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In re Harvey Morse, an alleged Bankrupt.

petitioning creditor and other creditors constituting the number and amount of creditors required by the bankruptcy Act to procure an adjudication in bankruptcy. On the 11th of March, 1879, the said petitioning creditor filed an amended petition, not joining any other creditor. The petition was verified March 10th, 1879. It sets forth, as the indebtedness to the petitioning creditor, three promissory notes endorsed by Morse, and alleges that Morse was duly charged as endorser on each of them. One of the notes, for $500, fell due June 14th, 1878; one, for $300, fell due July 14th, 1878; and the third, for $500, fell due August 14th, 1878, which was after the original petition in bankruptcy was filed. The amended petition sets forth the filing of the original petition, and the filing of an answer thereto by Morse, and alleges that it was held that the petitioner did not constitute the requisite amount to authorize an adjudication of bankruptcy, and that such amended petition is prepared as an amended petition. To said amended petition Morse interposed a demurrer, upon the grounds (1) that it appears that said petition is founded in part upon promissory notes endorsed by Morse, maturing and protested after the filing of the original petition in bankruptcy ; (2) that said petition does not show or state an indebtedness upon which a petition in bankruptcy could be maintained at the time of filing the original petition in bankruptcy, or when the bankruptcy Act was repealed. On the hearing, the District Court made the said order of March 11th, 1879.

I have not been furnished with a copy of any decision giving the views of the District Court, and am compelled to the conclusion that the order in question was erroneous and must be reversed. The statute in regard to involuntary bankruptcy, (Act of June 22d, 1874, $ 12, 18 U. S. Stat. at Large, 180,) provides, that any person "owing debts, as aforesaid,” who shall do so and so, “shall be deemed to have committed an act of bankruptcy, and, subject to the conditions hereinafter prescribed, shall be adjudged a bankrupt on the petition of one or more of his creditors, who shall constitute

In re Harvey Morse, an alleged Bankrupt.

It was

one-fourth thereof, at least, in number, and the aggregate of whose debts provable under this Act amounts to at least onethird of the debts so provable.” The section goes on to provide for the filing, by the debtor, of a list of his creditors, with “ the sums due them respectively.” The expression, “owing debts, as aforesaid,” refers to the words, in $ 5,014 of the Revised Statutes, (Act of March 2d, 1867, $ 11, 14 U.S. Stat. at Large, 521), “owing debts provable in bankruptcy,” or “owing debts provable under this Act.” The meaning of the statute is, not merely that the debts shall be of a provable character, or shall be at some time provable, but that they shall be debts provable at the time the petition is filed, and made provable at that time by the statute. The whole subject of provable debts is regulated and covered by SS 5,067, 5,068, 5,069, 5,070 and 5,071 of the Revised Statutes. originally provided as follows, by $ 19 of the Act of March 2d, 1867, (14 U. S. Stat. at Large, 525 :) “ All debts due and payable from the bankrupt at the time of the adjudication of bankruptcy, and all debts then existing, but not payable until a future day, a rebate of interest being made when no interest is payable by the terms of the contract, may be proved against the estate of the bankrupt.” It was held by judicial decisions, that the words, " at the time of the adjudication of bankruptcy,” meant " at the time of the commencement of proceedings in bankruptcy ;” and that time was the time of the filing of the petition. (Act of March 2d, 1867, $ 38, 14 U.S. Stat. at Large, 535; Rev. Stat. U. S., $ 4,991.) Accordingly, in $ 5,067 of the Revised Statutes, the above provision of $ 19 of the Act of 1867 was re-enacted in these words: “ All debts due and payable from the bankrupt at the time of the commencement of proceedings in bankruptcy, and all debts then existing, but not payable until a future day, a rebate of interest being made when no interest is payable by the terms of the contract, may be proved against the estate of the bankrupt.” The same § 19 of the Act of 1867 went on to provide as follows: "If the bankrupt shall be bound as drawer, indorser, surety, bail or guarantor, upon any bill,

In re Harvey Morse, an alleged Bankrupt.

