In re Dresser

COXE, Circuit Judge (after stating the facts). Several of the objections urged against the original proof were obviated by the amended proof, and it is manifest that the issue now arises on the amended proof and objections thereto. It is, at least, doubtful whether the objections are sufficient to present any of the questions now discussed, but as the point has not been seriously pressed we shall regard them as presenting fairly the following questions; First. Does the amended proof, upon its face, state a claim against Dresser & Co.? And Second. Is it prima facie evidence of the indebtedness as therein stated ? It is contended by the appellant that the agreement of the firm of Dresser & Co. to be valid must be in writing, and as no written agreement is filed with the proof, pursuant to section 57b of the law (Act July 1, 1898, c. 541, 30 Stat. 560 [U. S. Comp. St. 1901, p. 3443]), it must be presuttied that no such writing exists and, therefore, the proof is invalid on its face. The paper is, no doubt, evidence to establish the allegations of the proof of claim, but failure to plead it raises no presumption against its existence. Non constat the writing which the appellant considers necessary may be in the possession of the claimant to be produced when an issue is presented requiring its production. [498] But the transaction is not, we think, within the statute of frauds. In Booth v. Eighmie, 60 N. Y. 238, 19 Am. Rep. 171, the court says: “Tlie test to be applied under the statute in every case, is whether the party sought to be charged is the principal debtor primarily liable, or whether he is only liable in case of the default of a third person; in other words, whether he is the debtor or whether his relation to the creditor is that of surety to him for the performance, by some other person, of the obligation of the latter to the creditor.” In Bank v. Chalmers, 144 N. Y. 432, 39 N. E. 331, the court says: “Wherever the facts show that the debtor has transferred or delivered to the promisor, for his own use and benefit, money or property in consideration of the latter’s agreement to assume and pay the outstanding debt, and he, thereupon has promised the creditor to pay, that promise is original upon the ground that by the acceptance of the fund or property under an agreement to assume and pay the debt the promisor has made that debt his own, has become primarily liable for its discharge, and has assumed an independent duty of payment irrespective of the liability of the principal debtor.” See, also, as bearing on the question involved: Hendrick v. Lindsay, 93 U. S. 143, 23 L. Ed. 855; Johns v. Wilson, 180 U. S. 440, 21 Sup. Ct. 445, 45 L. Ed. 613; Barlow v. Meyers, 64 N. Y. 41, 21 Am. Rep. 582; Coster v. The Mayor, 43 N. Y. 399. The language quoted above is applicable to the present situation. The bankrupts took over the entire property of Dresser, including, the claimant’s securities and the moneys obtained from the loans, and assumed all his liabilities. The benefits to be derived from the claimant’s property were transferred to the firm and this constituted a new and sufficient consideration to support its promise and obligation to return or account for the securities. The averments of the proof leave no doubt as to the true nature of the transaction.' The claimant has lost the possession of her securities, the bankrupts took them, obtained money thereon, which they used in their business, and agreed to return them to the claimant. There is some obscurity in the allegation that the money derived from the loans was turned over to the bankrupts, but it is evidently due to a clerical omission, and is not fatal to a document which need not necessarily conform to the strict rules of pleading. The amended proof of claim being properly verified and valid upon its face is prima facie evidence of the indebtedness of the bankrupts. We are dealing here with a statute the primary object of which is to collect the property of the bankrupt speedily and divide it equally among his creditors. Analogies drawn from pleadings in actions at common law and in equity furnish little assistance in the interpretation of such a law. If the doctrine be once established that a proof of claim in bankruptcy is entitled to no greater weight than a complaint- in an ordinary action at law the most serious results will follow. Any vindictive or contumacious creditor can, by filing objections, compel creditors to come from distant states and even from foreign countries to testify in support of their claims before a word of testimony impeaching their validity has been adduced. No one disputes that in the absence of objection the proof of claim stands as sufficient warrant for the payment of a dividend based thereon. It is not then a mere pleading, confessedly it possesses some probative force. This being [499] so it is not easy to approve the logic which' deprives it of all weight as evidence upon the mere filing of an objection. If the appellant’s contention be sustained an efficient administration of the law might, as we have seen, be made difficult, if not impossible. We see no reason or necessity for such an interpretation of the law. On the other hand a construction which requires the objector to offer some proof before subjecting the creditor to the expense and annoyance of presenting sustaining evidence seems to be in accord with the intent and purpose of the act and to present a simple, efficient and perfectly fair rule of procedure. In a vast majority of instances the claims of creditors are susceptible of the most simple verification. The trustee has the bankrupt’s books at his disposal and can at any time call upon the bankrupt for assistance. In cases where exaggerated or fraudulent claims are filed there is no difficulty in ascertaining and proving facts sufficient to establish the true character of the claim, thus putting the claimant upon his proof. The subject was carefully examined in Re Sumner (D. C.) 101 Fed. 224, and the conclusion was reached that under section 57 “a,” “b,” “d,” and “f” of the act the objector, though not required to disprove the claim, must produce “evidence whose probative force shall be equal to, or greater than, the evidence offered in the first instance by the claimant.” This, we think, is a correct statement of the law and is in accord with general order 21 (6), 89 Fed. x, which seems to indicate that the claim must stand until evidence has been adduced which authorizes the referee to expunge or reduce it. See, also, In re Shaw (D. C.) 109 Fed. 780; In re Felter (D. C.) 7 Fed. 904. The order of the District Court is affirmed.