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IN RE PHILADELPHIA CONSISTORY SUBLIME PRINCES ROYA

September 4, 1941

In re PHILADELPHIA CONSISTORY SUBLIME PRINCES ROYAL SECRET 32 degrees ANCIENT ACCEPTED SCOTTISH RITE


The opinion of the court was delivered by: KALODNER

The question involved is whether an unincorporated fraternal association not conducted for profit may file a voluntary petition in bankruptcy. (The parties have eliminated the controversy whether the association in question is a "moneyed, business, or commercial" organization.)

The matter comes before me on petition to dismiss the voluntary petition, answer and amended answer, and reply to amended answer. I am considering the voluntary petition itself as part of the record.

 On May 23, 1941, "Philadelphia Consistory Sublime Princes Royal Secret 32 degrees Ancient Accepted Scottish Rite", hereinafter for brevity called the Consistory, filed a voluntary petition in bankruptcy.The petition is executed in the name of the Consistory by its treasurer, and attached to the petition is a certified copy of a resolution under the seal of the Consistory authorizing the filing and execution of the petition, and a certification by the secretary, likewise under seal of the Consistory, of the adoption of this resolution and its correctness as appearing on the minutes of the association.

 The amended answer to the petition to dismiss sets forth (paragraph 2):

 "It is averred that Philadelphia Consistory is an unincorporated beneficial association, and that from time to time it gives various funds, aid and support to those of its members and members' families, in need and applying to it for such.* * *

 "It is further averred that Philadelphia Consistory has the following powers and privileges of a corporation, that is to say: It is an association of more than seven thousand men; has a common name; has a constitution and bylaws; it elects governing trustees; it has powers to own real estate and personal property, and does so own them; it has power to sue and be sued; it acts by its trustees, who are elected as a single body."

 Section 4 of the amended Bankruptcy Act, the Chandler Act, approved June 22, 1938, 11 U.S.C.A. § 22, provides as to "Who may become bankrupts":

 (a) "Any person, except a municipal, railroad, insurance, or banking corporation or a building and loan association, shall be entitled to the benefits of this Act [title] as a voluntary bankrupt."

 (b) "Any natural person, except a wage earner or farmer, and any moneyed, business, or commercial corporation, except a building and loan association, a municipal, railroad, insurance, or banking corporation, owing debts to the amount of $1,000 or over, may be adjudged an involuntary bankrupt * * *."

 Section 1, Meaning of Words and Phrases, subdivision 23, of the amended Bankruptcy Act, the Chandler Act, defines a "Person" as follows: "'Persons' shall include corporations, except where otherwise specified, and officers, partnerships, and women, * * *."

 It is to be noted that the definition of "Persons" includes "corporations", and the definition of a corporation appears in section 1, subsection 8, of the same Title, as follows: "'Corporation' shall include all bodies having any of the powers and privileges of private corporations not possessed by individuals or partnerships and shall include partnership associations organized under laws making the capital subscribed alone responsible for the debts of the association, joint-stock companies, unincorporated companies and associations, and any business conducted by a trustee or trustees wherein beneficial interest or ownership is evidenced by certificate or other written instrument."

 It is contended by the petitioner who seeks to dismiss the voluntary proceedings that the term "corporations" as extended or made more comprehensive by the Bankruptcy Act relates solely to organizations having a limited liability of those interested in them ("under laws making the capital subscribed alone responsible for the debts of the association") and comprehends only business or commercial organizations. A consideration of the development of the legislation and examination of the present Act, however, fails to sustain such contentions.

 The present definition of corporations in Section 1, sub. 8 of the Chandler Act is derived from Section 1, sub. 6 of the Act of July 1, 1898, c. 541, § 1, 30 Stat. 544, which originally read:

 "'Corporations' shall mean all bodies having any of the powers and privileges of private corporations not possessed by individuals or partnerships, and shall include limited or other partnership associations organized under laws making the capital subscribed alone responsible for the debts of the association; * * *" and this subsection was amended by the Act of May 27, 1926, c. 406, § 1, 44 Stat. 662, by the placing of a comma after the word "association" and the addition of the following words: "* * * joint stock companies, unincorporated companies and associations, and any business conducted by a trustee, or trustees, wherein beneficial interest or ownership is evidenced by certificate or other written instrument."

 Thus, it will be noted that the definition of a corporation as it appears in section 1, subsection 8, of the Chandler Act, is substantially the same as existed ...


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