James Rees & Sons Co. v. Pittsburgh & Cincinnati Packet Line, No. 2161

No. 2161 | 3rd Cir. | Dec 8, 1916

McPHERSON, Circuit Judge.

This appeal is from a decree of the District Court distributing a fund in the hands of a receiver. The facts appear in the opinion of Judge Thomson, and we shall only repeat a few of them in order to explain the questions that are now decided.

[1] We note first that the fund distributed is a balance arising from two accounts, and that both accounts were confirmed absolutely. The first showed a balance in hand of $2,980.97, and to this no exceptions were filed. It was confirmed absolutely on December 4, 1909, and on December 11 Alfred Kerr was appointed auditor to make distribution. Numerous claims were presented and proved, and he prepared a prerliminary report—which he did not live to finish—containing a schedule of distribution in which he preferred eleven of these claims and awarded the whole balance to them. To this schedule exceptions were filed before him by the receiver “and such creditors as may join herein,” and these exceptions were accompanied by lists of claims, “presented and duly proven or admitted to be due by the receiver at the time of taking testimony and receiving claims.” For a reason to be presently stated, these lists are important.

Nothing further was done upon this incomplete report, and, when the receiver filed his second and final account several years afterward, he properly, carried into that account the balance of $2,980.97. Including this sum, the second account showed a balance of $8,713.71. Exceptions were filed, but these were afterward withdrawn, and the account was confirmed absolutely. A second auditor, was appointed to' make distribution, and all parties concerned (including the present appellant) admitted before him:

“That the creditors set forth in exceptions filed to the report of Alfred Kerr, the former auditor, be agreed upon as the proper creditors, and the distribution therein claimed as a proper distribution of the funds in the hands of the receiver.”

Whereupon “the record of approved claims heretofore presented to Alfred Kerr, auditor, and particularly set forth in exceptions filed to his report/' were offered and received in evidence before the second "auditor.

The record thus makes clear (1) that decrees confirming the receiver’s two accounts were and are in full force, and therefore that the correctness and the proper application of the debit and credit items in these accounts were not subject to attack either at the audit or in the district court. The duty of the auditor was to distribute the balance of $8,713.71 to the proper claimants, and (as long as the decrees of confirmation remained undisturbed) he had no power to decide that certain items therein had been improperly credited. So far, therefore, as the present appeal seeks to disturb any of these items, we decline to consider it.

It is also clear (2) that by agreement of all parties concerned in the audit a specified list of persons was accepted as “the proper creditors” —the persons entitled to share in the fund. On this appeal, we have chiefly to do with the lien creditors of the steamer Queen City, and when we turn to the list.in question to find such creditors we discover the names of numerous persons, with the amounts of their respective claims. This part of the list is expressly described as .composed of “claims which are liens upon funds derived from steamer Queen City”; and in it we find, not only the claim of James Rees & Sons Company, but many other claims, the total being nearly $15,000, all of them set out on the same footing, and with no reference to either actual or asserted priority on the part of any. This.is the list Judge Thomson accepted and used in the distribution now complained of, and we think the agreement before the auditor justified him in so doing. He has given other reasons for refusing priority to the claim of the Rees Company, and we must not be understood as intimating a disagreement with what he has said on this subject; we think it enough to say that the agreement before the second auditor—which clearly designates the lien creditors of the Queen City, and- accepts the list that set them out as equal in rank at the audit of the first account—is not now to be disregarded.

[2] The principal ground on which the Rees Company asserts precedence for its own claim, and for a few others, is the fact that after the receiver was appointed libels were filed upon these claims, although -the steamer was not seized and although nothing further was done. This, it is argued, was the exercise of diligence, and as no such action was taken by any of the other lien claimants the latter have lost their lien by laches in analogy to the statute of limitations. If the appellant can avail itself of this position, we think the argument overlooks the further fact that the other creditors have been just as diligent as those who filed the libels referred to; the presentation and proof of their claims before the first auditor was the full equivalent of filing a libel without seizure of the vessel. The statute of limitations ceases to run when the creditor sues, and a creditor sues—i. e., he pursues his legal right before a judicial tribunal—when he asserts his claim to share in the distribution of a fund. It is clear to us that there was no laches, and that all .the liens contained in the list stand on the same footing.

Therefore, as the questions raised by this appeal attempt to disturb-a situation that we regard as definitely settled either by (1) or by (2), we need not take time to discuss them further.

The decree is affirmed.

(At the argument of this appeal, the receiver presented a petition-asking us to make a further allowance for counsel fees and expenses, and to this the appellant, filed an answer. We have examined these papers, and, finding them to contain averments with which the District Court is better fitted to deal, we dismiss the petition, but without prejudice to the right of the receiver to make a similar application to the District Court, if he shall be so advised.

(And, in the event of such application, we empower the District Court to modify the decree of distribution that has just been affirmed, if modification thereof shall seeni to be justified.)