In re Graff

250 F. 997 | 2d Cir. | 1918

HOUGH, Circuit Judge.

[1,2] The power of reopening estates depends upon section 2, subd. 8, of the Bankruptcy Act. The statute presupposes that estates have been closed, and authorizes the court to “reopen them whenever it appears that they were closed before being fully administered.” We have held in Re Goldman, 129 Fed. 212, 63 C. C. A. 370, that a motion to reopen is “addressed to the sound discretion” of the District Court, and in the same case pointed out that such application should be made by creditors. This must follow from the fact that flic result of a reopening is the election of another trustee —a matter in which creditors alone can act, in the first instance at all events.

[3] Proceedings upon petition to reopen need not be of a technical nature nor of any especial formality (Re Newton, 107 Fed. 431, 46 C. C. A. 399); but there must be not only a reasonable prospect of unad-ministered assets, but also evidence of creditors or other parties in interest making the application who would and should be benefited by its success.

[4] In this case the action of the lower court is, properly we think, sought to be reviewed by petition to revise; a procedure entitling us to correct its action only in matters of law. As the proceeding is in its nature discretionary, our power to review is limited to considering whether -there was abuse of discretion.

[5] The error insisted on is that the order complained of prevented the creation of a new Irustee who might raise the question, in a plenary suit or otherwise, that Graff and Nevins, or one of them, had overlooked, or been guilty of a fraud in concealing, what they or one of them now confessedly has, and so compel its surrender. But this right or duty of a new trustee can be created or invoked only at the instance of a party in interest, to wit (so far as this record shows), a creditor, and it is our opinion that there was, to say the least, ample evidence justifying the court below in finding that Johnson was not a creditor, and was not intended to be a creditor, of Graff or Nevins, after the interchange of mutual releases between the bankrupts and Johnson’s principals.

We need express no opinion further than to hold there was evidence sustaining the holding complained of, viz. that Johnson was not a creditor. Therefore there was no abuse of discretion and no error in matter of law in denying tire motion to reopen.

[6] In so far as the order complained of went beyond a denial of the motion to reopen, it was without jurisdiction. The estate was closed, there was no longer a trustee, and the power of the District Court in respect of the discharged trustee was exhausted. Cf. In re Hollins, 238 Fed. 787, 151 C. C. A. 637.

The order under review is reversed, excent as to the portion thereof denying the motion to reopen; in that respect it is affirmed. There will be no costs in this court.