141 F. 518 | 7th Cir. | 1905
after stating the facts, delivered the opinion of the court.
The only questions arising upon this appeal are a single one of bankruptcy practice and two issues of fact. Error is assigned upon various rulings of the referee in the admission or rejection of testimony, and these rulings are pressed in the argument for reversal; but we are of opinion that no reversible error appears in either, and that neither of such assignments touches the merits of the controversy or justifies discussion. While the question of practice is complicated in the methods pursued by both parties to the controversy, its solution is free from difficulty when the proceedings are considered as an entirety. The appellant contends, in effect, that the petition on which the issues were referred confers no authority to hear the testimony or find the acts of bankruptcy reported by the referee, and that the District Court was without jurisdiction to allow the amendment to take effect as of the date when the original petition was filed, or to adjudge bankruptcy upon the report. Neither of these propositions is tenable. It is true that the original petition was defective in the allegation of other acts of bankruptcy than those specifically described. On objection raised before answer, or in the course of hearing, under the well-recognized practice, the District Court would either have required specification of any further acts, by way of amendment, as a condition precedent to the introduction of proof, or stricken out the general averments. Instead of thus calling attention to the defect, the appellant elected to take issue upon this general allegation by express denial, and proceeded upon the hearing without an objection, even before the referee, which raises the question. Upon the oral argument counsel for the appellant reasserted, in substance, the statement which appeared in their brief, “that on every
The evidence being thus received and reported to the court with the finding of facts, the doctrine is well settled that the jurisdiction of the District Court was complete, both to determine whether the petition was sufficient in form to cover these facts, and to allow amendment of the petition if deemed insufficient,'and that an amendment so allowed and made “relates to and takes effect as of the date of the filingof the original petition.” The case in that respect is ruled by the decision of this court in Re Shoesmith, of the present term (135 Fed. 684, 688, 68 C. C. A. 322), and the allowance'was within the judicial discretion, whether necessary or unnecessary at that stage. See The Tremolo Patent, 23 Wall. 518, 527, 23 L. Ed. 97; Graffam v. Burgess, 117 U. S. 180, 194, 6 Sup. Ct. 686, 29 L. Ed. 839.
The questions of fact are: (1) Whether the findings of insolvency are established by the evidence, and (2) whether the preferential transfers found by the referee are alike well founded. The answer to the first question will dispose of the second, as the facts of the several transfers are substantially undisputed, and the further inquiries of insolvency in fact and imputed knowledge thereof in either instance are the only debatable element.
The issues were sent to the referee, as special master, “to hear, take proofs, and report his conclusions,” on the application and consent of all parties. Thus the appellant waived its right to a jury trial, and
On examination, however, of the testimony referred to, it satisfactorily appears that the evidence supports the finding of fair valuation of the aggregate of the appellant’s property, and that the complaints so earnestly pressed are not well founded. These general facts unmistakably appear: That the corporation was organized and its operations carried on during its brief existence with insufficient capital to accomplish the business sought; that the patents, which entered largely into the capitalization, however valuable as contributions to the venture, were available only when sufficient cash, or other means, was contributed to manufacture and market the products, and their fair valuation was problematical; that the operations were hampered and success constantly threatened because available means were not at hand; that, whatever of promises in future business were thus far indicated in production and sales, a successful business was not well established and not well assured without further capital; and, finally, prior to October, 1903, creditors were pressing, and urgent demands for pay rolls and other needs were relieved only through temporary loans upon pledges of goods and like expedients of the debtor in a struggle to carry on business with insufficient cash and credit. The real estate, buildings, and fixed machinery
So, in respect of the finding that acts of bankruptcy were committed, both the fact of insolvency and imputed knowledge, in three instances of preference, at least, unmistakably appear and sustain the finding.
The order of the District Court that the appellant be adjudged bankrupt accordingly is affirmed.