Frederick v. Citizens' Nat. Bank

McPHERSON, Circuit Judge. In 1904 William Stevenson, John J. Stevenson, and Myers N. Titus formed a trading partnership under .the name of Stevenson, Titus & Co. In 1907 Titus died and his interest in the firm was taken over by the remaining partners, who assumed the firm liabilities then existing and continued business under the same name. In September, 1914, the firm and the two individual partners were adjudged bankrupt, and thereafter a number of claims were presented to the trustee. Among them were eleven judgment notes owned by George N. Rinehart, A. G. Titus, Robert Minor, Maud Stevenson, P. J. Ho if art, and the Citizens’ National Bank of Waynesburg, respectively. These notes are signed either by Myers. Titus and the two Stevensons, or by the two Stevensons without Titus, or by J. J. Stevenson alone, and two of them are also signed by sureties. All the proofs of claim asserted the notes to be obligations of the firm, and on this subject some further testimony was taken. The notes were for borrowed money, all of which was applied to firm purposes with the knowledge and consent of the partners. No doubt there are merchandise creditors also, but we have no information concerning the time when their debts were contracted. [1] The referee rejected all the claims on the ground that the face of the notes showed them to be individual obligations merely, and that this presumption had not been satisfactorily overthrown. Believing' the evidence to be sufficient, however, the District Judge came to a different conclusion, and allowed the claims. In this court there is little dispute about the legal rules that should govern the controversy; the principal question is whether, on all the evidence, the presumption arising from the form of the notes has been overcome, and, as we agree with the District Judge in his view of the facts, we shall add nothing to his opinion as above set out, except to say that we think the evidence as a whole justifies the inferences (1) that the payees of the notes understood that the loans were made to the firm and for its benefit; and (2) that the notes were given with the intention of binding the firm, and in the belief that such a result was being accomplished. [2] The bank rests its motion to quash on the fact that it owns two of the notes, one for more than $500, and one for less, and asks us to dismiss the appeal so far as the smaller claim is concerned on the ground that under section 25 of the Bankruptcy Act (Act July 1, 1898, c. 541, 30 Stat. 553 [Comp. St. 1913, § 9609]) we have no jurisdiction to entertain it. The record shows that the notes were separately proved before the referee, in accordance with a practice that is said to prevail in the county of Greene, where the bankruptcy proceeding was [672] carried on. No reason appears for thus dividing such a claim in the hands of a single creditor, and we think the practice is objectionable. Clearly the debt due the bank was the aggregate of both notes, and the claim should have been so proved. The motion to quash is therefore refused. [3] On the argument before us another objectionable matter was disclosed, to which we deire'to call attention. The referee’s order of rejection was general in its terms; but, as this was equivalent to a specific disallowance of each claim, it was properly so treated when the six claimants separately asked the District Court to review the order. And, although the order of the District Judge allowing the claims was also general in its scope, this again was equivalent to specific action upon each, and we find no difficulty in so treating it. But the action of the trustee in taking a single appeal from the comprehensive order of allowance violates a settled rule of appellate procedure, and would justify us in dismissing the appeal of our own motion. In the interest of regularity of practice, no other course would be open to us if we had felt obliged to disapprove the order in part, and to approve it in part. The six claims are wholly independent of each other; they are supported by different evidence, are owned by distinct parties, and present distinct subjects of litigation. As it happens, however, we have come to a similar decision on each claim, and we have therefore concluded to overlook the present error, but with the warning that our action now is not to be taken as a precedent. The order allowing each of the' claims in question is affirmed.