Court Opinion

ID: 8800071
Source: CourtListenerOpinion
Date Created: 2022-11-26 14:28:14.872143+00
Date Added: 2024-06-11T17:03:51.212645
License: Public Domain

_ HENRY D. CRAYTON, District Judge.
This cause, coming on to be heard, is submitted for order and decree upon the motion of the bankrupt and certain of his creditors to dismiss or strike from the file the additional specifications of objection to the confirmation of the composition, and also for decree upon objections of certain creditors to the composition, and for decree in the matter of such composition reported and recommended by the special master in his report dated March 25, 1916.
The report and the testimony in the case have been carefully considered by me, and I have heard and considered the argument of the attorneys in opposition to the confirmation of the composition, as well as that of the attorneys in behalf of the confirmation. After careful examination and reflection, I have reached the conclusion that the real question to be decided in this case is whether or not the composition is for the best interest of the creditors of the estate. If this view be correct, and the whole controversy is reduced to that one question, it is unnecessary for me to pass upon several minor or incidental questions discussed during the oral argument. It is my opinion that the confirmation of the composition, as recommended by the special master, is to the best interest of all the creditors.
1. The letter of E. Lamar and that of A. W. Stewart to certain of *177the creditors in connection with the composition were fully and satisfactorily explained, and are far from persuasive that they were instruments of deception or were even instrumental in deceiving or misleading the creditors who accepted the composition. Further, no injury was worked to any of the creditors by these letters.
2. The contention that the claim of C. H. Dozier, Sr., president of the bankrupt, should not have been allowed, perhaps, ought not now to be considered by the court. But, it having been considered, I find from all the evidence in the case that it was just and proper.
3. The alleged concealment of the “true condition of the bankrupt’s financial condition” cannot here furnish a reason for disapproving the composition recommended. An examination of all the evidence in the case convinces me that there was no real, or at any rate no fraudulent, concealment of the assets of the bankrupt.
4 and 13. The objection that the subscription of C. H. Dozier, Sr., for $12,000 stock of the bankrupt corporation has not been paid is not well founded. The evidence satisfies me that such subscription has been paid.
5. The conditional leasehold interest in the warehouse, or conditional license to use the same, in accordance with the limitations of the contract. between the bankrupt and the railroad company, was not such a part of the bankrupt’s assets as that a failure to schedule the same can be held to be a concealment of assets. But, even if this be an asset at all, then it does not furnish any reason why the composition should not be allowed.
The liabilities of the bankrupt to unsecured creditors total .$14,- ■ 945.09. The claims of creditors who have admitted preferential liens amount to $3,288.02. Omitting the contract lease or license of the warehouse property, the assets of the bankrupt were appraised at $6,~ 935.50. It is not to be doubted that this appraisement was fair, and that the reasonable value of the assets of the estate is not more than $5,000. So it is a matter of simple mathematics to show that, although the leasehold or license interest in the warehouse, if treated as a part of the available assets of the bankrupt and as worth $2,000, the maxi-intmi amount of value which the objecting creditors can fairly claim it has, this would not furnish any reason why the composition should not be approved as being in the best interest of all the creditors.
Treating the warehouse interest as an asset worth $2,000, and assuming that it could be sold for that amount, and that the other assets (as shown by the evidence) sell for more than $5,000, this would produce an aggregate amount of $7,000; from which, deducting the $3,288.02, amount of preferred claims, there would be left a balance of only $3,711.98. From this amount, of course, there must be further deductions for the costs of administration, including receiver’s and trustee’s fees and expenses, insurance, and fees of the various attorneys and officers. It is not necessary to hazard an estimate of the aggregate amount of these deductions, as it is already entirely obvious that the above amount of $3,711.98 is of itself insufficient to pay a dividend of 25 per cent, on $14,945.09, which dividend of 25 per cent, is what the creditors will receive under the composition. *178However, assuming — as the court does — that the license in the warehouse property is not such property as passes to the trustee, the above figures would be reduced $2,000, and would be only $1,711.98, from which the costs of administration must be paid before being divided among the creditors; and it would be very doubtful even if as much as 5 per cent, could be realized to the general creditors.
6 and 10. It does not seem necessary to now consider the claim that large sums of money were paid out by the bankrupt to some of his creditors for debts due them within four months preceding bankruptcy. But, it being .considered, I find that the evidence does not sustain these grounds of objection. The findings of fact and the conclusions of law applicable to the question raised by these objections are correctly stated by the special master in his report.
7. The seventh ground of objection to the report is not well taken. There was no collusion between the attorney representing the creditors and the attorney representing the bankrupt, whereby any fraud was perpetrated upon or done to die creditors of the bankrupt. The whole matter raised by this objection is fully and satisfactorily explained by the evidence.
And I find that the other objections, numbered 8, 9, 11, 12, 14, and 15, of a like tenor, are not well founded.
8. As to objection 16, it is no more than a general objection, predicated upon the second, third, fourth, fifth, and sixth specifications, which I have dealt with, and, in dealing with them as I have, necessarily the effect is to hold that objection 16 is without any worth.
9. As to objection 17, which is a general exception to that part of the report in which the special master finds that there was not suffi-. ■cient evidence to support either of the objections to the said confirmation of said composition, it is sufficient to say that this is a general objection, which, if necessary to deal with at all, has been dealt with in my consideration of the several specific objections.
I am convinced that there is not sufficient, merit in any of the 17 objections to the composition, or in all of them considered together, to warrant the court in disallowing the proposed composition.
Accordingly decree will be entered, approving the report of the special master and authorizing the composition recommended by him.