In re McGinley

219 F. 159 | 6th Cir. | 1915

PER CURIAM.

[1] Without deciding whether summary proceedings were sufficient, or whether Mr. Brownson had acquired rights superior to Fishback’s, and assuming that the court might rightfully restrain the use of the certificates until some investigation could be made, we think it clear that the maximum of opportunity, which it can be permissible to give petitioning creditors in such a case, was exceeded. Where there is no testimony tending to show that property in the possession of an officer of a bankrupt corporation really belongs to the corporation, or that it has any interest therein, and where there is nothing to challenge the officer’s claim of personal ownership, except .suspicion due to the general situation, any impounding of the property while petitioning creditors look for evidence at least approaches the margin line of the rightful exercise of power; but, in any event, only the briefest practicable delay can be allowed, and the exercise of diligence must be imposed upon the attacking creditors. In this case, and in response to a superficially convincing showing of personal ownership made by Fishback on October 1st,- it appears that after 30 days the creditors had not made even a pro forma denial, much less taken any steps in the direction of disputing Fishback’s claim. We are compelled to conclude that, whatever the rights of the parties might have been on October 1st, on November 2d it was not within the provident exercise of discretion to require further delay, or to impose conditions which were equivalent to continuing the injunctions until 3 mouths after a trustee should be appointed, if that time should ever come.

[2] The contention made before the master, that the certificates should be held so that they might be available to satisfy a judgment which might be had in a suit which might be brought by the trustee against Fishback, was obviously untenable, and seems to be abandoned. Appellees suggest that an issue of ownership should not be tried out on affidavits without opportunity for cross-examination. This may be conceded; but we see no necessity for swearing witnesses until the allegations of the petition were denied, or until the petitioning creditors tendered issue and indicated that there was proof to be taken. Appellees say their reason for not doing this was that they regarded their opposition before the master as in the nature of a demurrer. Whatever its character, it was not the exercise of that diligence which the situation required.

The motion to file supplemental return is granted, but because its filing has become immaterial, and without implying approval of the practice. The order appealed from must be reversed, and the cause remanded, with instructions to modify the injunctions as prayed. Appellants will recover costs.