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    Frederic L. Grant Shoe Co. v. WM Laird Co., 212 U.S. 445 (1909)

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    The Supreme Court affirmed the lower court's ruling that unliquidated claims can serve as the basis for a bankruptcy petition. The bankruptcy act allows unliquidated claims to be liquidated by the court and thereafter proved and allowed against the estate. Reading the requirement of "provable claims" in the bankruptcy act to mean claims that are provable at the time of filing the petition is too narrow, as some claims like those for breach of warranty are of a kind that can be proved in bankruptcy proceedings once liquidated. Denying bankruptcy jurisdiction over petitions based on unliquidated claims would produce unjust results.

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    Frederic L. Grant Shoe Co. v. WM Laird Co., 212 U.S. 445 (1909)

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    The Supreme Court affirmed the lower court's ruling that unliquidated claims can serve as the basis for a bankruptcy petition. The bankruptcy act allows unliquidated claims to be liquidated by the court and thereafter proved and allowed against the estate. Reading the requirement of "provable claims" in the bankruptcy act to mean claims that are provable at the time of filing the petition is too narrow, as some claims like those for breach of warranty are of a kind that can be proved in bankruptcy proceedings once liquidated. Denying bankruptcy jurisdiction over petitions based on unliquidated claims would produce unjust results.

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    Filed: 1909-02-23 Precedential Status: Precedential Citations: 212 U.S. 445 Docket: 35

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    The Supreme Court affirmed the lower court's ruling that unliquidated claims can serve as the basis for a bankruptcy petition. The bankruptcy act allows unliquidated claims to be liquidated by the court and thereafter proved and allowed against the estate. Reading the requirement of "provable claims" in the bankruptcy act to mean claims that are provable at the time of filing the petition is too narrow, as some claims like those for breach of warranty are of a kind that can be proved in bankruptcy proceedings once liquidated. Denying bankruptcy jurisdiction over petitions based on unliquidated claims would produce unjust results.

    Copyright:

    Public Domain
    Download as COURT, PDF, TXT or read online from Scribd
    Download as court, pdf, or txt
    26 views3 pages

    Frederic L. Grant Shoe Co. v. WM Laird Co., 212 U.S. 445 (1909)

    Uploaded by

    Scribd Government Docs
    The Supreme Court affirmed the lower court's ruling that unliquidated claims can serve as the basis for a bankruptcy petition. The bankruptcy act allows unliquidated claims to be liquidated by the court and thereafter proved and allowed against the estate. Reading the requirement of "provable claims" in the bankruptcy act to mean claims that are provable at the time of filing the petition is too narrow, as some claims like those for breach of warranty are of a kind that can be proved in bankruptcy proceedings once liquidated. Denying bankruptcy jurisdiction over petitions based on unliquidated claims would produce unjust results.

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    of 3

    212 U.S.

    445
    29 S.Ct. 332
    53 L.Ed. 591

    FREDERIC L. GRANT SHOE COMPANY, Bankrupt, Plff. in


    Err.,
    v.
    W. M. LAIRD COMPANY, of Pittsburg, Pa.
    No. 35.
    Argued December 2, 1908.
    Decided February 23, 1909.

    Messrs. P. M. French and Satterlee, Bissell, Taylor, & French for plaintiff
    in error.
    Messrs. Hiram R. Wood and McGuire & Wood for defendant in error.
    Mr. Justice Holmes delivered the opinion of the court:

    This case comes up on a certificate concerning the jurisdiction of the district


    court on the following facts: The W. M. Laird Company filed a petition in
    bankruptcy against the Frederic L. Grant Shoe Company, alleging acts of
    bankruptcy, and setting up a claim for $3,732.80 for the breach of an express
    warranty of shoes sold to it by the latter. The shoe company answered, denying
    the foregoing allegations, and denying that the claim alleged was a provable
    claim. The case coming on to be tried before a jury, it moved the court to
    dismiss the proceeding for want of jurisdiction. The motion was denied, and
    insolvency and acts of bankruptcy being admitted, the claim was liquidated at
    $3,454, the shoe company offering no evidence. The shoe company was
    adjudged a bankrupt, and, at the same time, the judge certified that the
    jurisdiction of the court to make such an adjudication on a claim for
    unliquidated damages was the only question in issue. Afterwards this writ of
    error was brought, the taking of jurisdiction being the only error assigned.

