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In re Kleining Fur Corp.

July 25, 1942

IN RE KLEINING FUR CORPORATION; BRONNER
v.
KLEINING FUR CORPORATION.



Appeal from the District Court of the United States for the Southern District of New York.

Author: Hand

Before L. HAND, AUGUSTUS N. HAND, and CLARK, Circuit Judges.

AUGUSTUS N. HAND, Circuit Judge.

On January 16, 1942, Kleining Fur Corp., hereinafter referred to as Kleining, filed a petition in the District Court under Chapter XI of the Bankruptcy Act, 11 U.S.C.A. ยง 701 et seq. On March 6, 1942, Salomon L. Bronner, who was not listed as a creditor in the schedules, filed a claim against the debtor for $14,000. The pertinent clauses of the proof of claim read as follows: "That the above named Bankrupt was at and before the time of the filing of the petition in bankruptcy herein and still is justly and truly indebted to said claimant in the sum of $14,000.00. That the consideration of said debt is written guaranty executed by debtor guarantying investment made by Debtor in Lemkin, Eilender & Goodman, Inc., at special instance and request of Debtor and for benefit of Debtor." (The word "Debtor" appearing in the last line was inadvertently used in place of "Bronner.")

Thereupon the debtor moved before the referee to expunge the claim on the ground that there was not a guaranty. The claimant offered in evidence as proof a written agreement dated September 26, 1941, to which the debtor, Bronner, the corporation Lemkin, Eilender & Goodman, Inc., and Henry Lemkin, Irving Eilender and Herman goodman individually and as copartners were parties. It recited that the individuals Lemkin, Eilender and Goodman had agreed with Bronner on July 16, 1941, that their fur business, carried on by them as partners, should be transferred to a corporation to be formed and known as Lemkin, Eilender & Goodman, Inc., and that Bronner was to invest $15,000 in this corporation in exchange for which he was to receive 132 shares of preferred stock, having a par value of $100 a share, and 66 shares of common stock, having no par value, and Lemkin, Eilender and Goodman were each to receive individually 66 shares of common stock in exchange for their interest in the partnership; that Lemkin, Eilender & Goodman, Inc., was incorporated on August 20, 1941; that Kleining was a "major creditor" of the partnership; that Lemkin, Eilender & Goodman, Inc., was to assume the debts of the partnership among which was the obligation to Kleining; that Bronner consented to invest $15,000 upon the conditions set forth in the agreement and that the parties thereto, in consideration of one dollar and the mutual promises and covenants therein contained, agreed:

That Bronner invest $15,000 in Lemkin, Eilender & Goodman, Inc.;

That Kleining purchase the shares of stock from Bronner on or before January 31, 1942, for the sum of $15,000;

That any profits on the books of the corporation as of that date were to be divided as follows:

Lemkin 22%

Eilender 22%

Goodman 22%

Bronner 22%

Kleining Fur Corp. 12%

That in consideration of Kleining's agreement to purchase all of Bronner's stock Lemkin, Eilender and Goodman individually endorse their shares in blank and deposit them in escrow subject to full reimbursement to Kleining by Lemkin, Eilender and Goodman individually of any sum ...


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