Bartels v. John Hancock Mut. Life Ins. Co. ( 1938 )

HOLMES, Circuit Judge

(dissenting).

The district court found that there was no reasonable hope of appellant rehabilitating himself with the property involved in this estate, and that the petition was not filed in good faith. The record amply supports this finding, and the majority opinion does not question it. Nevertheless, the majority opinion holds that the court was without power to dismiss the proceedings.

In sustaining the constitutionality of the act, the Supreme Court held that the proceeding could be maintained only as a bona fide effort on the part of the debtor to rehabilitate himself-, and that this was without regard to any provision of the act specifically requiring good faith. In a footnote to its opinion, it says: “Relief under section 75 (s) may be obtained only by one who has made a bona fide attempt, and has failed, to effect a composition under section 75 (a) to (r).” Wright v. Vinton Branch, 300 U.S. 440, 462, 57 S.Ct. 556, 562, 81 L.Ed. 736, 112 A.L.R. 1455. Tt further states that the proceedings will be halted at the outset if the debtor is beyond hope of rehabilitation. Such a pronouncement, when made the basis for a holding that an enforced delay in favor of one class of litigants for a period of three years does not violate the due-process clause of the Constitution, should not be disregarded.

Good faith has been defined as lack of pretense. A proceeding such as this, without hope of rehabilitation, is a mere pretense. The majority says that, because there is a field of judicial action within which the court may move and act, the power to withhold its process in aid of a pretense is denied to it, and that, as a mere ministerial, functionary, it must proceed only upon such motions and petitions as are expressly provided for in the act. This is not within the usual concept of a judicial tribunal. The Supreme Court held otherwise, and pointed out that the practical administration of the section in the lower courts already gave ample evidence of substantial protection to creditors. For these reasons, I think the judgment of the district court should be affirmed.

The decision of this case is unfortunate in view of our decision in In Matter of John Beverly Henderson, Debtor, 5 Cir., 100 F.2d 820, this day decided. The two cases were submitted at the same term of court and w.ere considered together; but, owing to the fact that exactly the same judges did not sit in both cases, a different result is reached.