79 F.2d 976 | 2d Cir. | 1935
Lead Opinion
■ This appeal involves the meaning and application of section 66 of the Bankruptcy Act (11 USCA § 106), which is printed in the margin.
Section 66b (11 USCA § 106 (b) does not declare on whose motion dividends are to be distributed, and in many cases the trustee will have been discharged. Perhaps the court can distribute sua sponte; perhaps a single creditor may move for itself and for all others; but, since distribution will ordinarily involve substantial clerical work, practically it is not likely that any one will get his share who does not move. In any event, it is the court which must do the distributing, and to the creditors, not to a trustee. We agree that, aft-' er the creditors have their shares, it is too late to open the matter; the dilatory creditor who has not collected his dividend has then finally lost it; it would be intolerable that he should reclaim from each of his more diligent fellows. Section 66b is not, however, a statute of limitation, as the District Judge supposed; it is not lapse of time, but distribution, which tolls creditors’ rights to unclaimed dividends. The only question therefore is whether the payment to the Kayenkay Company under the order of April 30, 1934, was a distribution, and the very, terms of the order forbid its being so considered. It provided that “said sum * * * be treated by it in the same manner as the other remaining assets of the bankrupts heretofore assigned to it by the Trustee in Bankruptcy.” That language incorporated the terms of the trustee’s grant, of which we only know what is contained in the offer of the Kayenkay Company on which it obtained the property from the trustee. It was “to liquidate” the property conveyed “as promptly and efficiently as possible and to distribute the net proceeds of the liquidation at any time, or from time to time, in its discretion among such persons as have allowed claims” against the bankrupts “and in proportion to the amounts of such claims.” The company might “retain counsel, employ agents and incur expenses and obligations in the discretion of the directors.” The parties having themselves thus provided for a distribution after liquidation which might indeed exhaust the fund in expenses, it seems to'us clear that payment to it was not distribution among the creditors. Of course a creditor may collect his dividend by an agent, but this trustee was not an agent; the creditors had not that immediate and absolute power over the money as would result from distribution; they must sue the trustee for an accounting.
This is not only the reason of the thing but also its justice. There is no fair ground for depriving these creditors of their dividends except the annoyance and expense of recovering it from those to whom it has been once really distributed; while it remains in gross, it ought to be possible for them to get it. The analogy of the “bar orders” in the old sequestration suits in equity is a sound
The order is reversed, and an order will be entered directing the Kayenkay Company to pay the dividends in question to the clerk of the district court.
11 USCA § 106. Unclaimed dividends. (a) Dividends which remain un-. claimed for six months after the final dividend has been declared shall be paid by the trustee into court.
(b) Dividends remaining unclaimed for one year shall, under the direction of the court, be distributed to the creditors whose claims have been allowed but not paid in full, and after such claims have been paid in full the balance shall be paid to the bankrupt. In case unclaimed dividends belong to', minors such minors may have one year after arriving at majority to claim such dividends.
Dissenting Opinion
(dissenting).
I am not convinced that payment to Kayenkay Corporation pursuant to the order of April 30, 1934, was not a distribution of the unclaimed dividends within the meaning of section 66b (11 USCA § 106 (b). Concededly payment to the creditors themselves would have, cut off the rights of the appellants. I cannot see why payment to an agent or trustee for them should be less effective. Had the clerk of court been directed to make distribution direct to the creditors, each creditor would have received only slightly more than one-tenth of 1 per cent, of his claim. The number of creditors is said to be nearly 4,000, and the aggregate of allowed claims to be nearly $7,-300,000. Under such circumstances it seems a most reasonable disposition of the fund for the court to direct that it be paid to Kayenkay Corporation to be by it paid over to the creditors on the same terms and at the same time as other moneys which it held for them. “Under the direction of the court” should be interpreted as giving the court some discretion in the method of distributing the fund to the creditors. Compare In re Smith & Co., 52 F.(2d) 212 (D. C. Neb.); In re Orona Mfg. Co., 269 F. 855 (D. C. Mass.). Payment by the clerk pursuant to the court’s order definitely fixed the rights of the creditors in the sum paid to the appellee as trustee for them. At that moment, in my opinion, any previously existing rights of the appellants were terminated. I think the order should be affirmed.