Opinion
J. Morton Rosenblum, of Manchester, N.H., for bankrupt.
Samuel A. Margolis, of Manchester, N.H., for creditors.
MORRIS, District Judge.
This is an involuntary petition in bankruptcy filed against Thomas K. Roy, doing business as Tommy Roy's Diner on June 18, 1942. The petition contains the names of three creditors and the amount of their claims as follows: Silver Bros. Co., Inc., $270.98; Manchester Fruit & Produce Co., Inc., $88; Foster Beef Co., $189.10.
On June 29, 1942, the alleged bankrupt filed a denial of bankruptcy through his attorney, J. Morton Rosenblum. On July 24, 1942, the alleged bankrupt filed a motion to amend the answer and dismiss the action in that the petitioning creditor, the Manchester Fruit & Produce Co., Inc., is precluded and estopped from becoming a petitioning creditor on the creditor's petition in that it did release in writing and waive its claims against the defendant, also, that it is estopped from joining in an involuntary petition against the defendant in that it has, prior to the filing of said petition, exercised an election of inconsistent remedies by releasing and discharging the defendant in writing, waiving its claim against him, and assenting to the assignment for the benefit of creditors in writing, and therefore cannot allege such act, the general assignment, as the basis for an involuntary adjudication.
The matter came on for hearing before the Court, July 2, 1942, but the amended answer was not filed until after the hearing.
I find the following facts: On March 30, 1942, the alleged bankrupt made a common law assignment to his attorney, J. Morton Rosenblum. The assignment was in the usual form and recorded in accordance wth the New Hampshire statute in the City Clerk's office in Manchester on the same day.
It appears that on April 4, 1942, the Manchester Fruit & Produce Co., Inc., one of the signers of the petition in bankruptcy, assented to an assignment in writing, but it is to be noticed that this assent refers to an assignment to Rosenblum dated March 20, 1942. No such assignment appears in the record.
The question for determination is whether or not the Manchester Fruit & Produce Co. is barred because of this assent to an assignment which did not exist, from becoming a petitioning creditor in the bankruptcy proceedings?
Upon an examination of the assent of the Manchester Fruit & Produce Co., and the assent of George Ingle, the only two appearing in the files, I find that the date, 'March 20, 1942,' was filled in on the typewriter by someone in the assignee's office and sent to creditors for their signature. The assent was inclosed in a letter to the creditors under date of March 31, 1942, in which it was stated that the 'debtor on March 30th made a common law assignment for the benefit of creditors to the writer.'
The assignee brushed the matter of dates aside as a typographical error but written documents cannot be so easily changed. The fact remains that the Manchester Fruit & Produce Co., Inc., signed an assent to a non-existent assignment which it now repudiates by signing the bankruptcy petition.
It is claimed that the Manchester Fruit & Produce Co., had a legal right to repudiate its assent under the provisions of Section 59, Sub. h of the Bankruptcy Act of 1938, 11 U.S.C.A. § 95, Sub. h, which reads as follows: 'A creditor shall not be estopped to act as a petitioning creditor because he participated in any prior matter or judicial proceeding, having for its purpose the adjustment or settlement of the affairs of the debtor or the liquidation of his property, or to allege such prior matter or proceeding as an act of bankruptcy, unless he has consented thereto in writing with knowledge of the facts, if any, which would be a bar to the discharge of the debtor under this Act (title).'
I construe this Act in accordance with its plain language and hold that the Manchester Fruit & Produce Co., Inc., is not estopped to act as a petitioning creditor in the bankruptcy proceeding. In re Stein-Lazow, Inc., D.C., 30 F.Supp. 409; In re Elfast, D.C., 30 F.Supp. 819.
I find that the alleged bankrupt owes debts to the amount of more than $1,000. The assignment of itself is an act of bankruptcy, and as I have disposed of the only questions raised as grounds for denying bankruptcy, there appears to be no reason why adjudication should not be entered, and the judgment is that Thomas K. Roy, doing business as Tommy Roy's Diner, be, and he hereby is, adjudged a bankrupt and the petition referred to Raymond U. Smith, Referee in Bankruptcy. The motion to dismiss is denied.