Court Opinion

ID: 8311435
Source: CourtListenerOpinion
Date Created: 2022-10-17 13:52:59.023983+00
Date Added: 2024-06-11T16:44:44.671108
License: Public Domain

On Petition for Rehearing.
T. W. Jones has presented a petition for a rehearing upon the questions decided by an opinion in the above cause by this court, filed on the 22d of May, 1928, and orders of the same date made in accordance with said opinion. I have read the petition and studied it very carefully, and have reviewed once more the testimony and record in the cause. All of the points of law raised by the petition were duly considered in the former opinion. Some of them were not discussed particularly in detail, but were included in the general discussion. As to the questions of fact presented by the petition for rehearing, in many eases the allegations of the petition are not supported by the record. The former opinion was a very lengthy one, and for that reason an effort was made to avoid details as much as possible. In order, however, that the parties may feel sure that no point has been overlooked, I will endeavor to advert as briefly as practicable to the main points suggested by the petition for rehearing.
In the petition for rehearing the point is made that the court overlooked the fact that the Douglas note was payable to order, and therefore negotiable. This point was not overlooked, but was not specifically discussed, for the reason that it seems to the court too plain for argument that the negotiability of the note has no bearing upon the question involved. The fact that the note is negotiable' could not add to or diminish the indebtedness to which the collateral was applicable.
The petition also makes the point that the word “payee” is mentioned in a number of places in the Douglas note and should receive the same meaning throughout. I am not prepared to hold that a word in a note must necessarily receive the same meaning throughout, especially in this particular ease, where the word “payee” in some places in the note is qualified by additional words, such as “its successors or assigns or the holder- hereof,” while in other places it is not so qualified, and especially is not so qualified in that place where it provides for the application of the collateral to “any other demand” “of the undersigned toi the payee.” But the question is what demands constitute a lien on the collateral, and the language of the note is that it must be demands “of the undersigned to the payee,” and not to the payee or any holder. The word “payee” in the note, however, was given in the former opinion exactly the same meaning throughout. As the petition for rehearing asserts, the word “payee” means, in every case, Mrs. Douglas; but certain provisions of the note upon which the petitioner relies give the holder the same rights that Mrs. Douglas would have had. But there is not a word in the note to indicate that the “holder” would have the right to tack to the note any other demands than Mrs. Douglas could have tacked to it.
That the argument of the petitioner is unsound, I think, may be demonstrated from another provision of the note. The note provides, not only for a lien upon the collateral described therein, but also upon “any and all other funds, property, or security at any time delivered to the payee or left in its possession by or for the undersigned for safekeeping or otherwise.” ‘ Under this provision it is clear that any property in the hands of Mrs. Douglas belonging to the makers of the note would have been applicable to the payment of the note. If the argument of the petitioner is sound, then any property in the hands of T. W. Jones belonging to the maker of the note would likewise be applicable to the payment of the note. Let us suppose that the note had remained in the hands of Mrs. Douglas, and that the makers of the note had turned over for safe-keeping to Mrs. Douglas some other property, say a horse, entirely disconnected with the note in question. It is clear that under the terms of this note Mrs. Douglas would have the right to sell that horse and apply the proceeds to the note. But let us suppose that the horse had been turned over to Mr. Jones, say before he acquired the note (or even afterwards), by the makers of the note. Would any court hold that Mr. Jones would have the right to sell that horse and apply the proceeds to that note? I think not. And the reason is that the note provides for property left for safekeeping with the “payee,” but does not" provide for property left with any “holder.” And yet, if the argument of the petitioner is sound as to the construction of the word “payee” and the rights transferred to the holder of this note, Mr. Jones would have the right to sell the horse, as well as the collateral specifically described and deposited.
But I think it unnecessary to multiply words or add to the discussion. The whole basis of the decision of this court is that we must look to the intention of the parties, and what they must be reasonably supposed to have intended when they spoke of other demands of the payee, and I think that in all the circumstances they must have contemplated only demands made by Mrs. Douglas, and *342not demands of some subsequent holder, in the absence of clear language showing that such subsequent holder was in contemplation.
The petition for rehearing also alleges error in that portion of the former opinion which holds that the note does not cover demands against Haynsworth & Stuckey jointly with other persons. Assuming that Haynsworth & Stuckey assumed the payment of the Haynsworth & Lawton notes, in the absence of a novation it is clear that the original makers of those notes remained liable along with Haynsworth & Stuckey. Whether that liability was joint or several really makes no difference in lids case. The point is that the demands referred to in the Douglas note are demands against Haynsworth & Stuckey, and not demands against Haynsworth & Stuckey along -with' other people who are equally liable.
