252 F. 942 | E.D. Mich. | 1918
This is a petition to review an order of the referee in bankruptcy, overruling objections filed by the trustee of the estate of the bankrupt to the claim of one Herman D. Keller, father of the bankrupt, and refusing to expunge such claim, as requested by such trustee. The order of the referee allowed said claim in full in the sum of $3,615.65, and the trustee has brought the matter before this court by a petition for the review of such order.
At the time of the filing of the voluntary petition in bankruptcy herein, the bankrupt, Herman J. Keller, was engaged in operating an automobile garage and salesroom in Midland, Mich., and was doing business under the name of Milan Garage & Sales Company. Shortly before the date of the filing of such petition this garage had been conducted by the bankrupt and his brother, Frank Keller, as copartners, and a few months before the date, mentioned the father of the bankrupt, the creditor whose claim is here involved, had advanced to the bankrupt certain sums to enable the latter to pay debts due from said bankrupt to his said brother, and also to purchase the interest of the latter in such partnership.
There is no testimony in the record tending to show that at the time of the making of any of these advances to the bankrupt the latter was insolvent. Furthermore, the testimony shows that the claimant did not himself purchase the interest of his son, Frank, in this partnership, but that such purchase was made by the bankrupt with funds borrowed by him from his father, the claimant. The testimony taken before the referee and returned to this court also shows that the claimant owned the premises in which the garage in question was conducted, and at and
Claimant filed his proof of claim, which was thereupon- allowed. Afterwards the trustee filed a petition with the referee, asking that the allowance of said claim be reconsidered, and the different items thereof rejected and expunged, for reasons which will be considered presently. A hearing was held on this petition, the claimant and the trustee giving testimony, which was taken stenographically, and typewritten transcript of which is attached to the return of the referee. All of the objections of the trustee were overruled, the petition to expunge was denied, and the claim was again allowed in full. This court is now asked to review the decision of the referee.
Three objections are urged against the allowance of this claim:
“The item of $200 (purchase money for interest of Frank Keller) is not a provable debt against .this estate, he (Frank J. Keller) being a member of the partnership previous to the filing of the petition in bankruptcy of I-Ierman J. Keller, and said estate being insolvent at the time of the dissolution and during this period, and for the further reason that it is an antecedent debt and a preferential payment.
“Item of $360 (wages paid Frank Keller) is an antecedent debt, and therefore preferential. Objected to for the further reason that the claimant is the inter alias for Frank Keller, he being a member of the partnership previous to the dissolution in bankruptcy by Herman J. Keller and while this estate was insolvent. Cannot prove a claim for labor and materials contributed to his own bankrupt estate, or to this estate.”
I have carefully read all of the testimony, and agree with the referee that there is no evidence tending to support the contention that the bankrupt was insolvent at the time of the making of any of these payments. Nor does it appear that the partnership was at any time insolvent. It cannot, therefore, be said that any preference is involved in this connection. It is clear from the testimony that the sums paid by claimant to the former partner of the bankrupt were charged to the bankrupt, and were simply loans made to the bankrupt for the purpose of enabling him to pay indebtedness due from him to his brother. The claimant was examined at some length by counsel for the trustee, but no facts or circumstances showing fraud, or from which any fraud could be properly inferred, appeared. This objection is clearly untenable. This applies also to the similar objection to one of the other items of the claim to the effect that it involved a preference.
2. A number of the items are objected to as being too indefinite. While, perhaps, the proof of claim is not as definite and specific in some respects as might be desired, yet, as already stated, the claimant was examined and cross-examined in open court in regard to all of these items, and the trustee had ample opportunity to inform himself
“Whenever a claim is founded, upon an instrument of writing, such instrument, unless lost or destroyed, shall be filed with the proof of claim. If such instrument is lost or destroyed, a statement of such fact and of the circumstances of such loss or destruction shall be filed under oath with the claim. After the claim is allowed or disallowed, such instrument may be withdrawn by permission of the court, upon leaving a copy thereof on file with the claim.”
The provisions of this section are clear, positive, and mandatory, and, in my opinion, must be strictly followed. To entitle a claim to payment out of the bankrupt estate, it must first be proved and then allowed. Moreover, it seems apparent that the proof of any such claim
“Claims wMcli do not comply with the requirements of the statute are not ‘duly proved.’ They are not, therefore, entitled to allowance.”
While perhaps in the present case, in view of the positive character of'the testimony on this point, this objection is somewhat technical, the trustee seems to be within his rights in making it. As, however, a properly verified claim was filed by claimant within the statutory period, he is entitled to now amend such claim, if he so desires. Buckingham v. Estes, 128 Fed. 584, 63 C. C. A. 20; In re Standard Telephone & Electric Co. (D. C.) 186 Fed. 586.
The matter will be remanded to the referee for further proceedings in conformity with the terms of this opinion. Upon the amendment, within a reasonable time, to be fixed by the referee, of the proof of claim, so as to comply with the.requirements of section 57 of the Bankruptcy Act, the order allowing the claim in full will stand affirmed.
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