283 F. 404 | 7th Cir. | 1921
(after stating the facts as above).
The motion to dismiss this petition to review and revise is overruled.
(1) In the first paragraph of the complaint there is an appositive clause describing defendants as “co-partners trading as an alleged common law trust under the name of the Co-Operative Society of America,” and the prayer is that defendants, again described as co-partners, “be adjudicated to be bankrupts”; while in the second paragraph there is an averment of a false representation “that the alleged bankrupt was a going prosperous organization making a profit.” At the one point, the assault seems to be upon a plurality of named individuals; at the other, upon a single organization. What theory of liability the pleader had in mind it is impossible to discover from any statement of facts. If defendants were partners, a clear, direct, and unambiguous charge of the fact should have been made. What was meant by the adjective “alleged” in the phrase “an alleged common law trust”? If the alleged fact was the truth, if the only relationship between plaintiffs and defendants was that of beneficiaries and trustees of an express trust, wherein the trustees had full title and control and the beneficiaries had no title and no control, beyond appealing to a court to restrain waste and malfeasance, then the facts should have been pleaded, so that a demurrer could test the question whether the bankruptcy statute impinges upon the otherwise exclusive jurisdiction of equity over trusts.
This complaint, with respect to jurisdiction over defendants, is too indefinite to support an action in bankruptcy. Many of the possible inferences as to what the pleader intended are mutually destructive as contradictions; but neither defendants nor the court should be compelled to indulge in conjectures.
(2) Plaintiffs, in the second paragraph of their complaint, disclose that they are not creditors in the commercial sense of unpaid sellers or lenders. If they are creditors, they are so because they have causes of action on account of having been led by fraud into accepting contracts. Did they affirm or rescind? We are unable to learn from the complaint. If they affirmed, the measure of damages is the difference between what they received was actually worth and what it would have been worth, but for the fraud. There is no averment of the amount of • that difference. If they rescinded, then they should have tendered back what they have received, unless it was utterly valueless, and thereupon they would have rights of action for what they paid. There is no averment of what they paid. At one point they allege that what they received was “of absolutely no value.” At another they say they received proportionate interests in securities “of the value of less than $20,000.”
Another defect, at least as grievous, is plaintiffs’ failure to connect defendants with the fraud and to aver that plaintiffs believed and acted on the false representations.
This complaint, with respect to plaintiffs’ capacity to sue, is insufficient.
(3) In the last paragraph preceding the prayer, the complaint charges that defendants committed an act of bankruptcy by transferring a sum of money to one of the defendants without consideration. Taking the complaint as being against partners, transference of partnership money to one of the partners (without consideration, and therefore to be held as partnership assets) could not be an act of bankruptcy.
Our conclusion is that the District Court erred in sustaining the legal sufficiency of the complaint.
The petition to review and revise is sustained, and the District Court is directed to set aside the order of reference, and to sustain defendants’ motion to dismiss the complaint (as a demurrer thereto), with leave to the court to fix time and terms of filing an amended complaint.
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