
    No. 773
    BUCYRUS MACH. CO. v. EDSINGER et
    U. S. Appeals, 6th Circuit
    No. 4466.
    Jan. 5, 1926
    1002. RECEIVERS — Party held to have applied for received within Bankruptcy Act when answer was filed to proceedings in equity, said answer admitting allegations of petition.
    Attorneys — Holliday, Grossman & McAfee, Cleveland; C. F. Schaber, Bueyrus, for Company; B. J. Cattey, Crestline; and Gallinger & McCarron, Bueyrus, for Edsinger et.
   MACK, C. J.

Rose Edsinger et al. instituted bankruptcy proceedings against the Bueyrus Road Machinery Co. in the District Court. The petition alleged that the company, because of insolvency, permitted a receiver to be put in charge of its property by the state court. An intervening petition set forth that the alleged bankrupt through its president, filed an answer to the petition for a receiver in the'state court, admitting the truth of the allegations of the petition; whereupon the court appointed a receiver.

The petition in bankruptcy in the District Court was referred to a special master who reported against the bankrupt on all points. The District Court confirmed this report and adjudicated the company a bankrupt. On av-peal, the Circuit Court held:

1. The action of the company in the receivership suit in the state court and the conduct of the proceeding was tantamount to an application for a receiver.
2. The act of bankruptcy is committed if debtor was in fact insolvent in the bankruptcy sense at the time of appointment of the receiver even thoegh such appointment was baesd upon allegations of insolvency in the equity sense.
3. The lower court found that the company was not a going concern. The record does not disclose however, that the parties in charge had stopped work.
4. The question of insolvency at the time of the appointment of the receiver must be determined by the valuation of the property at that time as that of a going concern.
5. As it is unclear that the special master and the trial judge would have found insolvency on the basis of a going concern valuation the decree of adjudication will be reversed.

Judgment reversed and remanded.  