bond, note, or any other specialty or contract, or for any debt of another person, and his liability shall not have become absolute until after the adjudication of bankruptcy, the creditor may prove the same after such liability shall have become fixed, and before the final dividend shall have been declared.” This provision was re-enacted as follows, in g 5,069 of the Revised Statutes : “When the bankrupt is bound as drawer, indorser, surety, bail or guarantor, upon any bill, bond, note, or any other specialty or contract, or for any debt of another person, but his liability does not become absolute until after the adjudication of bankruptcy, the creditor may prove the same after such liability becomes fixed, and before the final dividend is declared." It is declared, by $5,072, that “no debts other than those specified in the five preceding sections shall be proved or allowed against the estate.” The present case does not fall within $ 5,070 or $ 5,071. It does not fall within $ 5,068, for, although an endorsement of a note by a bankrupt is a contingent liability contracted by him, it is “ herein otherwise provided for,” that is, in $ 5,069. In 8 19 of the Act of 1867, what is now found in $ 5,069 of the Revised Statutes preceded what is now found in $ 5,068 of the Revised Statutes. The endorsement of a note falls distinctly within $ 5,069. It does not become a debt, within the mean. ing of $ 5,067, until the liability of the endorser by reason of it becomes absolute or fixed. Until then it is not a debt “due and payable from the bankrupt.” If the liability of the endorser does not become absolute or fixed until after the commencement of proceedings in bankruptcy, the endorsement cannot be a debt “ due and payable from the bankrupt at the time of the commencement of the proceedings in bankruptcy," nor can it be a debt " then existing but not payable until a future day,” within the meaning of $ 5,067. The words, “the adjudication of bankruptcy,” in $ 5,069, must be held to mean "the commencement of proceedings in bankruptcy,” as was the case with the like words in the clause of § 19 of the Act of 1867 which is now found in $ 5,067 of the Revised Statutes. The endorsement which matured in this case

In re Harvey Morse, an alleged Bankrupt.

on the 14th of August, 1878, became a provable debt then, under $ 5,069, if the endorser was then properly charged, but it was not a provable debt when the proceedings in bankruptcy were commenced. They were commenced when the original petition was filed. The amended petition is the original petition amended. It has relation to the time of the filing of the original. A new bankruptcy proceeding was not commenced by the filing of the amended petition. The proceeding commenced by the filing of the original petition was continued and proceeded with by the amendments made to it by the amended petition.

It is entirely clear, therefore, that the demurrer to the amended petition ought to have been sustained, on the ground alleged in the demurrer, that such amended petition was founded in part upon a promissory note endorsed by the al. leged bankrupt, maturing after the original petition in bankruptcy was filed. The averments in the amended petition are to the effect that the debts set forth, of which such note is one, are provable under the statute against Morse, and that it requires all the debts so set forth to make up one-third of the debts provable under the statute.

An order must be entered reversing said order of March 11th, 1879, with costs to Morse in this Court; and directing the District Court to enter an order allowing, with costs to Morse in that Court, the demurrer to the amended petition, and vacating the adjudication in bankruptcy and the reference to the register, and all subsequent proceedings founded thereon; and also directing the District Court to take such further proceedings in the matter as shall be proper.

There is, also, a petition for the review and reversal of an order made by the District Court, April 1st, 1879, denying a motion by Morse for leave to withdraw said demurrer and to answer said amended petition. The order overruling the demurrer stated that it was made without prejudice to an application for leave to answer, upon showing satisfactory cause therefor. The application was promptly made. I think that it should have been granted, in analogy to the practice laid

The W. E. Gladwish, The F. B. Thurber and TŁ

down in Rule 34 in equity. The proposed ified, was presented in connection with the in the record. It alleges defences which M to try and prove. An order must be ente: order of April 1st, 1879, with costs to Morse in this Court.

vewing the

Kennedy & Tracy, for Morse.

James B. Brooks, opposed.

Tue W. E. GLADWISH, Tue F. B. THURBER AND THE

FRANCIS KING.

A person who ships cargo by a barge which he knows must be towed to her

place of destination, is bound by the terms of towage which the barge agrees

on with the tug which the barge procures to tow her. If the barge is sunk and the cargo is lost, by contact with ice, while the barge

is being towed by the tug, the owner of the cargo must show negligence on

the part of the tug, in order to recover against it for such loss. It was held not to be negligence in the tug to keep on, after reaching ice, in

stead of lying by, or making a harbor ; that the towing hawser was not too long; that the speed was not too great; that nothing could have been done by the tug to avoid the danger, when the obstruction which actually caused the loss was seen; and that the barge and the vessels in the tow with her were not improperly arranged. To make the tug liable for keeping on, it must appear that the error was one

which a careful and prudent navigator, surrounded by like circumstances, The judgment of witnesses as to speed, formed long after the event, and not based

upon anything which specially attracted attention at the time, is rarely to be

1;

would not have made.

depended upon.

(Before WAITE, Ch. J., Southern District of New York, August 28th, 1879.)

This was an appeal by the libellant from a decree of the District Court, in a suit in rem, in Admiralty, dismissing the

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