In re Double Star Brick Co. , 210 F. 980 ( 1913 )

DIETRICH, District Judge

(after stating the facts as above). In view of the fact that the applicant has presented his claim and has thus submitted the same to the jurisdiction of this court, and the further fact of his long acquiescence, it is a grave question whether his application does not come too late, and he is not estopped to raise the objection upon which he relies. In re Ives (D. C.) 111 Fed. 497; also 113 Fed. 911, 51 C. C. A. 541; In re Billings (D. C.) 145 Fed. 400. At least the application should not be granted unless it is clear that there is a want of jurisdiction of the subject-matter, and I am not satisfied that such is the case. It is to be admitted that in the decisions cited by the applicant (Kaiser Land & Fruit Co. v. Curry, 155 Cal. 642, 103 Pac. 341; Lewis v. Curry, 156 Cal. 99, 103 Pac. 493; Lewis v. Miller & Lux, 156 Cal. 101, 103 Pac. 496; Alaska Salmon Co. v. Standard Box Co., 158 Cal. 578, 112 Pac. 454) there are expressions strongly supporting the view that the forfeiture of the charter of a corporation under the act referred to operates to terminate its very existence, but it is to be borne in mind that no question like that here involved was under consideration. Very clearly the primary, if not the only, purpose of the statute was to take away from defaulting corporations the power to act as such corporations; their privilege to do business is withdrawn as a penalty for their failure to pay the license fee or tax. It certainly was not the intention' of the Legislature to impose any penalty upon, or to destroy, the rights of creditors. Were it not for these expressions of the Supreme Court of the state, I should not hesitate to hold that the statute operates simply to fender corpora--tions incompetent to transact business.

Apparently the Double Star Bick Company was insolvent and, had committed an act of bankruptcy, and its property had therefore become subject to the jurisdiction of this court for bankruptcy purposes, prior to the forfeiture of its character. The primary purpose of a bankruptcy proceeding is the distribution of the property of the debtor; the court takes hold of the res rather than the person.

While the California statute under consideration makes provision for trustees to represent the defaulting corporation in the preservation of its property for the benefit of any persons entitled thereto, no spe-7 cific scheme is outlined for the administration or distribution of the estate. In the present case it is admitted that these trustees voluntarily appeared and submitted to the adjudication, and consented to a' distribution of the estate under the provisions of the bankruptcy act.'

By section 8 of the Bankruptcy Act (Act July 1, 1898, c. 541, 30 Stat. 549 [U. S. Comp. St. 1901, p. 3425]), it is expressly provided that a proceeding shall not‘abate by reason .of the death or insanity of the bankrupt. True there is no express provision for the administration of the estate of a deceased or insane person, where proceedings are not commenced prior to the death or insanity, and the jurisdiction of bankruptcy courts in such cases may be doubtful. But at least in involuntary proceedings I am inclined to think that an insane person, though wholly incompetent in law, may be adjudged to be a bankrupt.

Perhaps still a better analogy to the present case is that of a partnership. It is familiar knowledge that under the Bankruptcy Act a partnership is deemed to be quite as much a legal entity as a corporation ; the partnership estate is treated as distinct from that of the individual members of the partnership, and is so administered. But if the theory here urged is to be accepted, by parity of reasoning it must be held that a partnership may become insolvent and commit acts of bankruptcy, and thereupon the jurisdiction of the bankruptcy court may be defeated by the dissolution of the partnership, either through the voluntary agreement of the partners, or by reason of the death of one of them.

In view of these considerations I am decided to resolve such doubt as there is in favor of our jurisdiction and to retain control of the estate. To relinquish control now would give rise to many complications, and would be to the prejudice of those, who, with the knowledge, acquiescence, and apparent consent of the applicant, have incurred expense and delayed other action in reliance upon the validity of this proceeding.