Page images
PDF
EPUB

it to permit its agents to do in that state what, in any view, the agent in this case undertook to do, would be a clear violation; and therefore, in addition to its legal right to insist on stipulations plainly made between it and the insured, the statute illustrates that the courts ought to aid it in so doing, and that the provisions in its policy on which it relies are not unreasonable, but are necessary for its protection. Aside from any statutory regulations, a life insurance corporation has a direct interest in maintaining the solvency of its agents, through whom large sums are often transmitted to or from it. It has, therefore, a direct interest in prohibiting them from involving themselves by incautious credits for amounts for which they (the agents) are holden responsible in cash, and from loading themselves with unavailable assets with reference to any sums for which they must account.

We have expressed our present impressions as to various questions which the parties seem to regard as involved in the case, and which might arise again on a new trial; but inasmuch as their application might be modified, more or less, on a new state of facts which a new trial might bring before us, and as it is not now necessary to decide whether, on the peculiar terms of this policy, a credit given by the agent to an applicant for insurance of the amount of the agent's portion of the first premium, and corresponding entries on the books of the insurer, made in ignorance of the credit, would cause the policy to attach, we have concluded that it is safer to rest our present determination on the simple fact that, whatever was the arrangement between George W. Simmons and White, the record fails to show that anybody ever paid, or agreed to pay, the entire premium called for by the policy, either in cash or otherwise; so that, independently of any question whether the provision cited, requiring payment in cash, would reach the 65 per cent, to be retained by White, and independently of all propositions relating to the special receipt prescribed on payment to an agent, the policy never attached.

The judgment of the circuit court is reversed, the verdict is set aside, the case is remanded to that court for further proceedings in accordance with law, and the plaintiff in error recovers its costs in this court.

(107 Fed. 429.)

In re NEWTON.

(Circuit Court of Appeals, Eighth Circuit. February 25, 1901.)

No. 19.

1. BANKRUPTCY-REOPENING OF ESTATE-APPOINTMENT OF NEW TRUSTEE. Where it is desired to reopen the estate of a bankrupt after it has been closed and the trustee discharged, the first step is properly the making of an order for that purpose, and it then devolves upon the creditors, under Bankr. Act 1898, § 44, to appoint a new trustee. The court has no authority to make such appointment unless the creditors fail to do so. 2. SAME-SHOWING TO WARRANT REOPENING OF ESTATE.

To authorize the court to reopen the estate of a bankrupt, under Bankr. Act 1898, § 2, subd. 8, it should "appear" by some satisfactory evidence

that there are assets unadministered, although no formal or technical procedure is required. An unverified petition filed by a creditor, stating on information and belief that the wife of the bankrupt has "money or property" belonging to him, without stating its character or amount, and which is unsupported by affidavits or other evidence, is insufficient to warrant any action by the court.

Petition for Revision of Proceedings of the District Court of the United States for the Western Division of the Western District of Missouri.

Francis A. Leach, George W. Day, and T. C. Sparks, for petitioner. James W. Garner, for respondent.

Before CALDWELL and SANBORN, Circuit Judges, and ADAMS, District Judge.

ADAMS, District Judge. This is an original proceeding instituted in this court to revise the action of the district court of the United States for the Western division of the Western district of Missouri in refusing to appoint a trustee in bankruptcy to administer certain assets alleged to have been discovered by the petitioner, Arthur G. Newton, after the first trustee had rendered his final accounts and had been discharged. The facts of the case, so far as it is now necessary to state them, are as follows: On November 9, 1899, one William E. Evans was, on his own petition, adjudicated a bankrupt. On December 2, 1899, after due notice, the first meeting of creditors was held, and John R. Walker duly appointed trustee of the bankrupt's estate. On December 8, 1899, the trustee submitted his final report, showing no assets. On the same day the report was approved, and the trustee discharged. On January 8, 1900, after due notice to creditors, the bankrupt's application for a discharge from his debts was granted by the court. On February 23, 1900, the petitioner, Arthur G. Newton, filed his proof of claim against the bankrupt's estate in the sum of $794, and on March 28, 1900, filed a petition in the district court setting forth the foregoing facts, and in addition thereto as follows:

"That your petitioner is informed and believes, and so alleges, that said William E. Evans has money or property which he did not include in his schedule of assets, and which may in proper proceedings be made available in the payment of his debts; that the money or property aforesaid is now held by Evans, the wife of said William E. Evans, in trust to the sole use, benefit, and behoof of the said William E. Evans, and was so held at the time of filing of said petition in bankruptcy, as aforesaid, in fraud of the creditors of the said William E. Evans. Wherefore your petitioner prays that an order be made appointing some suitable person trustee herein, to the end that all assets of said bankrupt may be administered and dealt with according to the law in such cases made and provided. "[Signed]

Leach, Day & Sparks, Attorneys for Petitioner."

