Heffron v. Rosenberg

NOURSE, P. J.

Plaintiff, as trustee in bankruptcy of the Estate of Jennie Rosenberg, commenced this action against Vaughn and Mrs. Rosenberg on the theory that the bankrupt was an undisclosed partner of Vaughn and that the latter held valuable assets in his own name, half of which should go to the trustee as assets of the bankrupt. The bankrupt filed an answer admitting all the allegations of the complaint, and then filed a cross-complaint pleading substantially the same matters alleged in the trustee’s complaint. On the same day that the cross-complaint was filed the trial court, on application of the cross-complainant, issued an order to show cause why a receiver should not be appointed to take possession of all the property held by Vaughn. In response to this order Vaughn filed a demurrer to the cross-complaint, and an affidavit denying the partnership and disclosing a compromise and settlement of the entire controversy between the trustee and himself, duly approved by the referee in bankruptcy. Following a hearing upon the order to show cause' the trial court appointed a receiver fixing his bond at $5,000 and granting Vaughn a stay on appeal if he filed a bond in the sum of $50,000. The appeal is taken from the order appointing the receiver.

It is not possible to sustain the order upon any legal ground, but, in the interest of brevity, we will confine our discussion to two issues—that the court was without juris

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diction to make the order, and that it is not supported by judicial discretion.

Mrs. Rosenberg filed a voluntary petition in bankruptcy in March, 1939, and was duly discharged in November, 1939. In December, 1940, the proceedings were reopened upon the affidavit of Mrs. Rosenberg stating that

she believed

that she had a partnership interest in the property standing in the name of Vaughn amounting to over $150,000, but that, through mistake, misapprehension, and misunderstanding, she had failed to include it in her inventory. In her cross-complaint she alleged that in 1923 she entered into an agreement of partnership with Vaughn under which they acquired numerous pieces of real estate, including an apartment house located on West Eighth Street in the city of Los Angeles; that the partnership also acquired valuable stocks and securities; that she filed .the original petition in bankruptcy because of a deficiency judgment for $4,200 and that there are other creditors in the sum of $1,500; that Vaughn has repudiated and denied the existence of the partnership, but that he had made an offer to the trustee to settle the controversy by the payment of a fixed sum.