127 F. 246 | W.D. Ky. | 1904
The bankrupt filed his voluntary petition! on November 3, 1899. On the next succeeding day he was adjudi
Section 2, cl. 8, Bankr. Act July i, 1898, c. 541, 30 Stat. 546 [U. S. Comp. St. 1901, p. 3421], gives to the District Courts jurisdiction to “close estates whenever it appears that they have been fully administered, by approving the final accounts and discharging the trustees, and re-open them whenever it appears that they were closed before being fully administered.” The power to reopen a case is given in one contingency only, namely, when it appears that the case was closed before being fully administered. No time is fixed within which this may be done. Somethirig is doubtless left to the sound discretion of the court, upon a consideration of all the circumstances surrounding each case. It would not be supposed that the court would as readily reopen a case where the creditors knew all the facts and slept on their rights, as where the concealment of assets was not only artful, but was unknown to the creditors, and not discovered by them for a long period. I take the proper rule to be that a fairly reasonable time under all the circumstances of a case should be allowed, and that, if the parties who had full knowledge delayed an unreasonable time to seek to reopen a case, their laches would authorize the court to refuse to do so. But neither the statute nor judicial discretion dictates any hard and fást rule in the premises. It is, however, contended by the bankrupt that section lid of the Bankruptcy Act of July 1, 1898, c. 541, 30 Stat. 549 [U. S. Comp. St. 1901, p. 3426], presents a bar to this proceeding. The language is this: “Suits shall not be brought by or against a trustee of a bankrupt estate subsequent to two years after the estate has been closed.” I think it clear enough that this proceeding to reopen this case is not a “suit” within the provision just copied. That provision manifestly refers to other matters, and- not to a mere application to the court to reopen a case. The bankruptcy act furnishes much evidence of its purpose to require the winding up of estates as speedily as possible, but no intent can be gathered from any of its provisions that a bankrupt should be benefited by a delay which results entirely from his own wrong — from his own artful attempt to cover up his assets. On the contrary, such an attempt, if made by a bankrupt,’ may be criminally punished. There is, therefore, small merit in a plea coming from a bankrupt that his creditors have been guilty of delay. Indeed, if a bankrupt has- honestly surrendered all of his assets to the trustee, he seems to have no interest in the question of reopening the case.
Upon the face of the papers, as they appeared in February, 1900, the assets had been fully administered. It now seems at least to be* probable that they had not in fact been administered fully, though it would be premature to decide, on the present issues as between the • present parties, that in fact the transfer from the bankrupt to Oberdorfer, and from the latter to the bankrupt’s wife, were either actually or constructively fraudulent as to creditors. But if the court must carry the above clause of the bankrupt act into effect under the prompt
1. Claude W. Johnson is not a trustee herein, and has not been since the case was closed. He was discharged from the trust about four years ago. His trusteeship is functus officio, and he, as a mere former trustee, has no standing in court to seek a reopening .of the case. I conclude that none but creditors have a right to that relief:
2. W. P. Adams has never proved his debt at all, and, upon grounds presently to be noted, he can never do so. He, therefore, has no .right .to a reopening of the case. As he can never prove his debt, the reopening of the case, so far as he is concerned, would be an idle and vain thing. The same remark applies to all other creditors similarly situated.
3. Only John Broderick'and the Western Bank, to the extent .indicated, have proved their .debts. Broderick does not, join, in the .petition for a reopening of the case, but if that relief is granted it will of course.inure to his benefit. It should be stated that the proof .of debt made by the Western Bank was tendered and filed in the clerk’s office of the court .after the case was closed in the referee’s office, but before .the-discharge was .granted.. It remained in that condition, ,’and
_ 4. Section 57, cl. “n” (30 Stat. 561 [U. S. Comp. St. 1901, p. 3444]), is as follows :
“Claims shall not he proved against a bankrupt estate subsequent to one year after the adjudication; or if they are liquidated by litigation and the final judgment therein is rendered' within thirty days before or after the expiration of such time, then within sixty days after the rendition of such 'judgment: provided, that the right of infants and insane persons without guardians, without notice of the proceedings, may continue six months longer.”
It may well be that Congress could with wisdom have put into the clause an exception covering cases where there had been a fraudulent concealment of assets; but that was a matter exclusively for Congress to determine, and not for the courts to remedy. This court at least assumes no power to interpolate an exception, and thus put into the statute what Congress declined to embrace therein.
The language of the clause is plain and unequivocal. There is no ambiguity about it, and it admits of no construction. The decisions are equally clear to the effect that no proof of debt can be made after the expiration of one year after the adjudication, except in those instances where the period is extended by the act to not exceeding one year and six‘months. Either period would effectively bar the making of any proofs of debt in this case by any creditor whatever. In re Hawk, 114 Fed. 916, 52 C. C. A. 536; In re Rhodes (D. C.) 105 Fed. 231; In re Leibowitz (D. C.) 108 Fed. 617. This narrows matters down to a small compass, namely, to the two claims proved against the estate.
5. As already indicated, the petitioners who ask for a reopening of the case base their claim upon the sole ground that the bankrupt, in making his schedules, concealed an estate given him by the fifth item of his father’s will, and I think they must be confined to that contention. They have asserted no claim that the will is invalid, and no issue relative to that sxxbject arises on the pleadings, even if it be assumed that this court is not bound by the judgment of the state court which has jurisdiction over the probate of wills, and which more than four years'ago admitted this will to probate, and which judgment has been acquiesced in by all parties. At all events, this case will be reopened for the'sole purpose of enabling any trustee of the bankrupt to litigate the question of his right to recover such an amount of the trust fund as may be necessary to pay the two demands supposed to be entitled to share therein. It is possible that the reopening of the case may be avoided if an amount sufficient to pay those debts, interest thereon, and costs should'be deposited in the registry of the court under fair conditions as to the settlement of the rights of all parties therein, including Mrs. Paine.
Upon a very careful consideration of the subject in all its phases, I have concluded that the petitions of Claude W. Johnson and W. P.
John Broderick lias not joined in the petition, but, as he seasonably proved his debt, any relief now granted would necessarily inure to his benefit, as he would be entitled to share in any fund realized as assets of the bankrupt.
Unless I am in error in treating the proof of debt of the Western Bank as prima facie sufficient to entitle it to ask for the reopening of the case, then its prayer for that relief should be granted, but any judgment reopening the case should limit the right of the trustee of the bankrupt to seeking to subject so much only of the trust estate as may be necessary to pay the two debts referred to, interest thereon, and the proper costs of this proceeding. Even if the bank’s debt is not properly proved and allowed, I am still inclined to think that the case ought to be reopened for the benefit of John Broderick, and the clerk will be directed to notify him of the present status of this proceeding.
It may be that the bankrupt should be allowed the option of paying into court, for the purposes indicated, an amount sufficient to meet those purposes, and, if he should choose to do so, the judgment may provide for a reservation of his rights and those of Mrs. Paine to raise the question of whether the debt of the Western Bank has been properly proved and allowed in the legal sense, and whether the transfers to Oberdorfer and Mrs. Paine were, or whether either of them was, fraudulent as to the creditors of the bankrupt, or should be held to be mere pledges to secure loans.
The eighth and tenth exceptions filed by the bankrupt to the referee’s report are sustained, because the findings referred to therein are not pertinent to any issue raised by the pleadings, nor responsive to the order of reference. ^ All the other exceptions are overruled.