233 F. 53 | 2d Cir. | 1916
“The third motion is utterly irregular, in that it is made in the bankruptcy proceeding and has for its object the resettlement of an order entered in the common-law case.”
With this conclusion we agree, and that order is affirmed.
The motion which resulted in this order was made by an attorney “for the petitioning creditor herein,” without stating who such petitioning creditor was, and, while the record is supposed to bring up all the papers, we fail to find the affidavit and order to show cause made by the District Court on October 8, 1915, directed to the receiver in supplementary proceedings in Robinson v. Vanoscope Company, and requiring him to show cause why he should not be stayed from selling certain alleged assets of the Vanoscope Company.
We have, however, sufficient before us to determine the questions presented, and thus not to prolong this branch of the proceedings. There is some question as to whether the review of an order denying a motion to vacate an adjudication in bankruptcy should be by appeal or by petition to revise (Bankruptcy Act, §§ 24a, 24b, 25); but the weight of authority seems to support the proposition that the review is by petition to revise. Brady v. Bernard & Kittinger, 170 Fed. 576, 95 C. C. A. 656; B-R. Electric, etc., Co. v. Ætna Life Ins. Co., 206 Fed. 885, 124 C. C. A. 545.
On September 14, 1915, one Peirce filed a petition in the District Court of Delaware to have Vanoscope adjudicated a bankrupt, and upon this petition the District Court of Delaware appointed ex parte a receiver of Vanoscope Company and issued the usual injunction. On September 17, 1915, a motion was made by Receiver Derby for instructions as to selling, in view of the restraining order of the District Court of Delaware, and on October 5, 1915, an order was made by the District Court here to proceed forthwith with the sale of the assets as had been directed by the order of September 9th. The sale took place on October 9, 1915.
On October 8, 1915, for the obvious purpose of heading off and preventing this sale, Vanoscope Company, alleging the necessary jurisdictional facts, filed a voluntary petition in bankruptcy in tire Southern district of New York and on the same day an order with a meanwhile stay was issued.to Receiver Derby to show cause why he should not be stayed from selling in accordance with the previous orders requiring him so to do. When this motion came on, it was denied on October 14, .1915, and the stay in the order to show cause was vacated.
Prior to this date, and on September 25, .1915, Inventions Corporation, which hád become the assignee and owner of Robinson’s judgment against Vanoscope Company, filed an answer to Peirce’s petition in Delaware, alleging, among other things, that Peirce was not a bona fide creditor of Vanoscope Company and that it (Inventions Corporation) owned the only existing valid debt against Vanoscope Company. It further alleged that one Morhardt had begun a collusive suit against Vanoscope Company in Illinois for $1,000,000 — which, as appears later, ripened into a judgment. On October 7, 1915, after the filing of this answer by Inventions Corporation, Peirce filed a new petition 'in Delaware in which he set forth that he had been induced by the attorney of the Vanoscope Company and of Van Riper to sign and verify his original petition for the express purpose of preventing Robinson from collecting his judgment against Vanoscope Company and also against Van Riper; that Vanoscope’s attorney had told' him that he would have the present attorney for the unnamed petitioner here (presumably one Lowery) represent him in the proceeding; that the $30 necessary clerk’s fees were advanced to him by the Vanoscope Company’s attorney and Van Riper; and that he did not realize that a fraud on Robinson was contemplated. Other details appear in Peirce’s petition, but it is sufficient to point out that in substance and effect Peirce asserted that the Delaware proceeding was begun in the' interest and at the request of the attorney for the Vanoscope Company and Van Riper for the purpose of defeating the efforts of Robinson’s assignee to collect the large judgment which Robinson had obtained. Peirce asked for permission to withdraw his petition and for its dismissal.
It thus appears that Vanoscope Cornpany not only filed its voluntary petition in the Southern district of New York, but was also the instigator of the involuntary proceeding in Delaware, and, as amply
On October 13, 1915, the day before the sale by Receiver Derby was to take place as advertised, and five days after the adjudication of bankruptcy by the District Court of this district, one Lowery,_ claiming to be a general creditor of Vanoscope Company, filed a petition to intervene in the involuntary proceeding in Delaware which had been started by Peirce and that motion was granted. The Inventions Corporation filed a new or supplemental answer to the Delaware petition, alleging, among other things, that Lowery was not a bona fide creditor and that the proceedings brought by him were not brought in good faith.
Thereafter, on October 27, 1915, the attorney for the present petition moved (by order to show cause) that the adjudication in the voluntary proceeding in this distirct be vacated because of the pendency of the proceedings in involuntary bankruptcy in Delaware. That motion was denied by order dated November 5, 1915, and is now here on review.
General Order in Bankruptcy No. 6 of the Supreme Court (89 Fed. v, 32 C. C. A. v) provides in part as follows:
“In case two or. more petitions shall be filed against the same individual in different districts, the first hearing shall be had in the district in which the debtor has his domicile, and the petition may bo amended by inserting an allegation of an act of bankruptcy committed at an earlier date than that first alleged, if such earlier act is charged in either of the other petitions; and in case of two or more petitions against the same partnership in different courts, each having .iurisdiction over the case, the petition first filed shall be first heard, and may be amended by the insertion ol' an allegation of an earlier act of bankruptcy than that first alleged, if such earlier act is charged in either of the other petitions; and, in either ease, the proceedings upon the other petitions may he stayed until an adjudication is made upon the petition first heard; and the court which maltes the first adjudication of bankruptcy shall retain jurisdiction over all proceedings therein until the same shall he closed.”
Section 1 of the Bankruptcy Act provides:
“ ‘A person against whom a petition has been filed’ shall include a person who has filed a voluntary petition.”
By virtue of the fact that the District Court for the Southern District of New York made the first adjudication of bankruptcy, it is apparent that it was its duty to retain jurisdiction over all proceedings so long as that adjudication remained in full force and effect. It undoubtedly had the power to vacate the adjudication in the voluntary proceeding for good cause satisfactorily shown and thereupon to stay all proceedings until the disposition of the involuntary proceeding in Delaware. So far as upon the papers and proceedings before it, the District Court decided that the order of adjudication in the voluntary proceeding should not be vacated because lacking good cause satisfactorily shown, we fail to find any error of law requiring revision. If it were contended that the order sought to be revised rested in the discretion of the court, it should not be disturbed for there was. not only no abuse of discretion, but the order was precisely what the situation, as shown by the record, called for.
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