Court Opinion

ID: 8628631
Source: CourtListenerOpinion
Date Created: 2022-11-24 19:34:03.521601+00
Date Added: 2024-06-11T16:55:41.650916
License: Public Domain

KETCHUM, District Judge.
Exceptions first and second are sustained. The bankrupt law provides that a debtor upon certain conditions may be adjudicated a bankrupt on the petition of one or more of his creditors, who shall constitute one-fourth thereof, at least, in number, and the aggregate of whose debt provable under the, act shall amount to at least one-thud of all the debts so provable. And in computing the number of creditors aforesaid, who shall join in the petition, creditors whose respective debts do not exceed two hundred and fifty dollars shall not be reckoned. If there are no creditors whose debts shall exceed the sum of two hundred and fifty dollars, or if the requisite number have not joined in the petition, then those having debts of less amount shall be reckoned for the purpose aforesaid. In this case there are four creditors whose debts exceed two hundred and fifty dollars, but are not equal to all the debts provable. And there is in the petition one creditor whose debt exceeds two hundred and fifty dollars, but is not equal to one-third of the provable debts.
There are. altogether, large and small, sixty creditors on the list, but only twelve — one two hundred and fifty dollar creditor, and eleven having debts of less amount, have joined in the petition. These twelve creditors represent one-third of the amount of provable debts. It is conceded that, in any case, the aggregate of provable debts held by the petitioner must be equal to one-third of all the debts provable against the debtor. In this case there is but one petitioning creditor whose debt exceeds two hundred and fifty dollars. Of course he is one-fourtli of the creditors holding debts exceeding two hundred and fifty dollars, but his debt is not equal to one-thud of all the provable debts. Then, according to the act, we may count those having debts less than two hundred and fifty dollars — not solely to get one-third of the amount of the debts provable, but for the purpose aforesaid. What purpose aforesaid? The only purpose of any counting or computation is to determine if one-fourth in number of creditors holding one-third in amount of the provable debts have joined in the petition. Both in the two hundred and fifty dollar limitation in the clause, “computing the number of creditors aforesaid," and in the provision for counting those having debts of less amount “for the purpose aforesaid,” the “aforesaid” relates directly back to the primary requirement of the act, one-fourth in number and one-third in amount, and so far as the primary requirement of the statute is modified by the two hundred and fifty dollar provision, the modification relates directly to numbers, and only incidentally to the aggregate amount of provable debts. But the register assumes that it matters not that one-fourth in num- • ber of the two hundred and fifty dollar creditors who have joined in the petition do not hold one-third of the provable debts, and that if one-fourth of the two hundred and' fifty dollar creditors have joined in the petition, they are to be taken as the one-fourth of the creditors contemplated by the act in all cases, and that the only purpose of considering creditors having debts of less iimount, is to secure the one-third of the aggregate of the provable debts without reference to the number who hold them. As in this case one single two hundred and fifty dollar creditor, who with his whole class, -on the basis of two hundred and fifty dollars, amounts to nothing for want of the required; amount of debts, is given a power equal, numerically, to one-fourth of any possible number of creditors, if, under this deadheading construction, small debts enough, together with this one two hundred and fifty dollar creditor’s debt, can be found in the petition to make an aggregate of one-third of the provable debts, although the whole number of petitioning creditors who hold the one-third do not equal one-fourth of the creditors. In this case the debts in the petition are not held by one-fourth or by any number of two hundred and fifty dollar creditors. Nor are they held by one-fourth of all the creditors. There are debts enough, but not the statutory number of creditors representing them. Yet we have a quorum reported without one-fourth of the two hundred and fifty dollar creditors holding one-third of the provable debts, or one-fourth of the creditors holding one-third of the provable debts joining in the petition. All the debts, large and small, in the petition, amount to one-third of the provable debt,but all the petitioning creditors, large and small, do not amount to one-fourth of the creditors. The one two hundred and fifty dollar creditor is made equal to one-fourth of all the creditors, though he may not hold one fiftieth part of the provable debts. I cannot discover how this one creditor gets this transcendent power. The only purpose-*574of the two hundred and fifty dollar limitation is to obviate the necessity for getting a large number of small creditors with their debts on the petition, often troublesome and sometimes impossible, and when that purpose fails by reason of the failure of the two hundred and fifty dollar creditor to represent one-third of the provable debts, the two hundred and fifty dollar provision fails altogether, and every two hundred and fifty dollar creditor sinks into a common unit in the mass of creditors, and counts but one with the rest.
Exception third is overruled. When the name of a creditor is stated in the petition asserting a claim by a proper averment, but omitting .the amount, the claim may be amended by adding the amount, if done in good faith. It is a clerical error, which may be amended from the list of creditors or from the deposition or proof of the debt.
It is adjudged that a legal quorum is not made out by the petitioning creditors, and the petition will lie over ten days from the filing hereof, for additions.