In re Breitbart

LEARNED HAND, District Judge (after stating the facts as above). The bankruptcy of a partnership for most purposes is quite independent of the bankruptcy of the partners individually. The petition for adjudication included the partners, both as a firm and as individuals, but on this no adjudication was ever entered. The composition was an independent proceeding, like a discharge, and commenced by the filing of the petition on December 13th. This was entitled, “Deiv Breitbart and Sam Arbeitel, Trading as the B. & A. Novelty Store.” It alleged that they had filed their schedules and wished to make an offer in composition. This petition changed the caption of the petition for adjudication and was a petition for partnership composition. Indeed, these schedules showed that Breitbart had no individual assets and could not have offered an individual composition. It would have been a fraud on the partnership creditors to include the individual creditors on the same terms and pay them out of the same assets. The [695] whole confirmation went through on that basis. The order referring the petition to the master, signed January 3d, was entitled in the same way, as well as the certificate of the master, and the order of composition. Moreover, the notice to creditors, which is the whole basis of jurisdiction, gave no intimation that the partners were seeking a composition individually. Clearly, then, this was a firm proceeding, and had no effect on the individual debts. The order of composition was entirely regular, and ran along with all that had been done hitherto, except for the schedule annexed to it, which contained Weisager’s name, an individual creditor. That debt should not have been scheduled, because the petition was necessarily limited to firm debts. It is true that Weisager, as an individual creditor, would not be in fact barred, but there is on that account no reason why Breitbart should have false evidence of a discharge to which he is not entitled. Therefore his name will be stricken from the schedule. The applicant also moves to vacate the stay obtained upon the involuntary petition. If the order of composition had discharged Weisager’s claim against Breitbart individually, the order should be vacated, for the discharge proceedings would be terminated. If it does not, the stay should remain, because Breitbart’s petition for discharge individually has never been filed. He may still petition for a discharge, and until he does, and those proceedings are terminated, the stay is good under the statute. Therefore the stay must continue until either those discharge proceedings are determined or until the time prescribed by the statute has elapsed. An order will therefore be entered, denying the application to vacate the stay, but amending the schedule annexed to the order of February 3, 1923, by striking out the petitioner’s name.