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were debts of the partnership estate, rather than of the partner who first assumed their payment.
[Ed. Note. For cases in point, see Cent. Dig. vol. 6, Bankruptcy, 88 555-557.]
In Bankruptcy. On certificate from referee.
EWING, District Judge. The question certified by the referee is whether the claims of the Willson Bros. Lumber Company, the Empire Lumber Company, Lemuel Curry and R. M. Curry, William Curry, and Annie B. Sickman, respectively, were the debts of the partnership of Sickman & Glenn, or the debts of Jerry A. Sickman, individually. This certificate is made upon the petition of Flint, Erving & Stoner Company, creditors of said bankrupts, which petition asks that review be had regarding the claims of the Empire Lumber Company, Castle Shannon Savings & Trust Company, Wm. Curry, Willson Bros. Lumber Company, Lernuel Curry, and R. M. Curry, and of Jacob Linhart. It thus appears that the question certified by the referee omits the claims of the Castle Shannon Savings & Trust Company and Jacob Linhart, and embraces the claim of Annie B. Sickman, which is not included in the said creditors' petition for review. In the papers accompanying the certificate of the referee no request for a review of his ruling in regard to the claim of Annie B. Sickman appears, nor in those papers, including the testimony, is any information furnished in regard to the claim of Jacob Linhart. Our review of the action of the referee will therefore be confined to the claims named, other than those of Annie B. Sickman and Jacob Linhart.
The finding of the referee in regard to the former of these claims seems to be in accord with the wishes of these petitioners for review, and it is supposed, therefore, that such finding is satisfactory. If the claim of Jacob Linhart is of the character of the other claims embraced in the question certified, it can be disposed of in accordance with our views regarding those claims. The facts of the case very briefly are that up until the latter part of May or the 1st of June, 1905, a certain corporation called the Broughton Lumber Company had by itself, or through the intervention of the trustee of the creditors, been conducting the business, and at that time, by an arrangement then made, Jerry A. Sickman took over the property and assets of the Broughton Lumber Company, and assumed its indebtedness, and gave as evidence thereof to these creditors his own promissory notes, indorsed by his father and Lemuel Curry, who had been stockholders of said Broughton Lumber Company, and also by R. M. Curry. Jerry A. Sickman conducted this business for about a month, when he took into partnership with him John W. Glenn, forming the partnership of Sickman & Glenn, the bankrupts whose estate is now being administered. In forming such partnership, the agreement between Sickman & Glenn was that they should be equal partners, and that they should, as such partners, discharge the liabilities incurred by Sickman when he took over the property and assets of the Broughton Lumber Company, which assets now
became the property of such partnership. In this manner all the assets of the Broughton Lumber Company passed into the hands of Sickman & Glenn, and constitute to-day the principal, if not all the assets, of this partnership.
Both Sickman and Glenn testify positively as to this arrangement between them that they were to discharge the indebtedness taken over from the Broughton Lumber Company by Sickman, and they are corroborated by the testimony of some of the creditors, who testify that the partnership always admitted its liability for that indebtedness, and promised to discharge it. The notes originally given by Jerry A. Sickman for the debts of the Broughton Lumber Company, so far as they fell due prior to the proceeding in bankruptcy, were renewed from time to time by other notes of like character, executed by Jerry A. Sickman. Sickman & Glenn were adjudicated bankrupts in the fall of 1906, without having discharged any considerable part of the indebtedness of the Broughton Lumber Company. The claims here excepted to are those of the Broughton Lumber Company assumed by Jerry A. Sickman and subsequently by the bankrupt partnership of Sickman & Glenn, and are now objected to on the ground that they are individual debts of Jerry A. Sickman, and not payable out of the partnership assets.
The objecting creditor was not a creditor of the Broughton Lumber Company, but primarily of the partnership of Sickman & Glenn. It will be seen from what has been stated that the fund for distribution arises largely from assets originally of the Broughton Lumber Company, that the indebtedness of the Broughton Lumber Company was unquestionably assumed by Sickman & Glenn, and that it is only right and proper that these assets of the Broughton Lumber Company, upon the faith and credit of which the indebtedness was presumably incurred, should answer for that indebtedness in the hands of Sickman & Glenn, when they themselves agreed to such proposition when they took the assets of the Broughton Lumber Company into their possession.