The petition also alleges error in the court’s holding that it was not sufficiently shown that there was ever any assumption by Haynsworth & Stuckey of the Haynsworth & Lawton notes. This matter is fully discussed in the opinion, and the court, upon reconsideration thereof, is fully confirmed in its position that the evidence is not sufficient. The petition suggests, in reference to the statement in the schedules that the notes were assumed by Haynsworth & Stuckey, that it was not without the right of cross-examination. The fact that the parties who made this statement were afterwards sworn and cross-examined does not render the original statement admissible, except as a matter of contradiction. The right of cross-examination is not saved by admitting an ex parte statement, where no right to cross-examine at the time can be had, simply by the party being sworn and subject to cross-examination later. The only way in which such an ex parte statement is admissible at all is, when the witness is sworn and testifies in reference to the matter, he may be asked whether or not he made such a previous statement, for the purpose of contradicting him, and for that purpose only, which is not the fact in this ease.
The petition for rehearing also alleges error in the finding as to attorney’s fees. The petition states that there is no question whatever as to the fact that the note was placed in the hands of an attorney for collection, and that services were rendered prior to the filing of the petition in bankruptcy. But the difficulty is that the record does not support this contention. The petition asserts that Mr. Jones made this definite allegation in his verified petition and that it is not contradicted. But the objecting creditors (among other grounds) objected specifically on the ground that the note had not been placed in the hands of an attorney for collection before bankruptcy, and there is not a particle of evidence in the whole record from beginning to end to show that it was so placed. Mr. Jones could not, where the objecting creditors had made an issue of this point, merely by verified petition, make that proof of the very fact at issue. He should have offered evidence before the referee, showing that the note was placed in the hands of an attorney for collection before bankruptcy, and just what services were rendered prior to that time. This he did not do, and there is nothing before the court to show that any such services were rendered.
So, also, as to the point made in the petition that Mr. Jones had declared the note due and payable. There is nothing, so far as I can find in' the record, anywhere to show that he took any action in that respect whatever before bankruptcy. A party having an option to declare a note due and payable surely cannot simply by his own secret intention, never disclosed by act or word, claim that he declared the note due and payable. So far as the evidence before me goes, either the note was never declared due and payable, or, if it was, it was done simply by a secret undisclosed intention of Mr. Jones in his own mind, never manifested by any outward action or word.
The remaining points, with one exception, are so obviously without foundation in the facts of the case that a further discussion of them is unnecessary. But there is one point made by the petition for rehearing that it may be advisable to set forth the facts more in detail than was done in the former opinion. That point is in reference to the sale of the 95 shares of stock pledged to the Douglas note. The petition for rehearing asserts that Mr. Jones is willing to pay a larger sum for that particular block of stock than the price fixed by the proposed sale. In reviewing the record I find that the referee, in his report of July 2,1927, does state that Mr. Jones and the Carolina Building Material Company filed a petition opposing the sale of the stock as a whole, and in open court offered to pay a greater price than $105 per share for the 95 shares in question. From this the argument is made that it 'is therefore to the interest of the bankrupt estate to sell the 95 shares to Mr. Jones at some advance, rather than sell it in connection with the other stock as a block for the price fixed in the proposed sale by the order of the referee.
*343In the first place, nowhere does Mr. J ones state how much more he would be willing to give. Section 70(b) of the Bankruptcy Act (U. S. C. title 11, § 110(b); 11 USO A § 110(b) provides that property of the bankrupt estate shall be appraised, and when practicable sold subject to the approval of the court, and that it shall not be sold otherwise than subject to the approval of the court for less than 75 per centum of its appraised value. In this ease the trustee made report to the referee of the proposed sale, which would bring in more than 80 per cent, of the appraised value. The referee after full hearing approved this sale. In such circumstances, this court would not feel disposed to set aside the judgment of both the trustee and referee upon a showing merely by some creditor that he was willing to pay more. The creditor ought to make an offer of such a substantial advance as to appeal to the discretion of the trustee and the referee not to make the proposed sale, but to accept the offer of such creditor. Here, by selling these shares in connection with other shares belonging to the bankrupt estates of Lawton & Co. and J. M. Lawton, the trustee and the referee have obtained an offer of more than 80 per cent. They have looked into the matter fully, and advised that it is to the best interests of the estate that that offer be accepted; and I do not think that their judgment in the matter should be upset, in the absence of a showing that the offer of an advanced price covered a substantial amount.
