In re Disney

219 F. 294, 1915 U.S. Dist. LEXIS 1753
CourtDistrict Court, D. Maryland
DecidedJanuary 6, 1915
StatusPublished
Cited by9 cases

This text of 219 F. 294 (In re Disney) is published on Counsel Stack Legal Research, covering District Court, D. Maryland primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Disney, 219 F. 294, 1915 U.S. Dist. LEXIS 1753 (D. Md. 1915).

Opinion

ROSE, District Judge.

John W. and James F. Disney are brothers. They have always lived together upon a farm in Anne Arundel county. During all their adult life they have been engaged in farming. For many years they have carried on their agricultural operations as partners under the firm name of J. W. Disney & Sons. Each of them as individuals owned some of the land cultivated by the partnership, while the rest belonged to the firm. They estimate that the gross annual value of the crops sold by them varied from $13,000 to $20,000. These figures, in view of the tillable acreage employed, seem large, and probably are liberal; but as they were principally engaged in the production of fruits and vegetables, the value of their output and the cost of raising and marketing it were both high. In winter time, for the purpose of affording employment for their farm hands, they cut and dealt in cordwood. It was a small business. They estimate that it brought in not more than about $500 a year. In 1908 they decided to go into canning. They erected a canning factory on their place, and equipped it at a cost of some $8,000. In the years from 1909 to 1913, both inclusive, they annually put up and sold somewhere between $20,000 and $30,000 of canned goods. A considerable portion of the fruits and vegetables canned by them were raised on their places, but from a half to two-thirds were purchased from other people.

From a financial standpoint their canning venture was not successful. They lost money by it. In 1912, and in some preceding years, they purchased their cans from one of the petitioning creditors. They have not yet paid for them. In the fall of 1913 they sought a renewal of the notes they had given for these cans. At that time the creditor advised them not to re-engage in the canning business. Perhaps the Disneys supposed that this advice was in part inspired by the fact that they had purchased their 1913 cans elsewhere. At all events they appear to have decided not to follow it.

In July, 1914, they made arrangements with the Southern Can Company, from whom in the preceding year they had obtained their cans, to supply their requirements for the packing season of 1914. Early in August, in accordance with their direction it shipped them a car load of cans. About the same time they purchased solder and coal. The war in Europe had then broken out. Crop prospects on their places and in their neighborhood were poor. Their financial difficulties were [296]*296fast coming to a head. They changed their minds; and determined not to do any canning that year. They asked the Southern Can Company to take back its cans. It did so. In a similar fashion they disposed of their coal and their solder.

Arthur A. Downs is a neighbor and friend of theirs. He has also been farming all his life. In July, 1912, he and the Disneys entered into an agreement by which he was to be a partner in the canning business carried on by them. The style of the firm was to remain unchanged. They were to contribute the canning house and other buildings, and he was to put in $2,000. He was to have one-third of the profits and to bear one-third of the losses. At the end of the season he had the option of withdrawing his $2,000, if he wished. He was introduced to many persons having dealings with the firm as one of its partners. He never put in $2,000 of his own money; but, together with the Disneys, he either signed or indorsed notes to the extent of $9,500, most of the proceeds of which went into the canning business, although some of it may have been expended on the Disney farms. There were no profits in 1912, and he received none. There were losses; but, except in so far as the notes upon which he became liable helped to defray them, they have not been paid by him, if they have been paid at all. Neither he nor anybody else ever gave any notice to the creditors of the firm or other persons dealing with it that he had retired from it. As late as the summer of 1914 he on some occasions at least acted in such a way as would naturally lead persons who knew he had once been a partner to suppose he still was. When examined as a witness in this case, he seemed to be very uncertain in his own mind whether he was or was not a partner, and whether, if there had been any profits in 1914, he would or would not have been entitled to share in them. Many of the debts, contracted when he was a partner, are still unpaid. The partnership of which he was once a member is, therefore, still subject to adjudication in bankruptcy. Bankr. Act July 1, 1898, c. 541, § 5a, 30 Stat. 547 (Comp. St. 1913, § 9589).

During August, 1914, Downs and the Disneys, together with some of their relatives, gave two judgment notes to the Farmers’ National Bank of Annapolis, one for $8,000, and one for $1,500. On the 6th of that month the bank caused a confessed judgment to be entered on the larger note, and on the 19th on the smaller, for a sum aggregating, with attorney’s fees and costs, $9,709.50. At various other dates during the same month it and the Annapolis Banking & Trust Company obtained like judgments upon similar notes against the Disneys, but not against Downs, for the aggregate sum of $2,158.60. Almost all of the property of the debtors was in the form of real estate, upon which these’ judgments at once became liens. On the 30th of October, 1914, Downs made a general assignment for the benefit of his creditors, and on the 11th of November the Disneys did the like.

On the 5th of December the John Boyle Company, which had sold them cans in 1912, the Simpson & Doeller Company, from which they had purchased labels in 1913, the Patuxent Bank of Laurel, and the [297]*297Citizens’ National Bank of the same place, which had lent them money, as the banks understood, for their canning operations, filed a petition to have them adjudicated involuntary bankrupts. They owe the petitioning creditors some $11,500. The indebtedness of the firm due to other persons than the judgment creditors already mentioned, or to those uniting in the petition, amounts to some $7,000 or $8,000 more, so that the partnership owes in all about $30,000. Practically all of this indebtedness was contracted in the course of the canning business. It is not likely that as farmers they either would have sought or could have secured so extensive a line of credit. They resist adjudication on the ground that they are principally engaged in farming.

The substantial contest is, of course, not between them and the petitioning creditors, but between the latter and those who were fortunate enough to obtain judgments. All or nearly all the money or money’s worth that came from either set went into the canning business. If they are not adjudged bankrupts, the holders of judgments will get somewhere between 75 and 100 cents on the dollar, and the other creditors nothing. It does not appear that the debtors have even any sentimental interest in choosing among their creditors, for none of their relatives or associates are among those who have obtained judgments.

It may be safely assumed that Congress had no wish to facilitate preferences among a farmer’s banking or mercantile creditors. There were in its judgment, however, reasons which in the overwhelming majority of cases made it inexpedient that farmers be subject to the possibility of involuntary bankruptcy, although, of course, there would be instances in which the denial to creditors of the right to institute bankruptcy proceedings against a farmer would work grave injustice to them and be of no benefit to him.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Jenkins v. Ray E. Friedman & Co.
663 F.2d 184 (Eighth Circuit, 1981)
In Re Blanton Smith Corp.
7 B.R. 410 (M.D. Tennessee, 1980)
Kaufman-Brown Potato Co. v. Long
182 F.2d 594 (Ninth Circuit, 1950)
In re Inman
57 F.2d 595 (D. Wyoming, 1932)
In Re MacKlem
22 F.2d 426 (D. Maryland, 1927)
In re Brown
284 F. 899 (E.D. Missouri, 1922)
In re Doroski
271 F. 8 (E.D. New York, 1921)
Brown v. W. H. Kenworthy & Son
253 F. 357 (Ninth Circuit, 1918)

Cite This Page — Counsel Stack

Bluebook (online)
219 F. 294, 1915 U.S. Dist. LEXIS 1753, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-disney-mdd-1915.