Under the facts in this case, it can hardly be doubted that these several creditors could successfully maintain an action against Sickman & Glenn for the amount of their claims. Kountz v. Holthouse, 85 Pa. 235; White v. Thielens, 106 Pa. 173; Adams v. J. L. Leeds Co., 195 Pa. 70, 45 Atl. 666.
It is therefore concluded that the referee was correct in determining that these claims were properly debts of Sickman & Glenn, rather than of Jerry A. Sickman individually; and his action in the matter is affirmed.
UNITED STATES v. STACEY et al.
(District Court, S. D. Alabama. August 5, 1907.) HOMESTEAD-EXEMPTION-JUDGMENTS IN FAVOR OF UNITED STATES.
A homestead exemption given by the laws of a state may be asserted against a judgment in favor of the United States in a civil cause, and also, by virtue of Rev. St. $ 1041 [U. S. Comp. St. 1901, p. 724], which provides that judgments for a fine or penalty may be enforced by execution "in like manner as judgments in civil cases are enforced," against a judgment
imposing a fine, even though under the state decisions the exemption does not extend to executions on judgments for torts or for fines imposed under the criminal laws of the state.
[Ed. Note.-For cases in point, see Cent. Dig. vol. 25, Homestead, 162.] On Claims for Homestead Exemption. Wm. H. Armbrecht, for contestant.
Stevens & Lyons, McIntosh & Rich, and R. P. Roach, for defendants,
TOULMIN, District Judge. These are claims of exemption of homesteads levied on under executions issued on judgments in forfeited bail bond cases and in causes in which judgment or sentence was rendered imposing the payment of fines.
The statute of Alabama provides that the homestead of every resident of this state, not exceeding in value $2,000 and in area 160 acres, shall be exempt from levy and sale under execution or other process for the collection of debts contracted, etc. Code Ala. 1896, § 2033. The Supreme Court of Alabama has decided that the exemption does not extend to judgments and executions in actions of tort and for fines imposed under the criminal laws of the state. But the Supreme Court of the United States, in the case of Fink v. O'Neil, 106 U. S. 272, 1 Sup. Ct. 325, 27 L. Ed. 196, said:
"Nothing can be more clear than this, as a recognition by Congress that in case of executions upon judgments in civil actions the United States are subject to the same exemptions as apply to private persons by the law of the state in which property levied on is found, and that by this provision [referring to section 1042, Rev. St. U. S.] in favor of poor convicts it was intended, even in cases of sentences for fines for criminal offenses against the laws of the United States, that the execution against property for its collection should be subjected to the same exemptions as in civil cases."
The court also refers to section 5296, Rev. St. U. S. [U. S. Comp. St. 1901, p. 3608], as sustaining this conclusion. Section 5296 is found under title “Remission of Fines.” I think this section clearly indicates that Congress intended that a poor convict, in taking the oath prescribed in section 1042, should be discharged from all further liability under the sentence imposing the payment of a fine; in other words, that the fine is thereby remitted. Moreover, section 1041, Rev. St. U. S. [U. S. Comp. St. 1901, p. 724], provides that the judgment for the payment of a fine may be enforced by execution against the property of the defendant in like manner as judgments in civil cases are enforced. If a judgment in a civil case may not be enforced by execution against the exempt property of the defendant, it follows that a judgment for the payment of a fine may not be enforced against such property. Whatever may have been the ruling of the Supreme Court of Alabama on the subject, the legislation of the Congress, as construed by the Supreme Court of the United States, thereon, is the authority which is to control this court. In Clark v. Allen (D. C.) 114 Fed. 374, it is held that the exemption of a homestead may be asserted against a fine due to the United States government. See, also, same case (D. C.) 117 Fed. 699.
It is not disputed that the proceedings on the forfeited bail bonds are civil actions. My conclusion is that the defendants are entitled to the exemptions claimed by them. Judgment will therefore be entered against the plaintiffs for the cost of the levy and contest and for the release of the property from the levy.
A like judgment will be entered in each case.
DELAWARE, L. & W. R. CO. v. INTERSTATE COMMERCE COMMIS
SION et al.
