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IN RE EASTERN SUPPLY CO.

August 1, 1961

In the Matter of EASTERN SUPPLY COMPANY, a co-partnership consisting of Munroe E. Greene and Joseph Blonstein, Partners


The opinion of the court was delivered by: MARSH

On July 23, 1958, certain creditors of Eastern Supply Company, a co-partnership consisting of Munroe E. Greene and Joseph Blonstein, partners, filed a creditors' petition in this court of bankruptcy seeking to have the partnership adjudged a bankrupt. The petition alleged that the partnership committed the fifth act of bankruptcy 'in that it did heretofore, to-wit, on the 24th day of March, 1958, while insolvent, or unable to pay its debts as they matured, permitted or suffered voluntarily or involuntarily, the appointment of a Receiver to take charge of its property in the proceedings in The Court of Common Pleas of Allegheny County * * *.' *fn1"

The partnership denied the allegation and demanded a jury trial.

 On April 20, 1960, a judge, the writer of this opinion, referred the matter to the Referee in Bankruptcy at Pittsburgh, Pennsylvania, to conduct the jury trial. *fn2" No objection to this order was made to the referring judge.

 At the conclusion of the petitioning creditors' case in the jury trial conducted by the Referee, the partnership moved for a directed verdict. This was refused and the partnership offered no defense and rested.

 The following question was submitted to the jury and answered by it in the affirmative:

 'Did the appointment of Receivers on March 24, 1958, by the State Court occur while Eastern Supply Co. was unable to pay its debts as they matured?' *fn3"

 On June 16, 1960, the Referee filed an Order adjudicating the partnership a bankrupt.

 On June 17, 1960, the partnership filed a motion to set aside the verdict and have judgment entered in accordance with debtor's motion for a directed verdict and a motion for a new trial.

 Both motions were denied by the Referee in a Memorandum and Order. Subsequently, the partnership filed the petition for review presently under consideration.

 Argument was duly held and briefs submitted. At a supplemental hearing held on June 22, 1961, counsel for the partnership indicated that he was relying on one point and one point alone in his petition for review, and that all other points raised by the petition and in his previous motions before the Referee were abandoned. One of the points previously raised was that the Referee had no authority to conduct a jury trial. At the supplemental hearing counsel for the partnership specifically withdrew this objection, indicated that he no longer wished to press it, and refused the court's offer to grant a new trial. *fn4" The petitioning creditors maintain, and the Referee held, that the Referee has statutory authority to conduct a jury trial.

 Thus the sole question before the court now is whether there was sufficient evidence from which a jury could reasonably infer that on March 24, 1958, when the State Court Receivers were appointed, the partnership was unable to pay its debts as they matured, that is to say, as the partnership contends, that the assets of the partnership and of the individual partners available for partnership debts were insufficient to pay partnership debts as they matured. Cf. Francis v. McNeal, 3 Cir., 186 F. 481, affirmed 1913, 228 U.S. 695, 33 S. Ct. 701, 57 L. Ed. 1029.

 It is clear that in considering a motion for a directed verdict 'that the sole question (is) one of law whether plaintiff's evidence and all the inferences fairly to be drawn from it in a most favorable light made out a prima facie case for relief * * *.' O'brien v. Westinghouse Electric Corporation, 3 Cir., 1961, 293 F.2d 1, 8. *fn5"

 In our opinion the evidence met this standard. Since a transcript of the trial was not furnished, we rely on the deposition of Louis H. Lewis which was read to the jury and on excerpts of evidence cited by the Referee in his Memorandum of November 17, 1960, the ...


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