261 F. 627 | S.D. Cal. | 1919
In this matter Simon Goldstein filed his claims as a creditor for sums in excess of $6,600 against the bankrupt estate. They were duly allowed, but thereafter the trustee petitioned for their reconsideration, and by way of defense set up a counterclaim in the sum of $43,700 as for moneys owing to the bankrupt from the creditor upon an entirely disconnected transaction. Over the timely and insistent objection of the creditor, and without his consent (Bankruptcy Act July 1, 1898, c. 541, § 23b, 30 Stat. 552 [Comp. St. § 9607J), the referee proceeded to a hearing upon the merits of the set-off or counterclaim, and determined that the same was well taken. After allowing the claims of the creditor, he made and entered the following order:
“The trustee is entitled to a set-off against the claims filed by Simon Gold-stein in the within matter, and allowed at $1,916 and $4,703.25.
“And it is ordered and adjudged that Simon Goldstein is indebted to the-Continental Producing Company in the amount of $37,080.75, with lawful interest (hereon from August 30, 1916, being the difference between the sum of $43,700 and the proven claims of Simon Goldstein as allowed.”
Section 68 of the Bankruptcy Act (Comp. St. § 9652), does provide that, in all cases of mutual debts or mutual claims between the estate of the bankrupt and a creditor, the “account shall be stated, and one debt shall, be set off against the other, and the balance only shall be allowed or paid.” Respondent’s contention is that, the trustee’s counterclaim having been urged under the terms of this section, it became the duty of the referee to give it consideration for the purpose of enabling the account to be stated and one debt to be set off against the other. He insists that this would have been clearly so, had the counterclaim been for a less amount than the total claim presented by the creditor against the bankrupt estate, and that in such event, under established precedents, it would have been the duty of the referee to strike a balance and allow the claim of tire creditor only for such over-plus as was shown to exist. It is then said that if the referee could thus enter upon a consideration of the entire matter, with respect to any amount up to the very sum demanded by the creditor, out of considerations of expediency, if not of necessity, it was proper that the referee should proceed in like manner with respect to a case in which the amount claimed by tire trustee against the creditor was in excess of the claim presented by the creditor himself. Then it is asserted that, if it were found in the course of such hearing that the amount thus claimed by the trustee was a valid charge against the creditor, a finding to that effect should be made, as was done in the case at bar.
In this connection, although it is admitted that such a finding would not pf itself constitute an enforceable judgment against the creditor, yet it is urged that such finding would be conclusive against him, and that, in a suit thereafter to be brought upon the alleged overplus thus found to be due, he would be estopped from urging any defense other
If the trustee had entered his waiver with respect to the excess and the right to proceed further against the creditor, I am constrained to believe the referee would have had jurisdiction to enter upon the consideration of the entire counterclaim, merely for the purpose of determining whether or not the amount actually due thereon was sufficient
■So I am constrained to hold that, except in the event of a specific waiver by the trustee of all of his demand in excess of the allowed claim of the creditor, it is the duty of the referee to refuse to entertain consideration of the merits of the counterclaim at all, and, upon the allowance of the claim of the creditor, to hold all payments in satisfaction of the same in abeyance, until there shall have been a final determination of the question of the amount due the bankrupt estate in a forum having jurisdiction of such controversy. Collier on Bankruptcy, supra, p. 1099.
Obviously the trustee herein has not heretofore entered his waiver with respect to the excess referred to. If, hereafter, he shall do this, it will then be the duty of the referee, as I conceive it, to enter upon a consideration of the merits of the counterclaim, allowing the respective parties to introduce such proper evidence as they may desire, and .make such finding and judgment with respect to the offsets to the creditor’s claims, up to their total amount, as may be required. If the trustee declines so to do, then it will be the duty of the referee to allow the claims of the creditor in the amounts heretofore ascertained by him, and to make an order directing a withholding of all payments or dividends thereon, until there shall have been a final determination with respect to the counterclaim.
Upon the consideration thereafter, of the judgment in such suit, respecting the matter involved in the counterclaim, he will make such order as will be appropriate under the terms of section 68, supra. There is no suggestion in the case, of course, that anything in the nature of a preference (Bankruptcy Act, § 60b [Comp. St. § 9644]) is involved. Decisions recognizing the right of the referee to consider the merits of, and make a binding adjudication with reference to, an alleged preference, have no applicability.
The order heretofore made by the referee is therefore annulled, and the matter is re-referred to him, with instructions to take such action as will be in conformity with the views expressed herein.