(Circuit Court, S. D. New York. August 10, 1907.) INJUNCTION-PRELIMINARY INJUNCTION-SUIT AGAINST INTERSTATE COMMERCE
A preliminary injunction to restrain the enforcement of an order of the Interstate Commerce Commission pending a hearing on the merits
LACOMBE, Circuit Judge. All questions as to the propriety of the order made by the Commission and as to its power and jurisdiction may conveniently be disposed of at final hearing. The only reason advanced for preserving the status quo by preliminary injunction is the risk of fire, which would imperil, not only the property of plaintiff and other shippers by it, but also buildings owned by others in the neighborhood of its terminal. But the Commission expressly provided that the railroad company might take all needful precautions against a conflagration or other liability to accident. If there is risk because of delay in unloading the tank cars, it may require the consignee to be more expeditious. If the valves or cocks of the unloading apparatus are worn, or defective and leaky, it may require them to be replaced with efficient ones. If a pail is insufficient to catch the drippings, it may require the substitution of some receptacle with a broader opening. If the method of unloading from the bottom of the tank by gravity inevitably results in the spilling of oil, it may insist that a different method be employed, by a pump or what not. If, as seems most probable, the sole cause of the trouble is careless manipulation, it may refuse to allow the work to be done by persons who neglect to give proper attention to it and may insist that the consignee shall send employés to take the oil who will take proper precautions. Upon the proof, there seems to be no sufficient reason for any action by the court in advance of final hearing.
The motion is denied.
CLARK V. LYSTER.
(Circuit Court of Appeals, Eighth Circuit. April 27, 1907.)
1. PARTNERSHIP-PARTNERSHIP PROPERTY-REAL ESTATE USED IN BUSINESS.
Real estate not purchased with partnership funds does not become partnership property, though used for partnership purposes, unless there is some agreement that it shall be so considered.
[Ed. Note.—For cases in point, see Cent. Dig. vol. 38, Partnership, $
101-108.] 2. MORTGAGES-MORTGAGEABLE INTEREST-ELIGIBILITY TO RECORD.
Two partners in a manufacturing business who owned the real estate used therein as equal tenants in common entered into a contract by which one retired from active participation in the business but remained as a silent partner for a term of five years, leaving the most of his capital invested. He also conveyed to his partner his half interest in the real estate "as a basis of credit,” but took a bond for its reconveyance absolutely and unconditionally at the end of the term without subjecting it, as between the parties, to the risks of the business. After the expiration of the term, when he had become entitled to a reconveyance but had not received it, he executed a mortgage on his interest in the real estate to secure a valid indebtedness. Held, that such real estate was not property of the partnership but of the individual partners; that the mortgagor was the equitable owner of a half interest therein which was mortgageable as real estate, and that the mortgage given was valid, no rights of partnership creditors having intervened, and was entitled to record under Gen. St. Kan. 1901, § 1221, if not as a technical mortgage, as "an instrument in writing" affecting real estate, which record was constructive notice to all subsequent purchasers of its contents.
[Ed. Note.--For cases in point, see Cent. Dig. vol. 35, Mortgages, $$ 10,
11, 201.] 3. ESTOPPEL-EQUITABLE ESTOPPEL-ACTS CREATING.
In a suit to foreclose a mortgage, given to complainant by his son, against a grantee of the property, it appeared that defendant and the mortgagor were partners in a manufacturing business, and owners as tenants in common of the real estate used in the business. They entered into a contract by which the mortgagor retired as an active partner, but remained for a term of five years as a silent partner, leaving the most of his capital in the business, and also making defendant a loan to be used in the business and accounted for subject to its risks. He also conveyed his interest in the real estate to defendant "as a basis of credit,” but took a bond for its reconveyance at the end of the partnership term. About that time he and defendant became involved in litigation respecting the latter's accounting under the partnership agreement, which did not, however, involve or affect the real estate. Pending such litigation, and after he had become entitled to a reconveyance of the real estate but had not received it, he executed the mortgage in suit to complainant, covering his interest in such real estate, to secure a valid indebtedness, which mortgage was duly recorded. Subsequently a settlement of the litigation was effected between the parties by which defendant paid the mortgagor a sum of money in full of his interest in the business and the loan and received a quitclaim deed to the mortgagor's interest in the real estate. Nothing was said in regard to the mortgage, and defendant had no actual knowledge of it. Complainant, who resided in another state, hearing of the pending settlement, visited his son, and, on completion of the settlement, received part payment of the mortgage debt from the proceeds, a portion of which he gave to his son to be invested for the benefit of his family. It was in dispute whether he arrived before or after the completion of the