Bonnin v. Vazquez

OdliN, Judge, delivered tbe following opinion: . An involuntary petition in bankruptcy was filed in tbis case, which was thereafter amended and the court directed the same — 330 — to be filed as of tbe second day of October, 1923. Counsel for tbe alleged bankrupt filed a motion to dismiss tbe amended petition upon tbe ground that it did not set forth any facts constituting an act of bankruptcy, and tbe court, after bearing tbe argument, decided, on December 3d, 1923, that tbe motion for dismissal of tbe amended petition should be denied; and Can-dido Vazquez was declared a bankrupt. Thereafter, to wit, on December 13th, 1923, counsel for the. alleged bankrupt filed a denial of tbe act of bankruptcy, and with this denial there was an affidavit to tbe effect that tbe said Candido Vazquez bad not committed tbe supposed act of bankruptcy intended to be charged against him in and by said amended petition, and averred that be should not be declared a bankrupt for any cause set forth in said petition, and demanded that same be inquired of by a jury. Thereafter, to wit, on February 1st, 1924, a stipulation was filed, signed by counsel for tbe petitioning creditors and by counsel for tbe alleged bankrupt, withdrawing tbe request for a jury trial and submitting tbe matter to tbe decision of this court. This stipulation also set forth that tbe defendant admitted tbe allegations contained in tbe amended petition, but repeated bis claim that these allegations did not state facts sufficient to constitute a cause of action; in other words, be repeated bis claim that tbe petition failed to show an act of bankruptcy. Tbe matter has béen thoroughly argued by counsel for tbe petitioning creditors and by counsel for tbe alleged bankrupt, during tbe pres'ent term here at Ponce, and I have come to tbe conclusion that I erred in my decision of December 3d, 1923, with tbe result that I must dismiss tbe amended petition, it' being proper that I set forth briefly my reasons for this ruling. — 331 — The facts of the present case are admitted to bé as follows: Candido Vazquez was insolvent at the time of the filing of the original petition in this case, and was also insolvent on June 19th, 1923; it is also admitted that the petitioners are creditors with provable claims, amounting to more than one thousand dollars; and that on June 19th, 1923, the Sucesores de Casio y Primo, began a suit in the Insular district court at Ponce to collect a debt due them from Candido Vazquez, which debt is of a nature provable in bankruptcy proceedings. Also at the time of instituting said suit, the plaintiffs therein prayed for and obtained an attachment of the property of Candido Vazquez, under the local law of Porto Pico, and that the property so attached was perishable in its nature; that on July 11th, 1923, before any judgment was rendered, the plaintiffs in that suit obtained an order for the sale of the property attached, on the sole ground that the same was perishable in its nature, under the provisions of § 5242 of the Revised Statutes Comp. Stat. § 9834, 6 Fed. Stat. Anno. 2d ed. p. 903, of Poto Rico, and it was provided that the funds which should be produced by said sale were to be deposited with the clerk of the Insular district court at Ponce to wait the final determination of the suit; and that the marshal of the Insular district court at Guayama proceeded forthwith to advertise said perishable property, being provisions, to be sold on the 23rd day of July, 1923; that four days prior thereto, to wit, on July 19th, 1923, a judgment by default was entered against the defendant by the Insular district court at Ponce, and' that the said defendant appealed therefrom on August 20th, 1923, exactly one month after the petition in bankruptcy was filed; that prior to-the date set for the sale of said provisions, the debtor, Candido Vazquez, did — 332 — not ask that said sale be voided and annulled, that the judg-inent' of the Insular district court at Ponce, entered on July 19th, 1923, was by default, and that the supreme court of Porto Rico, on December 18th, 1923, dismissed the bill because counsel for Candido Vazquez had filed no brief; and that the notice of the judgment of the Insular district court at Ponce was mailed to the said Candido Vazquez on July 21st, 1923. In connection with a decision which I have read on this matter, I am not in the least influenced by the so-called appeal taken by counsel for Candido Vazquez to the supreme court of Porto Rico. It is very evident that his appeal was simply to kill time and had no meaning or force, according to my view of the case. The decision to which I have arrived is based upon entirely different grounds. I find on page 153, volume 1, of the valuable work of Mr. Collier on Bankruptcy, 13th ed. a clear and definite statement that attachment proceedings which have not been followed by a judgment are not of themselves sufficient to create an act of bankruptcy. Mr. Collier distinctly says there must be an actual determination of the claim, and a consequent judgment, execution, levy and day of sale appointed. It is conceded in the present case that there never was any execution issued. When it is sought to be argued that the sale of the perishable property, consented to by Candido Vazquez, is equivalent to an execution, a moment’s thought will show that this position is entirely untenable. It is distinctly admitted by both counsel in the present case that the order for the sale of provisions provided that the money derived from said sale should be deposited with the clerk of the Insular district court at Ponce. Where an execution issues, the money goes to the plaintiff in the execution; whereas in this case of a sale of per — 333 — Ishable property, under the local statutes of Porto Rico, tbe money remains in tbe custody of tbe court and awaits tbe final disposition of tbe suit, in other words, tbe money simply takes tbe place of tbe provisions. But tbe case wbicb absolutely is controlling on tbis court is that of tbe Parmenter Mfg. Co. v. Stoever, being a decision of tbe circuit court of appeals, first circuit, in tbe year 1899, reported in 38 C. C. A. 200, 97 Fed. page 330, 2 N. B. N. Rep. 174. It is true in tbis case tbe judgment of tbe district court in favor of tbe creditors and against tbe bankrupt was affirmed, but tbe reason wby it was affirmed is clearly shown by a brief recital of tbe facts, and a reading of tbe decision of Circuit Judge Putnam shows clearly that if tbe facts in tbe Parmenter case bad befen tbe same as they are in tbe case now before tbis court, no adjudication in bankruptcy would have followed. In tbe Parmenter Mfg. Co. Case tbe property of tbe alleged bankrupt was attached on July 5th, 1898, under a writ issued from one of tbe State courts in Massachusetts, a judgment followed in default and was entered on September 21st, 1898, and there at once issued a writ of execution in wbicb tbe property attached was seized under date of October 15, 1898, and tbe sale was made on October 27th. Tbe petition in bankruptcy was filed on February 1st, 1899. It will thus be seen that tbe petition in bankruptcy was filed more than four months after tbe attachment, but it was less than four months from tbe time of seizure and sale in execution. Argument bad been made before tbe district judge that tbe adjudication in bankruptcy should not be made on tbe ground that tbe period of four months dates from tbe day of attachment, and not from tbe seizure or sale in execution. Tbe court distinctly says that inasmuch as tbe — 334 — failure to effect the execution before the sale was an act of bankruptcy, it is clear that the four months period runs not from the date of attachment, but from the date connected with the proceedings after the judgment. In view of the language of Mr. Collier, and in view of the language used by Judge Putnam, and because the decisions of the circuit court of appeals of the first circuit are absolutely binding upon this court, I am constrained to hold that no act of bankruptcy has been shown against Candido Vazquez, and the amended petition is dismissed. • To this order and opinion counsel for the petitioning creditors excepts'. Done and Ordered in open court, at Ponce, Porto Eico, this 13th day of March, 1924.