In re Pan-American Match Co.

242 F. 995 | D. Mass. | 1917

MORTON, Jr., District Judge.

This is a review of certain rulings of the referee made in connection with the election of a trustee.

[1J As to the Green claims: Objection having been made to them, it was discretionary with the referee, either to delay the election and go into the objections sufficiently to determine whether the claims should be voted, or to suspend the claims and go forward with the election without them. In taking the latter course, it does not appear that he abused his discretion.

[2] As to the Worcester Trust Company claim: The trust company held a note for $15,000, made by the bankrupt and indorsed by certain third persons. The indorsers put up collateral security, belonging to them, with the trust company as security for the note. The collateral and the indorsements were of sufficient value to make payment of the note practically certain. Notwithstanding these facts, the learned referee allowed the trust company, against objection, to- prove as an unsecured creditor its full claim on the note. The effect of this ruling was to give the trust company control of the appointment of trustee. The question is whether the trust company was a “secured creditor.” If so, of course, it was not entitled to prove and vote, as it was permitted to do. B. A. § 56b. The expression “secured creditor” is defined in the act as follows:

“(23) 'Secured creditor’ shall include a creditor who has security for his debt upon the property of the bankrupt of a nature to be assignable under this act, or who owns such a debt for which some indorser, surety, or other persons secondarily liable for the bankrupt has such security upon the bankrupt assets.”

A creditor’s claim may be amply secured, but he is not a “secured creditor,” within the meaning of the act, unless the security is on “property of the bankrupt.” The reason for such a rule probably is that, when no property of the bankrupt is held as security, the claim is, as to the estate, an unsecured one, and may eventually be so presented against it. It is true that the trust company here has no financial interest in an efficient administration in bankruptcy; but the in-dorsers have, and the trust company may be assumed to act in their behalf. In re Noyes Bros., 127 Fed. 286, 62 C. C. A. 218 (C. C. A. 1st Cir.); In re Headley (D. C.) 97 Fed. 765; Gorman v. Wright, 136 Fed. 164, 69 C. C. A. 76; In re Bailey (D. C.) 176 Fed. 990; Collier, Bankruptcy (10th Ed.) p. 724; Remington on Bankruptcy (2d Ed.) § 756.

Order of referee affirmed.