In re KARDOS et al. (two cases).
Nos. 162, 163.Circuit Court of Appeals, Second Circuit.
February 7, 1927.*707 Albert Falck and Bigham, Englar & Jones, all of New York City, for petitioner appellant.
David W. Kahn, of New York City, for trustee in bankruptcy.
Before HOUGH, MANTON, and HAND, Circuit Judges.
HOUGH, Circuit Judge (after stating the facts as above).
Neither the Bankruptcy Act (Comp. St. §§ 9585-9656) nor the General Orders prescribe in detail how a proof of debt shall be drawn. Section 57 (Comp. St. § 9641) and forms 31 and 32 give outlines, but nothing more. The exact wording of a proof of debt, like a pleading, must always be largely a matter of practice or habit.
It cannot be doubted that a proof can be submitted, making claim against both a partnership estate and the estates of the individual partners. There is nothing necessarily inconsistent in making such demand. In re Coe (C. C. A.) 183 F. 745, affirming (D. C.) 169 F. 1002; In re McCoy (C. C. A.) 150 F. 106.
It is indeed true that every partnership debt is in a sense a demand against the estates of the individual partners. As to which estate shall pay, or be first devoted to payment, is a matter of properly marshaling the assets. Section 5g (Comp. St. § 9589). As matter of right, therefore, these claims, like any others, could have been filed against both the individual and the partnership property; but as matter of practice they were we *708 think read as being primarily filed against the partnership estate.
The original proofs are loosely drawn, and might be read as demands against both estates, and it is not unlikely that our feeling that they were well interpreted as claims against the firm arises mostly from the admitted infrequency of double claims.
But they were actual claims filed, and under some circumstances they might be paid in part out of the individual assets. Therefore under a long line of cases (cited and considered in Rem. §§ 888, 889) they were amendable after the expiration of the statutory year. A far more extreme case of amendment than this is In re Kessler, 186 F. 127, decided in this court. We cannot agree with In re McCallum (D. C.) 127 F. 768, while In re Walton, Deady 510, Fed. Cas. No. 17,129, a case under the act of 1867, is not, we think, applicable. It was therefore error to hold (if such was the holding) that there was no power to grant the amendment.
This point could be and is reached by petition to revise. In so far, however, as the action of the court below resulted in a denial of any right even to propound a claim against the individual estate, appeal lay as of right at the time it was taken (i. e., before August 27, 1926). Result is that the order denying leave to amend is reversed, with costs, and the matter remitted, with direction to allow the amendment.
In making this direction we have not intimated any opinion as to the validity of Baldwin's claim, or whether he is any better off after amendment than he was before. Our holding is only that he was entitled to amend, if so advised.