National Chemical Co. v. Golden Malt Cream Co., No. 1,418

No. 1,418 | 7th Cir. | Jul 22, 1908

GROSSCUP, Circuit Judge

(after stating the facts as above). The question of law presented is, whether or not respondent is estop-ped by reason of the proceedings in the State Court, October 4th 1906, notwithstanding the subsequent proceeding, from denying that it is insolvent within the meaning of the Bankruptcy Act — the actúa': facts relating to insolvency being, that the company had assets approximately of thirty-five thousand dollars and debts of twenty-fouj thousand dollars; facts that standing apart from the State Court recitals, do not render the company insolvent within the meaning of tht Bankruptcy Act.

Section 3, par. “a,” subd. 4, of the Bankruptcy Act of July 1, 1898, c. 541, 30 Stat. 546 (U. S. Comp. St. 1901, p. 3422), provides that it shall be an act of bankruptcy when because of insolvency, a receiver or trustee has been put in charge of his property under the laws of a state; from which it is argued by petitioners that tire act of bankruptcy does not depend upon the actual status of insolvency, as that status is fixed by the Bankruptcy Act, but upon the fact that a finding of insolvency is disclosed in the record of the State Court upon the basis of which a receiver was appointed; and that such finding cannot, after bankruptcy proceedings are begun, be recalled.

We cannot concur in this view of the law. The word “insolvency,” as used in the Bankruptcy Act, means insolvency within the meaning of the definition of that act. And though the same word be employed in the finding of a State Court to define a set of facts different from the facts intended to be defined by the word in the Bankruptcy Act, the State Court is not without power, by appropriate amendment, to so change its order that such order will set forth- the real facts on which the order was intended to act; for certainly a mere divergence of definition ought not to have the effect of making that an act of bankruptcy which in fact was not intended by the bankruptcy law to be an act of bankruptcy.

The petition is denied, and the order of the United States District Court of Indiana to reverse and revise which the petition is filed, is

Affirmed.