250 F. 116 | E.D. Mich. | 1918
This matter is before the court on objections by the Wolverine Furniture Company, a creditor of the bankrupt, which joined with the bankrupt in opposing the involuntary petition herein, and which now objects to the allowance of costs against it in the order of adjudication.
Promptly upon the filing of the involuntary petition by the petitioning creditors, the bankrupt, the Manufacturers’ Wholesale Fur
While the bankrupt was represented by its own counsel at this hearing, yet the attorney for this opposing creditor was as active in carrying on the defense as the attorney appearing for the bankrupt. An examination of the record, constituting over 1,000 typewritten pages of testimonythe briefs, and the report and supplemental report of the master, shows that the case was bitterly contested, and it does not appear that the opposing creditor was any less zealous in that regard than was the bankrupt itself, until nearly the close of the hearing, when counsel for said creditor refused to proceed further with the examination of witnesses or in attendance in court. After the filing of the master’s report, and the supplemental report, in which he recommended that an adjudication should be ordered in accordance with the prayer of the involuntary petition, this court filed an opinion overruling the exceptions to the latter report, and directing that said report should be confirmed, and “an order of adjudication entered in accordance with the .prayer of the petition in bankruptcy herein, with costs to petitioning creditors against the bankrupt and said Wolverine Furniture Company.” No appeal was taken from this order, but the opposing creditor has objected to the portion thereof directing costs against it, and this proceeding is brought for the purpose of modifying the order to that extent. Briefs have been filed by petitioning creditors and by the opposing creditor, which have been carefully examined.
The questions involved in this proceeding seem to be: First, has a bankruptcy court, on an involuntary petition, jurisdiction within its discretion to order costs against a creditor who has unsuccessfully opposed such petition? Second, if so, should such costs on this petition
“In cases of involuntary bankruptcy, when the debtor resists an adjudication, and the court, after hearing, adjudges the debtor a bankrupt, the petitioning creditor shall recover, and be paid out of the estate, the same costs that are allowed to a party recovering in a suit in equity; and if the petition is dismissed, the debtor shall recover like costs against the petitioner.”
These provisions must, of course, be read together, and are merely declaratory of the gen'eral power of courts of equity, including courts of bankruptcy, over the allowance and apportionment of costs. In re Chiglione (D. C.) 93 Fed. 186; In re Hines (D. C.) 144 Fed. 147; In re Ward (D. C.) 203 Fed. 769; In re Wise (D. C.) 212 Fed. 567; Clark-Herrin-Campbell Co. v. H. B. Claflin Co., 218 Fed. 429, - C. C. A. -. As was stated in the case last cited:
“Power to award costs to the prevailing party, if it were not given by the Bankruptcy Act, is inherent in courts of equity.”
It is, of course, well settled that courts of equity have a broad power over the allowance and apportionment of costs among parties to a suit. In the language of the court in the case of Kell v. Trenchard et al., 146 Fed. 245, 76 C. C. A. 611:
“In the federal practice in equity the giving or withholding of costs or the. apportionment and division thereof is a matter within the discretion of the court.”
Some, stress is laid by the opposing creditor upon the language of General Order 34, already quoted, allowing the petitioning creditors on contested objections to “be paid out of the estate” their costs, and it is urged that in such a case the petitioning creditor is confined to the estate of the bankrupt as the source of payment of his costs. I have already considered this contention, but am unable to agree with it. It seems to me that the provision authorizing payment of such costs out of the estate of the bankrupt is merely cumulative, and not exclusive. Considered in accordance with the contention urged, this general order would clearly be inconsistent with subdivision 18 of section 2 of the Bankruptcy Act, already quoted, and with the general power of the bankruptcy, court, as a court of equity, to allow and apportion costs in accordance with a sound discretion.
Assuming that it was the intention of the Supreme Court in promulgating the order in question to change the effect of the statute and rule referred to, and assuming, also, that this general order could legally have that effect, the soundness of both of which assumptions it is unnecessary to determine, the language of General Order 34 clearly
Such a construction ought not, in my opinion, to be adopted, unless manifestly required by language much more clear and positive than any provision thus far called to my attention. No case has been cited, and I have not discovered any, in support of this contention. On the contrary, respondent invokes and relics on a case which seems to me to be adverse to such contention. This case is that of In re Carolina Cooperage (D. C.) 96 Fed. 604. In this case it was held that, when a creditor of an alleged bankrupt unsuccessfully contests an involuntary adjudication, costs of petitioning creditor rendered necessary by the opposition against such creditor, may be taxed against the latter. Tt will be noted that such a holding necessarily rests upon the theory that General Order 34 is cumulative merely, because, if the right and liability to costs in such a case are derived solely from this provision, no costs could be taxed against an opposing creditor, even if rendered necessary by the opposition of the latter. 1 am clearly of the opinion that this court has power to order costs to petitioning creditor against a creditor of the bankrupt opposing the adjudication, and the contention just considered must be overruled.
It follows that the objections must be overruled, and the petitioning creditors will recover their legal costs against the bankrupt estate and the opposing creditor jointly. As already pointed out, I have not been called upon to determine, and have not considered, ány question as to the items of costs properly so taxable. Any such question can be considered when it arises.