This petition was not verified or otherwise supported by affidavits, but was submitted on its own showing, and on July 14, 1900, was overruled by the court.

The bankruptcy act, approved July 1, 1898, contemplates that an application for a discharge may be filed and acted upon before the estate is fully administered. Section 14 of the act provides that

such application may be made within one month after the adjudication. Section 57, subd. n, gives creditors one year after the adjudication within which to file their proofs of claim. The act also contemplates the reopening of an estate after it has once been closed. Section 2, subd. 8, provides that courts of bankruptcy may "close estates whenever it appears that they have been fully administered by approving the final accounts and discharging the trustees, and reopen them whenever it appears they were closed before being fully administered." Section 11, subd. d, gives a trustee two years after an estate has been closed to institute suit for the recovery of assets. These and other provisions of the act which might be referred to plainly show that notwithstanding a bankrupt may have been discharged from his debts, and notwithstanding a trustee may have filed his final accounts and been discharged from his trust, and the estate be thereby closed, it may nevertheless be opened again if unadministered assets be discovered.

While it is the duty of the court and the clear policy of the bankruptcy act to require trustees "to close up the estate as expeditiously as is compatible with the best interests of the parties in interest" (section 47, subd. a), it is equally the duty of the court to reopen the estate whenever it satisfactorily appears that there are assets of the bankrupt which have not been administered. When such a showing is made to the court as justifies an order for reopening the estate, such order should be made by the court as a first step towards the further administration of the bankrupt's estate. After such order is made, section 44 of the act contains provisions for further proceedings. This section provides that "the creditors of a bankrupt estate shall at their first meeting after the adjudication, or after the vacancy has occurred in the office of the trustee, or after the estate has been reopened, appoint one trustee or three trustees of such estate. If the creditors do not appoint a trustee as herein provided the court shall do so." This section, in our opinion, confers upon the creditors of the estate the same authority and power with respect to the appointment of a trus tee, after an estate once closed has been, by order of court, reopened, as is conferred upon them at the first meeting held after the adjudication. It confers upon the creditors, as the parties chiefly interested, the right in either case to select their own trustee. When they fail to do so, either at the first meeting, or afterwards, in case of a reopening of the estate, and not till then, power is conferred upon the court to make such appointment.

*

*

The prayer of the petition in this case is that the court make an order appointing some suitable person trustee herein. As it nowhere appears that there had been any previous order of the court to reopen the estate of the bankrupt, or that the creditors had failed to elect a trustee, it is clear that the district court had no right or authority to grant the prayer of the petition to appoint a trustee. Such authority was vested in the creditors, and, until they failed to exercise it at a meeting duly called for that purpose, the court had no authority to do so. The motion, therefore, was properly de nied by the district court.

46 C.C.A.-26

[ocr errors]

But if the petition of Newton could be regarded as a motion to reopen the estate preparatory to a reference for further adminis tration, it is, in our opinion, too indefinite and uncertain to move the court to open up the case. To sustain such a motion, the court must be reasonably satisfied; in other words, according to the provisions of the bankrupt act, it must be made to appear to the court that there are unadministered assets.

As already seen, the only information given to the court by the petition is an unverified statement made by petitioner's attorneys that the petitioner is informed and believes that the wife of the bankrupt held "some money or property" in trust for the bankrupt. Whether it is money or property, and how much of either,—whether $1 or $5,000 in value, the petitioner is not made even to venture a belief. This petition might be reinforced by supporting affidavits, but no such are found in the record.

We do not wish to be understood as holding that the petition to reopen an estate once closed must be of any formal or technical character. Such is not necessary, and in the practical administration of the bankruptcy act is not advisable, but such petition must be either in itself, or in connection with supporting affidavits, of such persuasive character as to reasonably satisfy the court of the requisite jurisdictional fact, namely, that there are some assets belonging to the bankrupt which have not been administered. We are of opinion that the petition in this case, if treated as a proceeding to reopen the estate, was vitally defective, in that it failed to state any substantial or definite facts from which the court could reasonably find that there were any assets to be administered. The conclusions reached in this case can work no injustice, as the petitioner has ample time within which to renew his effort to reopen the estate, provided he can make the requisite showing. It results that the action of the trial court in denying the petition for the appointment of a trustee was correct, and the same is approved and confirmed.

