he was a creditor for medical services in the sum of $98. His name does not appear in Exhibit I, and the record is wholly barren of evidence about him, except that Haight's lawyer at one of the hearings said: "there should not be very much doubt that the Larned claim would be admitted because your Honor recalls the Larned claim in the first proceeding". We have said several times that we will not search through the colloquy of counsel, especially in insolvency proceedings, to extract admissions out of casual remarks. In re Syracuse Stutz Co., Inc., 2 Cir., 55 F.2d 914, 917; In re National Public Service Corp., 2 Cir., 68 F.2d 859, 861; In re Adolf Gobel, Inc., 2 Cir., 80 F.2d 849, 853. We also disregard. Brown's admission in his answer that the petitioners were his creditors for over $500, and that Larned in particular was a creditor for $98. Like Exhibit I these declarations were hearsay; and, however relevant the answer itself might be as an act of Brown, its contents was not competent against Haight. Central State Bank v. Harrington, 6 Cir., 4 F.2d 514. The adjudication must be reversed for these reasons, and as the cause will probably be retried, we will lay down some rules for its guidance.

First: Petitioning creditors ordinarily have the burden of proof upon all the issues and throughout the hearing. The petitioners at bar do not deny this expressly, but much of their reasoning is consistent only with a contrary opinion. It is true that the act of bankruptcy is within § 3a (3), 11 U.S.C.A. § 21(a) (3), and therefore that under § 3d, 11 U.S.C.A. § 21(d), Brown would have had the burden of proving solvency, if he...

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24 cases
  • Merkel v. CIR
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • 11 Marzo 1999
    ...Inc.) , 92 F.3d 139, 156 (3d Cir. 1996); In re Xonics Photochemical, Inc., 841 F.2d 198, 200 (7th Cir. 1988); Syracuse Engineering Co. v. Haight, 97 F.2d 573, 576 (2d Cir. 1938)). In each of the three cited cases -Mellon Bank, Xonics Photochemicals, and Syracuse Engineering -assets and liab......
  • Peters v. United States
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    • 13 Junio 1969
    ...were just as objectionable and inadmissible as hearsay evidence whether they were sworn or unsworn statements. Syracuse Engineering Co. v. Haight, 97 F.2d 573, 575 (2d Cir. 1938). Even if the statements were affidavits, as the majority contends, they are still hearsay and are inadmissible u......
  • Matter of Hemphill
    • United States
    • U.S. Bankruptcy Court — Southern District of Iowa
    • 22 Enero 1982
    ...debt as though they were worthless. On appeal the Second Circuit said: Learned Hand\'s landmark opinion in Syracuse Engineering Co. v. Haight, 97 F.2d 573, 576 (2d Cir. 1938), taught us that contingent subrogation and contribution rights must be valued as assets in determining solvency. See......
  • Upson v. Otis
    • United States
    • U.S. Court of Appeals — Second Circuit
    • 23 Mayo 1946
    ...In re National Public Service Corp., 2 Cir., 68 F.2d 859, 861; In re Adolf Gobel, Inc., 2 Cir., 80 F.2d 849, 853; Syracuse Engineering Co. v. Haight, 2 Cir., 97 F.2d 573, 575; Royal Petroleum Corp. v. Smith, 2 Cir., 127 F.2d 841, In Re Syracuse Stutz Co., supra 55 F. 2d 917, we said: "In co......
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