In re Black Diamond Copper Mining Co.
In re Black Diamond Copper Mining Co.
Opinion of the Court
On November 25, 1904, the California Yigorit Powder Company, Harper & Reynolds Company, and F. W. Braun Company, filed a petition in bankruptcy against The Black Diamond Copper Mining Company, a corporation. Several acts of bankruptcy were alleged. Summons was duly issued and served, and December 10, 1904, fixed as the return day. On the return day counsel entered appearance for the company and secured from the court an order granting thirty days’ extension of time in which to plead. No answer having been filed within this extended time, the court, on January 23, 1905, further extended the time to plead until March 1, 1905. No answer was filed within the extended time, nor has any answer ever been filed. It appears in the minute entries in the record that on April 3, 1905, counsel for the petitioners and for the bankrupt appeared before the court, and the court heard argument upon some matter, the nature of which is not disclosed, and continued the matter for the term. On May 9,1905, it similarly appears that the testimony of two witnesses was taken. The record does not disclose the nature of the testimony taken. The matter was then continued to May 11th. No action was taken on May 11th, and on May 18th the minutes recite that the case was continued by consent for a further hearing on May 31, 1905. On June 1, 1905, the appellants, Soto Bros. & Renaud, copartners, filed a petition setting forth the same acts of bankruptcy contained in the original petition, that they are creditors, and prayed leave to join in the original petition, and that the respondent company be adjudged a bankrupt. On June 2, 1905, the copper company filed what is denominated a
The question first presented is whether the court erred in refusing to adjudicate the copper company a bankrupt and in dismissing the petitions. We are not aided in this investigation by any brief on behalf of the appellee. It is alleged by appellant, and' it also appears from certain papers accompanying the very imperfect record in this case, that instead of filing an answer to the original petition the copper company confined itself to compromising the claims of the creditors, and that the various extensions of time within which to plead were secured with that end in view; that among those with whom settlements were effected were the original petitioning creditors. The action which the appellee attempted is what is sometimes termed an “informal composition.” Such compositions are subject to the rights of any creditor who may appear and present his claim. In re Lockwood, (D. C.) 104 Fed. 794.
It is first to be observed that by the plain provision of the Bankruptcy Act appellants had a right to join in the original petition. Section 59 (f) reads: “Creditors, other than
The record does not disclose upon what point testimony was taken, but we cannot perceive how any testimony could be pertinent, as no issue whatever was raised by the pleadings. While no formal request to withdraw or to dismiss on behalf of the original petitioners is found in the record, it is apparent that such a request was made verbally to the court, and that the court was of the opinion that they had that right, and that, there being but one other creditor left in court and no allegation that the creditors were less than twelve in number, it was compelled to make the order of dismissal. We are of opinion that the trial court was mistaken in this view of the law. Under the authorities it is probably the duty of the court to dismiss a petition upon the
Appellants also complained of the order made allowing a fee to the attorney for the petitioning creditors, the objection being that since they did not secure an adjudication' there is no reason why the bankrupt’s estate should be depleted at the expense of the creditors who do desire an adjudication. The authority of the court to allow an attorney’s fee to the petitioning creditors is found in section 64 (b), which provides: “The debts to have priority, except as herein provided, and to be paid in full out of bankrupt estates, and the order of payment shall be . . . (3) The cost of administration, including . . . One reasonable attorney’s fee for the professional services actually rendered, irrespective of the number of attorneys employed, to the petitioning creditors in involuntary cases.” Act July 1, 1898, c. 541, 30 Stats. 563, (U. S. Comp. Stats. 1901, p. 3447). We have found no ease in which a fee was allowed an attorney for the petitioning creditors prior to adjudication. The provision of law for a fee to the attorney presupposes a prior adjudication, as it is included as a cost of administration of the bankrupt’s estate. It seems too clear for argument that a court may not administer the estate until an adjudication of bankruptcy is made.
The orders complained of are set aside, and the case remanded to the court below, with directions to adjudicate the copper company a bankrupt, and to proceed with the administration of its estate.
Reference
- Full Case Name
- In the Matter of THE BLACK DIAMOND COPPER MINING COMPANY, a Corporation, in Bankruptcy. SOTO BROS. & RENAUD
- Cited By
- 2 cases
- Status
- Published
- Syllabus
- 1. Bankruptcy — Compromise with Petitioning Creditors — Bights op Creditors Subsequently Appearing. — An arrangement made by a debtor and creditors in a petition in involuntary bankruptcy whereby claims of the creditors are compromised, sometimes termed an “informal composition,” is subject to the rights of any creditor who may appear and present his claim. 2. Same — Involuntary — Petitioning Creditors — Who May Join— Bankruptcy Act, July 1, 1898, c. 541, Sec. 59 (f), 30 Stats. 562 (U. S. Comp Stats. 1901, P. 3445), Construed. — Section 59 (f), supra, expressly provides that creditors other than the original petitioners may join in the original petition in involuntary bankruptcy. 3. Same — Adjudication—Duty op Court — Dismissal — Bankruptcy Act, July 1, 1898, Sec. 18 (b), as Amended, Act Feb. 5, 1903, c. 487, 32 Stats. 798 [U. S. Comp. Stats. Supp. 1905, p. 685], Sec 18 (e), c. 541, 30 Stats 551 [If. S. Comp. Stats. 1901, p. 3429], Sec. 18 (f) Construed. — Under section 18 (b), supra, as amended, providing that the bankrupt may appear to plead to the petition in involuntary bankruptcy within five days after the return day; section 18 (e), supra, providing that if, on the last day within which pleadings may be filed, none are filed, the judge shall on the next day make the adjudication or dismiss the proceeding; and section 18 (f), supra, providing that if the judge be absent on the next day after the last day on which pleadings may be filed, and none have been filed, the clerk shall refer the case to a referee, — where a petition in involuntary bankruptcy set forth acts of bankruptcy, and no pleadings were filed by the bankrupt within the time fixed by law, nor within further time granted by the court, it was the duty of the court to adjudicate the debtor a bankrupt, and a dismissal as against the objection of a creditor seeking to join in the petition is error. 4. Same — Dismissal op Proceedings — When not Permissible. — A creditor who has joined in a petition in involuntary bankruptcy proceedings may not effect a settlement with the bankrupt and then withdraw, and thus destroy the jurisdiction of the court. 5. Same — Dismissal—Notice—Necessity—Bankruptcy Act, July 1, 1898, c. 541, Secs. 58 (a), 59 (g), 30 Stats. 561, 562 (U. S. Comp. Stats. 1901, pp. 3443, 3445), Construed. — An order dismissing-a petition in involuntary bankruptcy without complying with the provisions of sections 58 (a) and 59 (g), supra, requiring that at least ten days’ notice shall be given all creditors before an involuntary petition shall be dismissed, by the petitioners, or for want of prosecution, or by consent of parties, is invalid. 6. Same —• Attorney’s Fees — When Allowable — Bankruptcy Act, July 1, 1898, c. 541, Sec. 64 (b), 30 Stats. 563 (U. S. Comp. Stats. 1901, p. 3447), Construed. — Under section 64 (b), supra, fixing the priority of debts, providing for the payment of the cost of administration, and including therein one reasonable attorney’s foe for the professional services actually rendered, irrespective of the number of attorneys employed by the petitioners in involuntary eases, an allowance of an attorney’s fee for the attorney for creditors in a petition in involuntary bankruptcy, where no adjudication of bankruptcy is made, is unauthorized. [Motion for Behearing, April 9, 1906. Appeal U. S. C. C., May 12,1906.]