(107 Fed. 434.)

UNITED STATES v. CHEVALLIER.

(Circuit Court of Appeals, Ninth Circuit. February 4, 1901.)

No. 633.

INTERNAL REVENUE-WHOLESALE LIQUOR Dealer-BRANCH HOUSE-TAXATION AS SEPARATE BUSINESS.

Defendant, a wholesale liquor dealer in San Francisco, maintained a branch house in Portland, bearing his sign, and where presumably samples of his trade were kept, and where the public were invited to purchase. The manager thereof was a "salesman" who was required to sell judiciously, the right to cancel his contracts being reserved to his principal, who filled all orders, and, without prepaying the freight, delivered the goods to a carrier at San Francisco, consigned to purchasers in various parts of the agent's territory. Held, that the sales were made wholly at San Francisco, notwithstanding the agent may have been authorized to make binding contracts and collected the purchase money,

and defendant was not subject, under Rev. St. § 3244, subd. 4, to the internal revenue tax, as an Oregon liquor dealer, though his method of transacting business may have been devised purposely to evade such tax.

In Error to the Circuit Court of the United States for the District of Oregon.

It is sought by the writ of error in this case to review the judgment of the circuit court (102 Fed. 125) in an action instituted by the United States against George F. Chevallier, doing business under the firm name of F. Chevallier & Co., to recover special revenue tax as both wholesale and retail liquor dealer, which business it was alleged was carried on in the city of Portland, in Oregon, in violation of subdivision 4 of section 3244 of the Revised Statutes. The defendant in error, by his answer, denied that he was carrying on the business of either retail or wholesale dealer in liquors within the state of Oregon, and set out, in a further and separate answer, that he was carrying on the business of wholesale and retail liquor dealer in San Francisco, state of California, and had paid a special tax therefor; that he had a branch office in the city of Portland, over the door of which was painted the sign, "F. Chevallier & Co., W. H. Fiske, Manager," where he kept no wines or liquors for sale, but where his agent received conditional orders for wines and liquors, and forwarded the same to the defendant's house in San Francisco, there to be approved and filled, and that upon such approval by the defendant the goods ordered were shipped from the San Francisco house directly to the purchaser in Oregon or elsewhere at the risk of the purchaser; that the said Fiske, as manager, had no authority from the defendant to make any sale of or offer for sale any wines or liquors in the city of Portland or elsewhere in the district of Oregon; that all such sales were completed and made in the state of California. The answer admitted that the said agent received as his compensation for such services a commission on the amount of sales made by the defendant in San Francisco upon such orders, and was authorized to receive from the defendant's customers in Oregon in certain instances the purchase price of wines and liquors so sold, and in some cases did receive such purchase price, and accounted for and forwarded the same to the defendant in San Francisco, and that the agent kept an account of all moneys so received and disbursed by him, and a duplicate copy of the record of such sales made by the defendant in San Francisco, and that for that purpose defendant employed a clerk to aid the agent at his office at Portland, Or. This answer was demurred to upon the ground that the matters pleaded and set forth therein are insufficient to constitute a defense to the complaint, and on the submission of the demurrer it was agreed that the agreement between the defendant and his agent, under which the agency was conducted, might be considered by the court as if it were set forth in the answer. The agreement contains, among others, the following provision: "That, in order to better carry on their business in the states of Oregon, Washington, Idaho, and Montana, the first parties hereby employ the second party in the double capacity of salesman and manager of the office which the first parties will maintain within the territory just mentioned. As salesman, the second party agrees to sell for the first parties judiciously, and to the best of his ability, any and all articles in their line of which the first parties may furnish him a list, at prices and on terms to be specified by them, and over any and all such territory as is included in the states of Oregon, Idaho, Washington, and Montana. The second party shall submit all orders to the judgment of the first parties, and shall abide by their decisions regarding the propriety of filling or rejecting any or all such orders. He shall also use due diligence in forwarding the interests of the first parties, making trips or traveling over the described territory as often as the first parties may consider necessary for the welfare of the business." The agreement makes further provision concerning the management of the business, employment of clerks, repair of fixtures and office furniture, and contains the following: "The first parties will allow the second party a gross commission of 24% on all bona fide sales of such merchandise as they carry regularly in stock, effected within the described territory."

« PreviousContinue »