Opinion · Supreme Court of the United States
Armstrong, as Liquidator of Boysen & Company, v. Fernandez
Armstrong, as Liquidator of Boysen & Co., v. Fernandez, 208 U.S. 324 (1908)
- Type
- Opinion
- Court
- Supreme Court of the United States
- Jurisdiction
- Federal
- Date
- 1908-02-24
- Topic
- general
Mr. ’Chief Justice Fuller, after making the foregoing statement, delivered the opinion of the court. This is an appeal from a court of bankruptcy, “not within any organized circuit of the United States,” from a judgment adjudging Pascasio Alvarado; a bankrupt under §24a and § 25a of the bankruptcy act, and General Order XXXVI, 3. . The errors assigned in reference to the action of the referee and of the court, ip permitting the amendment, of the verification and other.amendments we regard as without merit. The power of a court of bankruptcy over amendments is undoubted and rests.'in the sound discretion of the court. We think there was no abuse of discretion here and. that the court was fully justified in its ordérs in 'reference to amendments.
Citator
UpLaw has not yet analyzed Armstrong, as Liquidator of Boysen & Company, v. Fernandez. The absence of a flag is not a finding that it is good law.
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ARMSTRONGv. FERNANDEZ,208 U.S. 324(1908)
28 S.Ct. 419
ARMSTRONG, AS LIQUIDATOR OF BOYSEN COMPANY,v. FERNANDEZ.
APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES FOR PORTO RICO.
No. 114.
Submitted January 17, 1908.
Decided February 24, 1908.
APPELLEES, residing in Juana Diaz, Porto Rico, filed on the
twenty-ninth day of March, A.D. 1906, their petition in
duplicate, praying that Pascasio Alvarado, also of Juana Diaz, be
adjudged a bankrupt. They averred that Alvarado had, for the
greater portion of six months next preceding the filing of the
petition, his principal place of business at Juana Diaz, and owed
debts to the amount of a thousand dollars, and that petitioners
were his creditors and had provable claims amounting in the
aggregate, in excess of securities held by them, to the sum of
five hundred dollars, the nature and amount of each of said
claims being specified.
The petition further stated "that said Pascasio Alvarado is
insolvent, and that within four months next preceding the date of
this petition the said Pascasio Alvarado committed an act of
bankruptcy, in that he did heretofore, to wit, on the
Page 325
twenty-eighth day of February, A.D. 1906, permit and suffer
several of his creditors, to wit, Alberto Armstronget al. to
secure and obtain an advantage through legal proceedings over his
creditors, in that he suffered and permitted the said ____ to
attach all of his properties and interest, real and personal, by
virtue of a writ offieri faciasissued out of the United States
District Court for Porto Rico on January 20, A.D. 1906, on a
judgment rendered in the above said court at the January Term,
A.D. 1906, in favor of the said Alberto Armstronget al. and
against the said Pascasio Alvarado. And your petitioners further
represent that within four months next preceding the date of this
petition, the said Pascasio Alvarado did commit another act of
bankruptcy in that he did, heretofore, to wit, on the fourteenth
day of March, 1906, in a letter addressed to Eduardo Fernandez,
one of the petitioners, admit his inability to pay his debts and
his willingness to be adjudged a bankrupt on that ground."
Alvarado was served with process March 30, returnable April
13, and on April 24 an order was made by the clerk of the court
reciting the absence of the judge from the division of the
district, and referring the petition to a referee in bankruptcy
in the city of Ponce and District of Porto Rico.
On the twenty-eighth of April counsel for Armstrong, as
liquidator of the firm of Boysen Company, creditors of
Alvarado, moved the referee to dismiss the petition because of
the defectiveness of verification. The alleged defect was because
the justice of the peace who took the jurat had omitted to attach
to his signature of "justice of the peace" the words "of Juana
Diaz, Porto Rico."
On the eighth of May the referee overruled a motion to amend
and dismissed the petition with costs. Afterwards he filed in the
clerk's office an order, dated July 6, stating that a motion for
rehearing had been granted, and setting aside the order of
dismissal, at the same time directing that the amendment might be
made.
Thereafter, July 16, 1906, motion was made by counsel for
Page 326
Armstrong and others in the District Court, before the judge
thereof, to set aside the order of the referee dated July 6,
whereupon the court set aside the clerk's order of reference and
ordered the case back for further proceedings. And then the court
denied the motion of counsel for Armstronget al., and gave the
petitioning creditors until the eighteenth to amend their
petition in the matter of the verification. On the seventeenth of
July the amendment was made by inserting after the words "justice
of the peace," at the close of the verification, the words "of
Juana Diaz, Puerto Rico;" and the justice of the peace so
certifying.
July 18, Armstrong's attorneys again moved to dismiss on the
ground that the petition did not make the averment that the
alleged bankrupt did not come within the excepted classes of
persons who might not be declared bankrupt. This motion was
denied by the court, and the petitioning creditors were allowed
to amend in the particular named.
