223 F. 501 | 9th Cir. | 1915
On September 8, 1914, an involuntary petition in bankruptcy was filed by certain alleged creditors (the respondents herein) of the Equal Rights Company, Incorporated, a corporation, wherein they prayecl that such corporation be adjudged a bankrupt. Thereafter R. R. Sabin, the petitioner herein, having asked for and obtained leave to intervene as a creditor in the bankruptcy proceedings, filed a motion to dismiss the petition, which motion was sustained. On September 26, 1914, by permission of the court’ below, the petitioning creditors filed an amended petition, and, the petitioner herein having interposed a motion to dismiss the petition as amended, the motion was sustained. Thereafter, and on the 26th day of October, 1914, a second amended petition was filed by the petitioning creditors, -and it also, upon motion of the petitioner herein, was dismissed on November 16, 1914; the court in its order of dismissal granting the petitioning creditors five days within which to file a third amended petition. On Novenjber 23, 1914 (two days after the expiration of the time thus granted), the petitioning creditors moved the court for further time within which to file the third amended petition (the court at that time being occupied by a judge other than the one who had granted the former orders in the proceeding); and the petitioning creditors, pursuant to such request, were granted to and including the 23d day of November, 1914, within which to file the third amended petition. The third amended petition, denominated by the petitioning creditors as “second amended petition,” was, however, not filed until November 25, 1914, two days after the expiration of the time as last extended by the court. On December 3, 1914, the petitioner herein filed a motion to dismiss the third amended petition of the petitioning creditors, which motion was denied. The present petition for revision has been filed for the purpose of having this court review, in matters of law, the order of the court below denying the petitioner’s motion to dismiss the third amended petition.
The grounds upon which the petition for review are based are four:
The whole matter of permitting or refusing amendments in bankruptcy proceedings in the federal courts rests entirely in the sound judicial discretion of the lower court, and, in accordance with the general rule, its decision will not be interfered with by a reviewing court, unless abuse of discretion has been shown. Pittsburgh Laundry Supply Co. v. Imperial Laundry Co., 154 Fed. 662, 83 C. C. A. 486; Loveland on Bankruptcy, vol. 1, p. 421. In the present case we cannot say that no good and sufficient reason was presented to the court below for permitting the filing of the amendment after the expiration of the time fixed for that purpose. It is sufficient that no abuse of discretion has been shown.
It is alleged in the amended petition that the Equal Rights Company, Incorporated, is a corporation duly organized and existing under and by virtue of the laws of the state of Oregon, with its principal place
“Any natural person, except a wage-earner or a person engaged chiefly in farming or the tillage of the soil, any unincorporated company, and any monej'ed, business, or commercial corporation, except a municipal, railroad, insurance, or banking corporation, owing debts to the amount of one thousand dollars or over, may he adjudged an1 involuntary bankrupt.”
The respondents in their petition having negatived the exceptions set forth in the above section, and having alleged that the company was engaged in the “general retail merchandise business,” the question is: Was it necessary that they also allege that the corporation sought to be adjudged bankrupt was a “moneyed, business, or commercial” corporation? Counsel for the petitioner refer us to no decision, and our own research reveals none, in which it has been held that the character of the business of an alleged bankrupt corporation must be set forth in the phraseology of the bankruptcy act. While such would undoubtedly be the better practice, we think that any language, the fair and reasonable import of which is that the alleged bankrupt is a moneyed, or a business, or a commercial corporation, is sufficient. The allegation in the present petition that the alleged bankrupt is engaged in the “general retail merchandise business” undoubtedly brings the corporation within the class of “business” corporations which under the act may be adjudged involuntary bankrupts. To place upon the language used any other construction would be* hypercritical.
The claim to which exception is taken is as follows:
“Dryer, Bollam & Co., a copartnership, money due on open account from Equal Eights Company, Incorporated, a corporation, upon a stated account rendered July 2, 1914, $80.00.”
The specific objection to the claim seems to be that it is not set forth with “sufficient consistency and particularity required in pleading.” The lack of “sufficient consistency” ■ is claimed to be in the use of the terms “open account” and “stated account.” An open account is an account in which some item is not settled between the parties — a running acqount. A stated account is an account presented by the creditor and assented to as correct by the debtor. Funk & Wagnall’s Standard Dictionary of the English Language. But there is no inconsistency in the terms, as used in the claim above set forth. The language employed is not entirely free from ambiguity, but what the pleader un
The Supreme Court of the United States in 1898, in pursuance of the power conferred by the Constitution of the United States and particularly by the act of Congress approved July 1, 1898, adopted and established certain general orders and forms in bankruptcy. These orders and forms were published in 172 U. S. 653 — 723 (18 Sup. Ct. iv-xlviii, and 89 Fed. xiv, 32 C. C. A. xxxvii). They have the force and effect of law. In re Gerber, 26 Am. Bankr. Rep. 608, 617, 186 Fed. 693, 700, 108 C. C. A. 511. In Order No. XXXVIII it is provided that:
“The several forms annexed to these general orders shall be observed and used, with such alterations as may be necessary to suit the circumstances of any particular ease.”
Form No. 1 (89 Fed. xv, 32 C. C. A. xxxix) requires a verification to a debtor’s petition (voluntary bankruptcy) in the following form:
“I,----, the petitioning debtor mentioned and described in the foregoing petition, do hereby make solemn oath that the statements contained therein are true according to the best of my knowledge, information, and belief.”
Form No. 3 (89 Fed. xxviii, 32 C. C. A. lii) requires a verification to a 'creditors’ petition (involuntary bankruptcy) in the following form:
“-! being three of the petitioners above named, do hereby make solemn oath that the statements contained in the foregoing petition, subscribed by them, are true.”
We must assume that the difference in the forms of verification for the debtor’s and creditors’ petition had a purpose, and that a positive statement of the facts in a debtor’s petition is not required, but may he made upon the best of the petitioner’s knowledge, information, and belief. The allegations of the form of petition .show why the verification is in this form. The debtor admits his insolvency and proposes to surrender his property for the benefit of his creditors, tie is required to attach a Schedule A, which is to contain a full and true statement of all his debts and (so far as possible to ascertain) tlie names and places of residence of his creditors, and in Schedule B to he attached there must be set forth an accurate inventory of all his property, both real and personal. It is evident that it may often occur that items of lilis character can only be set forth by the debtor on information and belief, and a more positive statement is not required. But with respect to a creditors’ petition, the situation-is different, and the difference is important. In this petition the statement must show the principal place of business of the debtor; that he owes debts to the amount of $1,000; that the petitioners are creditors having provable claims
[-6] Although a verification of a petition in involuntary bankruptcy upon belief is insufficient, nevertheless the defect is not jurisdictional and may be cured by amendment. The infirmity will not work a dismissal of the petition.
The order will therefore be that the petitioning creditors have leave to verify the petition in accordance with the prescribed form within ten days after notice of. this order. If not so verified, the order of the lower court will be reversed, and the creditors’ petition dismissed. Costs on this petition in favor of the petitioner.