In re Pilger

SEAMAN, District Judge. The issues of insolvency and of commission of an act of bankruptcy having been determined upon the-hearing before a jury, the questions of jurisdiction remain for consideration. Two objections are raised to adjudication of bankruptcy under the petition: (i) That the petition contains no averment that Pilger was not a wage-earner, and the .testimony shows-that he was such in fact; (2) that one of the three petitioners (R. H. Schwab & Sons Company) was not a creditor. The testimony is undisputed that the alleged bankrupt was secretary and stockholder of a bankrupt corporation (Egan Engineering Company) up to the adjudication of bankruptcy against that corporation; that as secretary he was financial manager and “solicitor” for business, at a salary of $100 per month, and that he had no other business; that the alleged act of bankruptcy occurred April 23, 1902; and that when the petition herein was thereafter filed he was earning $65 to $70 per month as a bookkeeper in the employ of other persons. Section 4b of the bankruptcy act authorizes involuntary proceedings against “any natural person, except a wage-earner or a person engaged chiefly in farming or the tillage of the-soil”; and section 1 (27) defines a wage-earner as “an individual-who works for wages, salary or hire, at a rate of compensation not exceeding one thousand five hundred dollars per year.” No jurisdiction exists to adjudge involuntary bankruptcy against a person-who is within either of these exceptions. In re Taylor, 42 C. C. A. 1, 102 Fed. 728. Whether a petition is defective which is made in. the general form prescribed by the supreme court rules in that behalf, and does not negative these exceptions, has not been directly-decided in any case called to my attention; nor is the question material to the present controversy, as the facts are undisputed, and an. amendment of the petition would cover any such defect in the event of clear proof that the alleged bankrupt was not within either exception. When • jurisdiction thus depends upon a specific fact or condition, the presumption is against jurisdiction, and, unless the207 proof presents a case to which the exception is clearly inapplicable, the bankruptcy court cannot take cognizance. In re Plótke, 44 C. C. A. 282, 286, 104 Fed. 964. The general rule in respect of such conditions is that jurisdiction depends upon the state of things at the time the action is commenced. 'Mollan v. Torrance, 9 Wheat. 537, 6 L. Ed. 154, 2 Rose’s Notes U. S. Reports, 279. Under this-provision of the bankruptcy act, it has been held (In re Luckhardt [D. C.] 101 Fed. 807) that the question whether the alleged bankrupt is within the exception dates from the commission of the alleged act of bankruptcy; and like view appears to have been adopted by Judge Ware, under the old act, in Everett v. Derby, 5 Law Rep. 225, Fed. Cas. No. 4,576. Tested by either of these rules, Pilger had no business or occupation other than that of bookkeeper and wage-earner at a salary less than $1,500 per year, and was not subject to involuntary bankruptcy. Whether one or the other date is applicable to this case does not call for decision, as I am of opinion that the inquiry cannot, at the utmost, extend beyond the date of committing the act of bankruptcy. Moreover, if the prior status of Pilger were open to consideration on this question, the testimony shows that he was theretofore a wage-earner, within the above definition, and that he had no other occupation. While the fact appears that he was a stockholder in the insolvent corporation, it is not probable that such fact can be treated as a separate occupation or business, and I do not perceive that it would affect the exception. The second objection, therefore, requires no consideration. The petition must be dismissed for want of jurisdiction.