The amendment was made so as to aver that Pascasio Alvarado
"is not a wage earner nor a person engaged chiefly in farming or
the tillage of the soil, and who is chiefly engaged in commercial
business."
July 19, Armstrong and others by answer denied "the
allegations of the involuntary petition that the alleged bankrupt
does not come within the excepted classes of the bankruptcy act
and that he has committed the acts of bankruptcy therein
alleged."
On the same day the court heard the testimony of the
petitioning creditors, Fernandezet al., "upon the issue raised
by said answer." At its conclusion counsel for opposing creditors
moved that the petition be dismissed, which motion was denied.
Then the court heard "the testimony offered by the opposing
creditors, and at the conclusion of all the testimony overrules
said answer and denial, and directs that a proper order of
adjudication and reference be prepared, to which counsel for
Armstronget al. except."
The order of adjudication was thereupon entered.
Page 327
An appeal to this court was prayed and allowed, and errors
assigned to the effect that the referee in bankruptcy erred in
granting a rehearing by his order of July 6; that error was
committed in refusing to annul that order of the referee; that
the court also erred in overruling the motion of July 18, to
dismiss the petition; and that the court erred in adjudicating
Alvarado a bankrupt.
The district judge filed findings of fact and conclusions of
law under General Order XXXVI as follows:
"On July 16, 1906 when the present incumbent of this bench
held his first term of court at Ponce in this district, the
above-entitled matter came on for hearing, and it developed that
the petition for involuntary bankruptcy had theretofore been duly
filed and sent out to the referee, who, it appears, had first
dismissed the petition for informality as to the verification
thereof, but thereafter rescinded his order in that regard and
permitted the petition to stand. On this state of affairs,
Armstrong Company, in open court, moved that the petition be
dismissed for improper verification, in accordance with the first
action of the referee. Other creditors resisted this motion. The
court thereupon entered an order recalling the matter from the
hands of the referee, and in open court permitted the
verificationnunc pro tuncto be corrected and the petition to
be considered as filed, as thus amended. Then the question as to
whether or not the defendant was a person `engaged chiefly in
agriculture or the tillage of the soil' was raised by Armstrong
Co., and on the decision of which would depend the right of the
court to declare him a bankrupt at all. On this question the
court gave the parties opportunity to procure evidence, and set
the case down for a succeeding day for that purpose, and did, at
the time fixed, hear evidence pro and con on the subject. From
the evidence thus adduced the following facts appear:
"That Pascasio Alvarado is now a feeble old man living at
Juana Diaz near said Ponce with his sons, one of whom conducts
his business, which it appears is being wound up;
Page 328
that for more than twenty-five years last past he has been
engaged in conducting a large mercantile business at said place,
and that he kept a stock of goods ranging from twenty-five
thousand dollars upwards, continuously, and was well known to the
wholesale merchants of Europe, and perhaps of the United States;
that during the last two years he has been, or at least his sons
for him have been, engaged in selling out the remainder of his
stock of goods and in endeavoring to collect the debts belonging
to the estate, in cash and in coffee and other products; that at
the time the business was put into liquidation and his son took
charge of it, and since, the estate was in possession, orquasi
possession, of several pieces of land under mortgage, which it
collected payments from in the way of portions of the coffee and
other crops raised, and perhaps the estate was the absolute owner
of some small portion of land itself, on which some coffee is
raised. Most of the evidence thus taken is transmitted herewith,
duly certified. The court, of course, had the benefit of the full
record of the case and of the arguments of counsel and statements
made in open court at the time.
"The court held on this evidence, that the defendant was not a
`wage earner or a person chiefly engaged in the tillage of the
soil,' but that he was, and is, a merchant, and that all the
debts he owes, were created as a merchant, and that he could,
therefore, be declared a bankrupt, and so held. From this action
of the court, Armstrong Co., who have some attachment or other
liens on some of his estate, not four months old at the time of
the filing of the petition, have appealed."
Neither the referee nor the court had any jurisdiction to reinstate the cause after the order of dismissal made by the referee on May 8, 1906, which was as authoritative and final as though made by the judge himself.Neustadterv.Chicago c.Co., 96 F. 830;In re T.L. Kelly Dry Goods Co., 102 F. 747;In re Rosenburg, 116 F. 402.Page 329
The court below should have granted the motion of appellant, made July 18, 1906, to dismiss the amended petition of appellees.
As evidence was taken on the first ground set out in the motion and the court found as a fact that the petition had been filed in duplicate and ordered its records amended accordingly, this court will not review that ground. The second ground of the motion, however, was well taken. While at the beginning one or two decisions leaned toward the position that the exception of the statute regarding the occupation of the alleged bankrupt need not be negatived in the petition, the great weight of later authorities is with our contention.In re Mero, 128 F. 630;In re Callison, 130 F. 987;In re Brett, 130 F. 981;In re White, 135 F. 199;Risev.Bordner, 140 F. 566;In re Taylor, 42 C. C.A. 1.
