In re Aponte Cintron

13 P.R. Fed. 358

Opinion

OdliN, Judge,

delivered the following opinion:

The interesting question is submitted to this court whether the rule requiring proceedings to set aside transfers of property by the bankrupt on the ground that they are illegal preferences must be brought in the name of the trustee, shall be enfoiced where it is proved that the trustee himself is under charges and where it is alleged that he is unfriendly to the petitioning credi-to'rá. ' • At tbe time of tbe filing of tbe petition in tbis court against tbe Crédito y Aborro Poncefio asking that certain transfers of property by tbe bankrupt to tbe said Crédito y Aborro Poncefio shall be declared null and void as being an illegal preference, proceedings bad already been instituted and were tben pending undecided for tbe removal of Agustin Blasini as trustee. During tbe recent session of this court at Ponce much testimony was taken in connection with tbe said petition for removal. Tbe court, after listening to tbe arguments of counsel and considering tbe case, rendered an opinion on tbe 13 tb day of March, 1924 [ante, 319], tbe effect of which was to remove Agustin Plasini as trustee, not upon tbe ground that be bad been guilty of anything in tbe nature of fraud, but that be bad been grossly negligent of tbe rights of certain creditors, and bad also been exceedingly extravagant in the administration of tbe affairs of tbe bankrupt estate. Tbe record shows that nearly $9,000 in cash bad been realized from tbe sale of certain assets óf tbe bankrupt and no creditor has yet received one dime in tbe nature of a dividend. All this large sum of money has been expended in attorney’s fees and expenses of tbe former referee in bankruptcy and of tbe trustee, Agustin Blasini; and, although tbe court has ordered refunds of a large portion of tbe excessive fees paid to certain attorneys, tbe time for tbe enforcement of said orders for repayment, in connection with announced intentions to carry the case to tbe circuit court of appeals at Boston on a petition to revise, has not expired, and therefore tbe bankrupt estate to-day has an empty cash box.

In view of these conditions as they existed at tbe time of the filing of tbe present petition against the Crédito y Ahorro Pon-cefio, counsel for tbe petitioning creditors argued with cGnsid-erable force that be ought not to be obliged to bring this proceeding in the name of the trustee, and that § 60 (b) of the Bankruptcy Act ought not to be strictly construed by this court and that the said petitioning creditors wlm claim to have been defrauded by the transactions between the bankrupt and the Crédito y Ahorro Ponceño should be permitted to present their petition directly to this court and ask for a hearing upon the questions involved in the controversy, and that this court should determine upon the present petition whether the Crédito y Ahorro Ponceño should be allowed to retain the property which they acquired from the bankrupt or whether they should be obliged to surrender the same. In said § 60 (b) of the Bankruptcy Act it is provided that the preferences “shall be voidable by the trustee and he may recover the property or its value,” etc. It is argued by counsel for the Crédito y Ahorro Ponceño that this present petition was not filed by the trustee and therefore this court has no jurisdiction, under the express provision of the Bankruptcy Act, to entertain the same. It is argued by counsel for the petitioning creditors that the peculiar circumstances of this case are such as to authorize this court to permit the petitioning creditors to apply to this court directly for relief and ignore the trustee, who was then under charges and who has since been removed.

After carefully considering this matter and the various authorities cited by the respective counsel, I have come to the opinion that one of the points made by the counsel for the Crédito y Ahorro Ponceño is well taken. If the transaction between the bankrupt and the Crédito y Ahorro Ponceño was illegal, then there automatically arises as one of the assets of bankrupt estate a right of action against the Crédito y Ahorro Pon-ceño. This asset undoubtedly passed after tbe adjudication to tbe trustee. Tbe former trustee, Agustín Blasini, baying been removed and Eduardo Diaz Brinck baving been recently cbosen as tbe successor to Agustín Blasini, it is clearly my opinion that this right of action against tbe Crédito y Ahorro Ponceño is one which should be enforced in an action by tbe new trustee. Tbe court now authorizes tbe new trustee to permit Mr. Yieente Zayas Bizarro, as counsel for tbe petitioning creditors, to use the name of this new trustee in a petition against tbe Crédito y Ahorro Ponceño if such request shall be made. If tbe new trustee has no funds in bis possession to cover tbe costs of tbe proceeding, the petitioning creditors represented by Mr. Vicente Zayas Bizarro will be authorized to advance said funds if they see fit, and in case they prevail in their petition these funds will be returned to them after tbe close of tbe litigation. But tbe present petition must be dismissed; this dismissal, however, . being without prejudice to tbe rights of tbe petitioning creditors to institute a new proceeding in tbe manner above indicated.

This court refrains from passing upon all the other defenses set forth by tbe Crédito y Ahorro Ponceño and decides at this time only tbe matter of procedure.

To this order and opinion counsel for tbe petitioning creditors and counsel for tbe Crédito y Ahorro Ponceño both except.

Done and Ordered in open court at San Juan, Porto Kico, this 2d day of April, 1924..