126 F. 889 | E.D. Wis. | 1903
Revision of the allowance by the referee is sought upon the sole ground that claim therefor was not proved against the estate within one year from the adjudication of bankruptcy, and the contention is that the claim is barred by section 57n of Bankr. Act July i, 1898, c. 541, 30 Stat. 561 [U. S. Comp. St. 1901, p. 3444]. While exceptions are filed to the referee’s findings of fact, they were not pressed upon the argument, and I am satisfied that the testimony supports the findings. The material facts are: On December 2, 1901, the property of the bankrupt was destroyed by fire, with insurance thereon, which then represented his sole assets. December 4, 1901, the bankrupt executed an assignment to Mr. Neuberger for the benefit of creditors, and at their instance, which was valid at common law, but voidable on behalf of a creditor under the law of the state. The expenses in question were necessarily incurred by the assignee in the proof and adjustment of loss ($8,300), requiring the services of an adjuster and of counsel, as the several insurance companies disputed liability under the policies. Proceedings for involuntary bankruptcy were commenced several' months later, induced by garnishments on the part of certain creditors, and the trustee therein was appointed May 12, 1902. On demand of the trustee, Mr. Neuberger turned over to him the policies of insurance, with all proofs and claims, subject to lien or allowance for the expenses so incurred, which the trustee agreed to submit in that view, and filed his report of such facts with the referee September 17, 1902, together with report that no other assets were found, and that he had brought suits upon the several policies in default of payment. In October, 1903, the trustee effected a compromise of the insurance claims, receiving in settlement thereof $3,750, and filed his account of proceeds and disbursements, which included a charge in favor of Mr. Neuberger for $590.64, so claimed for his expenses, subject to allowance by the court. Without the proofs of loss and other evidence thus provided by the timely action of the assignee, no recovery under the policies was possible. The charges are found to be reasonable in character and amount, and the estate received the full benefit of the service for which they were incurred. Indeed, if bankruptcy proceedings had intervened within the time required for such service, it is presumable that like expenditure would have devolved upon a receiver or trustee to preserve the insurance liability. The right of the assignee to have such expenditures allowed as a charge against the fund is established by the recent decision in Randolph v. Scruggs, 190 U. S. 533, 23 Sup. Ct. 710, 47 L. Ed. 1165, though the equitable considerations on which it rests were not recognized in some of the earlier cases in the district courts. Vide Brandenburg on Bankruptcy (3d Ed.) § 980. So the only question which remains open relates to the classification of the allowance — whether it is a claim within the meaning of section 57 of Bankr. Act July 1, 1898, c. 541, 30 Stat. 560, 561 [U. S. Comp. St. 1901, pp. 3443, 3444], which cannot be proved (section 57n) “subsequent to one year after the adjudication.” The claim was neither formally presented nor proved before the expiration of the year thus limited, and, if the section referred to is applicable, it is doubtful, to say the least, whether
The ruling and order of the referee accordingly are affirmed and adopted.