The court below erred in its determination of the issue raised by the answer of appellant to the creditors' petition. Three issues were made in appellant's answer:
Whether the bankrupt was within the exceptions of the statute, that is, was a wage-earner or a person engaged chiefly in farming or the tillage of the soil; whether he had committed an act of bankruptcy by permitting appellant to obtain an execution against him; and whether he had committed an act of bankruptcy by admitting his inability to pay his debts and his willingness to be adjudged a bankrupt.
Upon this issue it developed upon the petitioning creditors to prove the negative of the first proposition — and the affirmative of either the second or the third.
The burden of proof is on the petitioning creditors to prove the allegations of their petition.In re Pilger, 118 F. 206;In re McLaren, 125 F. 835;In re Doddy, JourdanCo., 127 F. 771;Jonesv.Burnham et al., 71 C. C.A. 240.
The allegations touching the second proposition were altogether insufficient to constitute an act of bankruptcy, even if proved, because not only must it be alleged that execution hasPage 330been issued against the bankrupt's property, but that it is within five days of sale thereunder, and the bankrupt has not yet vacated or discharged it.Seaboard Co. v.W.R. Trigg Co., 124 F. 75;In re Vastbinder, 126 F. 417.
There is neither finding nor evidence that the alleged bankrupt had committed either act of bankruptcy alleged or any act of bankruptcy whatever. In the absence of such proof, which it was the duty of petitioning creditors to furnish, there could have been but one proper finding, that Alvarado was not a bankrupt.
No counsel appeared for the appellees.
The errors assigned in reference to the action of the referee and of the court in permitting the amendment of the verification and other amendments we regard as without merit. The power of a court of bankruptcy over amendments is undoubted and rests in the sound discretion of the court. We think there was no abuse of discretion here and that the court was fully justified in its orders in reference to amendments.
Nor do we see any reason to question the conclusion of the District Court "that the defendant was not a `wage earner or a person chiefly engaged in the tillage of the soil,' but that he was, and is, a merchant, and that all the debts he owes were created as a merchant, and that he could therefore be declared a bankrupt."
The appellant Armstrong now contends, however, that the petitioning creditors "lost sight of every controversy except that as to the occupation of the bankrupt, and that the courtPage 331later also made the same error, as there is neither finding nor evidence that the alleged bankrupt had committed either act of bankruptcy alleged, or any act of bankruptcy whatever."
The acts alleged were that Alvarado permitted Armstrong to obtain an execution against him; and also that Alvarado admitted in a letter addressed to Fernandez "his inability to pay his debts and his willingness to be adjudged a bankrupt on that ground."
And the record shows that the court heard testimony on behalf of Fernandez and others, petitioning creditors, as to the commission of the acts of bankruptcy as well as to the occupation of the bankrupt. The court then denied Armstrong and others' motion to dismiss, and heard testimony on their behalf, and at the conclusion of all the testimony directed the order of adjudication. From that order of adjudication this appeal was prayed, but it nowhere appears that Armstrong and others objected to the want of proof of the acts of bankruptcy or asked any findings in respect thereto, or objected to the findings that were made for deficiencies in that regard. In other words, Armstrong and others permitted the findings to be made as they were, and now say that other findings should have been made in relation to proof of acts of bankruptcy, without having objected that they were not made, or that the findings as made were on that account fatal to the judgment. The presumption is that if such a suggestion had been made to the court, the alleged deficiencies, if really existing, could have been supplied and would have been supplied. But the record and the certificate of the judge leave no doubt that the petition as to acts of bankruptcy was sustained by the facts.
The last error assigned is that the District Court erred in finding from the evidence offered on July 19, 1906, "upon the issue between said petitioning creditors and these opposing creditors that said Pascasio Alvarado should be adjudged a bankrupt and in so adjudging him," and that, of course, was broad enough to cover any question involved upon the evidence;Page 332but we think that that was intended to cover the finding as to Alvarado's being a merchant and not a wage earner, etc., and therefore susceptible of being declared a bankrupt.
The findings of fact and conclusions of law made by the district judge for transmission to this court, under the general order in that regard, set forth, among other things, that, after the petition was amended, "Then the question as to whether or not the defendant was a person `engaged chiefly in agriculture or the tillage of the soil' was raised by Armstrong Co., and on the decision of which would depend the right of the court to declare him a bankrupt at all. On this question the court gave the parties opportunity to procure evidence, and set the case down for a succeeding day for that purpose, and did, at the time fixed, hear evidence pro and con on the subject." And from that evidence the court stated the facts which appeared, and his finding and conclusion that Alvarado was a merchant, etc.
It seems clear that the acts of bankruptcy had been previously determined as committed and that the case was only contested on the other point, and hence that this contention is an afterthought, which ought not to be entertained, let alone that from the findings that were made it is obvious enough that Alvarado was in liquidation and might properly be adjudged a bankrupt.Decree affirmed.Page 333