Court Opinion

ID: 8823584
Source: CourtListenerOpinion
Date Created: 2022-11-26 15:40:10.594199+00
Date Added: 2024-06-11T17:04:42.820129
License: Public Domain

BOURQUIN, District judge.
[1-3] In these involuntary proceedings in bankruptcy, there is but one issue, viz.: Were defendants not engaged chiefly in farming or tillage of the soil when they committed the act of bankruptcy counted upon? That is the vital time (In re Folkstad [D. C.] 199 Fed. 363; Harris v. Tapp [D. C.] 235 Fed. 918), ancl the burden is upon petitioners t,o establish that respondents are of those subject to be adjudged involuntary bankrupts.
The evidence is that in 1916 respondents entered into partnership lor the purpose of leasing and farming some thousands of acres of lands. At that time Martin was a farmer, and Beiseker cashier and manager of a small bank, of which he owned $1,000 or 5 per cent., of the capital stock, and from which he had a salary of $225 per month. They equipped the lands with all necessary and suitable machinery, and that and every year thereafter cultivated to various grains from 2,500 to 5,000 acres. Martin lived upon the lands and managed them, and Beiseker lived some 40 miles distant in the town of the bank, continued its cashier and manager until it closed, but visited the lands two or three times a week during the crop seasons, and exercised management and control over the lands and Martin. Beiseker financed the enterprise, and bought and sold for it. Obviously expenses were heavy and risks great.
Although not clear, it would seem there were failures of crops and accumulation of debts, and in 1920 Beiseker’s financing assumed an altitudinal aspect. Through his bank they floated $52,000 of notes, secured by 1,400 sheep, and $200,000 of bonds of a corporation by them then organized, and apparently falsely represented to own the leases, equipment, and farm operations aforesaid. This equipment on January 11, 1921, was by respondents mortgaged to the son-in-law of Beiseker’s brother, who was one of the organizers of said corporation, which as an alleged preference is the act of bankruptcy counted oh herein. December 14, 1920, the bank closed, and thereafter Beiseker had no occupation, but in connection with the farming operations aforesaid, the headquarters of which, before maintained by him in the bank, thereafter are maintained in the same town in the office of a land company for which he performs some service.
During the fall of 1920 and winter following, Beiseker continued his usual services to the farm opexations, including procuring and preparing seed for some 2,500 acres of grain sowed in the spring of 1921. He testified his salary from the bank was his support, but the farming operations were his chief activities, absorbed all his money and most of his time and attention, and were the basis of all his hopes; and in ihe main this is obvious. The case is within the circumstances that determine that men are engaged chiefly in farming or tillage of the soil (see In Re Brown, 253 Fed. 357, 165 C. C. A. 139), and accordingly such determination is made herein.
[4] Petitioners make some contention that in equity the corporation should be assumed to be the owners of the leases and equipment, and *1012hence that on January 11, 1921, when the act of bankruptcy was committed, respondents were at most mere wage-earners, and not engaged chiefly in farming. Be that as it may, however, it helps not petitioners’ case. Wage-eamersi cannot be adjudged involuntary bankrupts, and if the equipment was then the corporation’s, respondents’ mortgage of it did not diminish their estate available to creditors—was not a preference and act of bankruptcy. See Trust Co. v. Title & Trust Co., 229 U. S. 444, 33 Sup. Ct. 829, 57 L. Ed. 1268.
The proceedings are dismissed.