In re the City Contracting & Building Co.

4 D. Haw. 145
CourtDistrict Court, D. Hawaii
DecidedMay 15, 1913
StatusPublished

This text of 4 D. Haw. 145 (In re the City Contracting & Building Co.) is published on Counsel Stack Legal Research, covering District Court, D. Hawaii primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re the City Contracting & Building Co., 4 D. Haw. 145 (D. Haw. 1913).

Opinion

Clemons, J.

On the petition of Wong Hong Yuen, a member of the City Contracting & Building Company, a copartnership, praying “that the said firm may be adjudged . . . to be bankrupts” (as concludes Form 2 adopted by the Supreme Court: 172 U. S. 681, 89 Fed. xxvii.), this co-partnership, composed of the petitioning partner and the respondents Chung Ping, Wong Gock, Au Hang Hing, Au Tin Kwai, Lau Chung, and Au Ne Chong, was adjudged a bankrupt. The respondents had all appeared and admitted service, and thereafter upon the day set for hearing, they all, excepting Au Hang Hing, expressly consented to the adjudication of the firm as prayed. Au Hang Hing entered no demurrer, plea, answer, motion, or objection, but “stood mute,” except to state in open court that eight days before the petition was filed he had withdrawn from the firm by sale of his interest to the copartner Wong Gock. See Black, Law Dic., 2d ed., 818, tit. “nihil dicit;” Buena Vista Freestone. Co. v. Parrish, 34 W. Va. 652, 654, 12 S. E. 817, 818; Wilbur v. Maynard, 6 Colo. 483, 485; Falken v. Housatonic R. Co., 63 Conn. 258, 27 Atl. 1117, 1118-1119. See, also, In re Solomon & Carvel, 163 Fed. 140, 20 Am. B. R. 488, 489; Brandenburg, Bankruptcy, 3d ed., sec. 133. The adjudica[147]*147tion having been ordered, the firm members, with the exception of Wong Hong Yuen, Au Hang Hing and Wong Gock, by their attorneys in open court, asked to be adjudged bankrupts as individuals.

Subsequently, upon motion of certain creditors and after due notice, the firm members were all ordered to file their individual schedules of assets and liabilities, — in the court’s reliance upon the authorities of Collier, Bankruptcy, 9th ed., 1059, par. viii., and 3 Remington, Bankruptcy, sec. 47714-The petitioning partner complied with this order. And the respondent Chung Ping has since filed schedules, but they do not conform with the full requirements of Form 1 established by the Supreme Court, 172 U. S. 668-679, 89 Fed. xvi-xxvii., — being merely a bare list of certain chattels, on the one hand, and on the other of certain debts whose nature is not specified. And the respondents Au Tin Kwai and Au Ne Chong have filed affidavits of “no [individual] assets excepting property exempt” by law, but no statement as to their individual liabilities. The respondents Wong Gock and Au Hang Hing have yet filed no schedules.

[1] Although not strictly required by this opinion, in view of the ruling presently to appear, the opportunity is taken to declare, that this court will countenance nothing but a strict and full compliance with the statute; rules and practice with regard to schedules. The Supreme Court in the forms prescribed has seen fit to provide that these sworn schedules shall give detailed information on definite points. A bare statement of assets and liabilities is not enough: the party must go through every item of the schedules and show the facts relating thereto, — nothing is to be left to inference. We are not to accept, e. g., his short answer, that he has nothing and owes nothing, but his verification affidavit must-cover every item which the Supreme Court has considered of enough importance to designate in these specific forms.

[2a] As to the delinquent respondents Wong Gock and Au Hang Hing, it being evident that they, who were in court [148]*148and, on at least one occasion, were expressly requested to file their schedules, and who, on special motion-of creditors for an order compelling them to do so, were thereafter served with a copy of the court’s express order to that end, are not disposed to comply with the order, their attitude is assumed to be founded on the advice of there being no lawful authority for an order directing a nón-bankrupt partner to file schedules in a proceeding in bankruptcy of his firm.' Inasmuch as there are authorities directly or impliedly supporting this position, the order under discussion contrary to these authorities, and made on an uncóntested presentation of the motion, calls fairly for reconsideration. And, also, any decision on so mooted a point should have some discussion, as was not then had, of the reasons which' induced it.

This is one phase of the constantly recurring and unsettled question of the status of the firm members in a partnership bankruptcy, and of the intent of Congress in changing the status of the firm itself from an association not distinct from its component members to an entity entirely separate and distinct. •

Although, by nearly unanimous opinion, the firm is held to be an entity under the act of 1898, yet the administration of the act in pursuance of the entity doctrine is by no means established, and by no means clear. Indeed the confusion of authorities is so persistent and in various phases the breach so widening, even between judges of the same court (see, e. g., In re Bertenshaw, 157 Fed. 363, 19 Am. B. R. 577, 17 L. R. A., N. S., 886), as to call for legislative remedy.

And it is, specially, because of this variance of authorities on the question whether in cases of partnership bankruptcy the estates of the firm members are. necessarily drawn into the administration, and, so, whether the solvent, or non-bankrupt, member can be compelled to file schedules of individual assets and liabilities, that it becomes worth while to state the reasons leading to my own matured conclusion: [149]*149for the power, if any, of . the court to require the filing of schedules of individual members, rests, it would seem, upon the very same foundation as the right to draw the estate of the partner , into the administration, at all.

There is no direct provision of the statute, and as I am now satisfied, no warrant even for., an inference, that the bankruptcy court has any such power, desirable though it may be. And my conclusion has not been reached without recognition of the fact that there are provisions of section 5 of the act,- relating to the title “partners,” e. g., clauses “d,” “e,” “f,” and “g,” 30 Stat. 547-548, which are well adapted to the administration of the estates of all the individual firm members, but which for want of clear authorization cannot be used to that particular end without some regard to the condition of the estates of those members as to solvency; nor have I failed to note that , there are some grounds of criticism of the leading judicial authority to sup-support my conclusion, the majority opinion by Circuit Judge Sanborn in the matter of Bertenshaw, supra.

Thus, that opinion errs in resting its conclusion to. any degree on plausible, and in any event not controlling, considerations of policy: see 157 Fed. 367-368, 19 Am. B. R. 582-583; for it makes much too good a case for the “shrewd and able” solvent partner, — in spite of whose shrewdness and ability, however, his firm has fallen into insolvency. When a partnership has reached this point, — when its creditors are compelled to go begging for their money, — it is useless to urge any such argument as, “Why should not the solvent partner administer the partnership property and his own and pay the partnership debts free from the delay and expense of a trustee?” 157 Fed. 368, 19 Am. B. R. 583. For the solvent partner has, with his fellow partners, already had the opportunity to pay the firm debts, as it may be said to have been in a sense his legal duty to do, the firm obligation being by the law of partnership his as well as that .of the firm and of the other partners. But in spite of [150]

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