    It already has been decided between these parties that a writ of error, not an
    appeal, is the proper means of bringing the case here. 203 U. S. 502, 51 L. ed.
    292, 27 Sup. Ct. Rep. 161. But the defendant in error moves to dismiss on the

    grounds that the writ was not sued out in time, because general order 36(2)
    allows only thirty days for appeals; and that no bill of exceptions was filed.
    Neither reason is good. The statutes fix the time within which writs of error
    may be brought. Rev. Stat. 1008, U. S. Comp. Stat. 1901, p. 715. See act of
    March 3, 1891, chap. 517, 4, 5, 26 Stat. at L. 826, 827, U. S. Comp. Stat.
    1901, p. 547. Allen v. Southern P. R. Co. 173 U. S. 486, 43 L. ed. 775, 777, 19
    Sup. Ct. Rep. 518. A bill of exceptions was not necessary, as it would have
    added nothing to what is patent on the face of the record. C. H. Nichols
    Lumber Co. v. Franson, 203 U. S. 278, 51 L. ed. 181, 27 Sup. Ct. Rep. 102.
    3

    Perhaps it should be mentioned that a motion to dismiss, earlier than the one
    we have mentioned, was made and overruled (125 Fed. 576), and that
    thereafter, on a petition for review, the decision was affirmed by the circuit
    court of appeals, 66 C. C. A. 78, 130 Fed. 881. Although in the report the case
    is headed 'In Error to the District Court,' it appears by stipulation that the
    proceeding was a revisory one under 24b of the bankruptcy act [30 Stat. at L.
    553, chap. 541, U. S. Comp. Stat. 1901, p. 3432], the order having been
    interlocutory. It is suggested that the plaintiff in error is concluded by the
    action of the circuit court of appeals. But, notwithstanding the objections to a
    double resort, we do not perceive how such an interlocutory decision, even of
    the higher court, can prevent a case, otherwise proper to be brought here, from
    being taken up after a final judgment is reached.

    Coming to the question certified, we are of opinion that the decision of the
    courts below was right. The argument to the contrary is based on the letter of
    the statute, and is easily stated and understood. By 59b petitions to have a
    debtor adjudged a bankrupt may be filed only by creditors who have provable
    claims. By 63b, 'Unliquidated claims against the bankrupt may, pursuant to
    application to the court, be liquidated in such manner as it shall direct, and may
    thereafter be proved and allowed against his estate.' The word 'thereafter'
    shows, it is said, that they are not yet proved to exist when merely presented
    and sworn to. Therefore it does not yet appear that there is any foundation for
    the proceeding, in the requisite amount or even the existence of the claim. But
    there must be a proceeding in court before a liquidation can take place, and,
    therefore, the claim cannot be liquidated until a proceeding is started in some
    other way. In short, the claim upon which the petition is based must be
    provable when the petition is filed, and this claim was not provable then, since,
    by the express words of the act, it had to be liquidated before it could be
    proved.

    On the other hand, by the equally express words of 63a, among the debts that
    may be proved are those founded upon a contract, express or implied. Again, by

    17, the discharge is of all 'provable debts' with certain exceptions, and it
    would not be denied that this claim would be barred by a discharge. Tindle v.
    Birkett, 205 U. S. 183, 51 L. ed. 762, 27 Sup. Ct. Rep. 493, If the argument for
    the plaintiff in error is sound, a creditor for goods sold on a quantum valebant
    would be as badly off as the petitioner, and both of them might be postponed in
    reducing their claims to judgment until it was too late. The intimations in Tindle
    v. Birkett, supra, and Crawford v. Burke, 195 U. S. 176, 49 L. ed. 147, 25 Sup.
    Ct. Rep. 9, are adverse to such a result. The whole argument from the letter of
    the statute depends on reading 'provable claims' in 59b as meaning claims that
    may be proved then and there when the petition is filed. But, if it can be seen
    then and there that the claims are of a kind that can be proved in the
    proceedings, the words are satisfied; and further, no reason appears why a
    liquidation may not be ordered on the filing of the petition, to ascertain whether
    it is filed rightly or not.
    6

    It is said that an unfounded claim of this sort might be used as a weapon to


    enforce an unjust demand or to make a solvent but struggling debtor bankrupt.
    Re Big Meadows Gas Co. 113 Fed. 974. But an unjust demand may be made
    for a liquidated sum, also, and we have mentioned the injustice on the other
    side. Again, it has been suggested that a cause of action for a breach of
    warranty really is for deceit, and sounds in tort, claims for torts not being
    mentioned among the 'debts which may be proved' in 63a. Re Morales, 105
    Fed. 761. No doubt at common law a false statement as to present facts gave
    rise to an action of tort, if the statement was made at the risk of the speaker, and
    led to harm. But ordinarily the risk was not taken by the speaker unless the
    statement was fraudulent; and it was precisely because it was a warranty,that
    is, an absolute undertaking by contract that a fact was true,that, if a warranty
    was alleged, it was not necessary to lay the scienter. Schuchardt v. Allen, 1
    Wall. 359, 17 L. ed. 642; Norton v. Doherty, 3 Gray, 372, 63 Am. Dec. 758. In
    other words, a claim on a warranty, as such, necessarily was a claim arising out
    of a contract, even if, in case of actual fraud, there might be an independent
    claim purely in tort.

    Judgment affirmed.

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