108 F. 525 | D. Or. | 1901
This matter comes on to be heard upon objections, filed by certain creditors of the bankrupt, to his discharge, upon the ground that he has concealed, while a bankrupt, from his trustee, property belonging to his estate in bankruptcy, and that he has made a false oath in relation thereto in the bankruptcy proceeding. The facts, in substance, are as follows: Conn, prior to the filing of the petition in bankruptcy, was a stockholder in a company known as the “Estes-Gonn Drug Company,” engaged in carrying on a retail drug store in the city of Astoria, Or. The other sto do-holders in the company were Conn’s wife and one Estes and wife. The business of the corporation not being in a satisfactory condition, and disagreements existing between its stockholders and directors as to the management of its business, the corporation, on the 2d day of December, 1898, constituted Louis Blumauer, of Portland, its trustee, with authority to take possession of the drug store and business; and if, in his judgment, it was to the best interests of all concerned that the same should be sold, then said trustee was authorized to sell and transfer said property, either at private or public sale, to the highest bidder, upon 10 days’ notice to the parties in interest. Thereafter, and in May, 1900, after twice advertising such property for sale, the trustee sold out the drug store and business to Mrs. Conn, the wife of the bankrupt, for fl,680. The money for the purchase was furnished to Mrs. Conn by the Blumauer-Frank Drug Company. Thereupon a new drug company was organized, at the instance of the Blumauer-Frank Company, with a capital stock of $2,000, divided into 40 shares, of $50 each. These transactions took place more than eight months prior to- the filing of the petition in voluntary bankruptcy by the bankrupt, Conn. Conn, 'in filing his schedules in bankruptcy, represented himself as the owner of one share in this new drug company. The objecting creditors now say that Conn was in fact the owner of one-half of the 40 shares in the capital stock of the company; that 10 shares of this stock stood in the name of Mrs. Conn, and the other 10 shares in the name of Conn himself; but that, as a matter of fact, the entire 20 shares belonged to the bankrupt. The creditors further say, as to the value of this stock, that at the time of the sale by the trustee the stock and business on hand were of the value of $5,000, and that sáid stock has been kept up in the present company, and is of equal value with that of its predecessor. So far as appears, no .book of subscription of stock was kept. None has been found, although diligent search has been made therefor. -It is therefore diffi-
The transfer of (he business of the Estes-Coim Drug Company to Blumauer as trustee, and ¡.he subsequent sale by Blumauer, under his trust, of the property to Mrs. Conn, are not, and cannot be, attacked in this proceeding. There is nothing in the transaction that tends to impeac.li its fairness and good faith. It was a proceeding in the interest of creditors, so far as appears. Blumauer testifies that the property had been advertised twice prior to the sale, and there is nothing to show that the price paid was not adequate, under the circumstances. This is the source of the title which Conn and his wife have in the stock standing in their names. There is no complaint about ir, and no ground for complaint; and there is no reason, in law or in morals, why the slock held by Mrs. Conn should be treated as tiie property of her husband. As already appears, the money with which she paid for the stock was furnished by the Blumauer-Frank Company. If ihe company had seen fit to allow her to retain exclusive ownership in the new concern, the husband’s creditors would have had no reason to complain. The Blumauer-Frank Company sub
In order to justify a complaint at what has been done, it ought to appear that these sharfes have a value substantially higher than their par value; and this does not appear, nor is there any fact- or .circumstance in the case which warrants an inference that such is the fact. It is claimed that the original stock of the Estes-Conn Company was worth $5',000, and that the present stock is of equal value. Por the purposes of this case, the bankrupt’s property must be treated as of the value it will bring at a sale, and it must be remembered that the property of the Estes-Conn Company sold for $1,-675. There is nothing to impeach the openness and fairness of this sale, or that questions the reasonableness of the price at which the property was sold. By the same test, the property of the present company cannot be said to be worth more than the par value of the stock of that company; and the probabilities are that the nine shares of stock held by the Blumauer-Prank Company for the bankrupt when he shall pay for them are not worth more than the $418.50 for which these shares are held, and until it appears that this stock is worth appreciably more than this sum there is no room to complain on the part of the creditors. The entire transaction is simply one where a large creditor has undertaken to preserve the business of the insolvent corporation by organizing a new corporation, and has seen fit to interest a part of the old owners in the new venture.
The creditors’ interest in this transaction must be measured by the actual present value of the bankrupt’s interest held for him by the Blumauer-Prank Company, and that interest consists of nine shares of stock not included in the bankrupt’s schedule of assets, and one share that is so included. Pacts and circumstances, to justify an inference of fraud, must be proved, not deduced as a matter of doubtful inference from other facts and circumstances. As already appears, with the sale of the business of the Estes-Conn Drug Company by L. Blumauer, as trustee, to Mrs. Conn, for a consideration furnished by the Blumauer-Prank Drug Company, this court has noth