But, in addition to this, there are other considerations that govern this particular case. There were 275 shares of this particular stock that are involved in the proposed sale. These 275 shares were formerly held by Haynsworth & Lawton, and J. M. Lawton, and J. M. Lawton & Co., under the agreement not to sell separately that I have already adverted to in the former opinion; 115 of these shares are now held by the trustee for the bankrupt estates of Lawton & Co. and J. M. Lawton. As far as aiding the sale of these 115 shares belonging to the bankrupt estates of Lawton & Co. and J. M. Law-ton, I am assuming that the shares now belonging to the bankrupt estate of Haynsworth & Stuckey should not be sold at a lower price than Mr. Jones would be willing to bid for them, for the sake of getting a larger price for the 115 shares belonging to the estates of J. M. Lawton & Co. and J. M. Law-ton. But the facts show that the bankrupt estate of Haynsworth & Stuckey has T60 of these shares; that is to say, T. B. Haynsworth 130,'and Haynsworth & Stuckey 30, shares. Of the 130 shares belonging to T. B. Haynsworth, 75 stand pledged to the Douglas note, and 55 to the note of the Commercial & Savings Bank; and of the 30 shares of Haynsworth & Stuckey, 201 are pledged to the Douglas note, and 10 to the note of the Commercial & Savings Bank. Now, Mr. Jones’ offer to purchase at an advance over the price fixed by the proposed sale (without saying how much the advance would be) was confined to the 95 shares. It is clear, therefore, that if the 95 shares of the bankrupt estate of Haynsworth & Stuckey are sold to him, then the 65 shares remaining in that estate cannot be sold to any advantage, if at all. In other words, laying aside any benefit to the sale of the 115 shares of the estates of Lawton & Co. and J. M. Law-ton, the trustee of Haynsworth & Stuckey, by making a sale of the 95 shares at $105 is also enabled to sell the remaining 65 shares of the bankrupt estate of Haynsworth & Stuckey for the same price; when, if he should accept the offer of Mr. Jones to purchase the 95 shares alone, then the remaining 65 shares of the latter estate could not be sold for as much, but probably for only a very much smaller sum. It is clear, therefore, that the proposed sale of the whole 160 shares of the Haynsworth & Stuckey estate is advantageous to that estate, unless Mr. Jones could make a showing, which he has not done, that the advanced price offered by him for only 95 shares would more than counterbalance the loss that would be occasioned by the sale of the 65 shares separately from the 95 shares.
It is argued by Mr. Jones, however, that the 65 shares stand pledged to the Commercial & Savings Bank, and that there is no equity for the general creditors in those shares, and that therefore the proposed action would inure only to the benefit of Commercial & Savings Bank, and not to the general creditors. But this argument assumes that there is no equity, and so far as the record before me discloses, there is nothing to show that there may not be an equity. But, even if there should be no equity, nevertheless the reduction of the claims of the Commercial & Savings Bank would reduce the amount of their deficiency on their notes which they would be enabled to prove against the bankrupt estate, and the reduction of this deficiency would inure to the benefit of the other creditors.
In the foregoing consideration of this matter, I have left out of view entirely the effeet upon the 115 shares belonging to the bankrupt estates of Lawton & Co. and J. Ml Law-ton, and also the agreement between the *344original holders of this stoek not to sell separately, though it seems that these matters ought to have some consideration in determining the advisability of approving the sale in question.
Upon a reconsideration of the whole matter in every aspeet, I think that it has been shown to the satisfaction of the trustee and the referee, and to this court, by the evidence and record in the cause, that the sale proposed by the trustee of the stoek as a whole is beneficial to the bankrupt estate and the general creditors of Haynsworth & Stuckey, and that Mr. Jones has not made any showing that any offer he may have made will be more beneficial to that estate, and that the proposed sale by the trustee as confirmed by the referee should be approved and confirmed by this court.
Upon this branch of the ease there have already been two arguments, and one argument on the other branches. The court has considered the whole case fully. It is to the interests of the public and of the parties to this particular case that there should be an end of litigation. I cannot see, therefore, that any useful purpose would be subserved by granting a rehearing.
It is therefore ordered, adjudged, and decreed that the petition of T. W. Jones for a rehearing on the above-stated matters be and the .same is hereby denied and refused, and the opinion of this court and the orders pursuant thereto, dated May 22,1928, be and the same are hereby ratified and confirmed.