In re Wood

248 F. 246, 160 C.C.A. 324, 1918 U.S. App. LEXIS 1424
CourtCourt of Appeals for the Sixth Circuit
DecidedFebruary 12, 1918
DocketNo. 3066
StatusPublished
Cited by7 cases

This text of 248 F. 246 (In re Wood) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Wood, 248 F. 246, 160 C.C.A. 324, 1918 U.S. App. LEXIS 1424 (6th Cir. 1918).

Opinion

KNAPPEN, Circuit Judge.

January 26, 1916, involuntary proceedings in bankruptcy were instituted against the firm of McDaniel & Co. The partnership was adjudicated bankrupt and a trustee appointed over the partnership estate. Adjudication as to the individual members of the firm was not asked and was not had. About four months later involuntary proceedings were begun against Mitchell, a member of the partnership,' and he was adjudicated a bankrupt. At a creditors’ meeting, in the matter of Mitchell’s individual estate, held in the following January, the referee denied the motion of Mitchell’s creditors to proceed to elect a trustee for his estate, and ordered the consolidation of the individual estate with that of the partnership, appointed the trustee of the partnership estate trustee of the individual estate, and directed the turning over of the latter to such trustee. This order was reversed by the District Judge. Meanwhile, the administration of the partnership estate had proceeded, and before the making of the order just referred to a small dividend had been declared. The referee’s action, in connection with the dividend order, in awarding several hundred dollars compensation to the receiver and to the attorneys for petitioning creditors, for tire trustee, and for the receiver, was reversed by the District Judge. This proceeding is brought by the trustee, under section 24b of the Bankruptcy Act, to review both these orders of reversal.

[1-3] 1. The trustee challenges the jurisdiction of the District Judge to entertain either petition for review. As to the first petition, the contention is that under General Order in Bankruptcy No. 27 the petition for review must be in writing and filed with the referee, that such petition was not filed, and that its subsequent filing conferred no jurisdiction. This contention must be overruled, for in his opinion on motion to set aside the reversal of the referee’s order the District Judge states that, while in his first order he had given directions for the filing of petition in case one had not already been filed, it was ascertained that one had been duly filed, but had been misplaced. This statement is not- controverted by the record. Moreover, it there affirmatively appears that the petition for review was filed on the same date that the certificate thereunder bears, and on the day previous to the filing of that certificate; and even if the petition was filed only with the clerk (as it may have been), it was treated by the referee as filed with him, and was as effective as if first filed with that officer and later by him filed with the clerk.

As to the other petition for review the criticism is that it was not filed within ten days after the order sought to be reviewed. But there is no suggestion of local rule requiring the petition to be presented within ten days, and the District Judge expressly asserts the absence of such rule. In fact, however, the petition was filed on the tenth day after the entry of the order complained of; and the date of the entry, not the date the order bears, governs.

[249]*249[4,5] 2. As to the selection of trustee: The petition to adjudicate the individual partner bankrupt was a wholly separate and independent proceeding. Not only was it not entitled in the matter of the partnership estate, but it contained no mention even of the fact of such estate, or of the existence of a partnership. The order of appointment was entitled in the individual estate. When the question of appointing a trustee came up, the administration of the partnership estate had already proceeded for about eight months. The action of the District Judge in reversing the appointment made by the referee was based upon the proposition, stated in his opinion, that :

“There can be no question, that the individual liabilities largely exceed the individual assets, so that there is nothing in the individual estate for partnership creditors.”

This conclusion of fact is binding upon us, for in proceedings to revise under section 24b of the Bankruptcy Act we are limited to a review in matter of law, and cannot determine questions of fact involved in the finding or order sought to be reviewed, where there is any evidence to support them. Duryea Power Co. v. Sternbergh, 218 U. S. 299, 302, 31 Sup. Ct. 25, 54 L. Ed. 1047; In re Stewart (C. C. A. 6) 179 Fed. 222, 228, 102 C. C. A. 348; In re Holden (C. C. A. 6) 203 Fed. 229, 233, 121 C. C. A. 435. The record is not such as to permit the assumption of lack of evidence to support this statement. True, the opinion is not in form a finding of facts, such as contemplated by subdivision 2 of our rule 34 (202 Fed. xxi, 118 C. C. A. xxi); but petitioner asked no finding of facts, his petition to revise does not assert the absence of testimony or admission supporting the statement of the District Judge, nor is error in that respect asserted therein. The copy of bill in equity to set aside conveyances, accompanying the trustee’s application to set aside the District Judge’s order of reversal, is not enough to controvert the judge’s conclusion of fact. The trustee, under a petition to revise in matter of law only, is not thus in position to complain of the absence of formal finding of facts.

[8] It is well settled that, in administering the estate of a bankrupt partnership and its members, partnership creditors must first be paid out of the partnership assets, and separate creditors out of the separate assets, before either class of creditors can resort to the other estate. Francis v. McNeal, 228 U. S. 695, 700, 33 Sup. Ct. 701, 57 L. Ed. 1029, L. R. A. 1915E, 706; In re Telfer (C. C. A. 6) 184 Fed. 224, 231, 106 C. C. A. 366; International Corporation v. Cary (C. C. A. 6) 240 Fed. 101, 105, 153 C. C. A. 137.

[7] The important question upon this branch of the case thus is whether the bankruptcy court was, under the facts of this case, inflexibly bound, as matter of law, to appoint the trustee of the partnership estate trustee of the individual estate. The trustee contends that such appointment is compelled by the very terms of section 5 of the Bankruptcy Act, and, indeed, that under that section, and by the adjudication in the individual estate, the trustee of the partnership estate automatically became trustee of the individual estate. We are unable to agree with this contention. True, a partnership cannot ordinarily be insolvent unless all [250]*250the partners are (Francis v. McNeal, supra, 228 U. S. at pages 699-701, 33 Sup. Ct. 701, 57 L. Ed. 1029, L. R. A. 1915E, 706; Vaccaro v. Security Bank [C. C. A. 6] 103 Fed. 436, 442, 443, 43 C. C. A. 279); and it is not only settled that where a partnership is declared bankrupt on a ground involving its insolvency, although less than all of the individual members are declared bankrupt, the bankruptcy court has power to draw to itself and administer the property of the other members (Francis v. McNeal, supra, 228 U. S. at page 700, 33 Sup. Ct. 701, 57 L. Ed. 1029, L. R. A. 1915E, 706; Armstrong v. Fisher [C. C. A. 8] 224 Fed. 97, 99, 139 C. C. A. 653; Ft. Pitt, etc., Co. v. Diser [C. C. A. 6] 239 Fed. 443, 446, 447, 152 C. C. A.

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Bluebook (online)
248 F. 246, 160 C.C.A. 324, 1918 U.S. App. LEXIS 1424, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-wood-ca6-1918.