In re Botany Industries, Inc.

17 B.R. 631, 1982 Bankr. LEXIS 4888
CourtUnited States Bankruptcy Court, E.D. Pennsylvania
DecidedFebruary 5, 1982
DocketBankruptcy Nos. 72-273G, 72-274G
StatusPublished
Cited by1 cases

This text of 17 B.R. 631 (In re Botany Industries, Inc.) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Botany Industries, Inc., 17 B.R. 631, 1982 Bankr. LEXIS 4888 (Pa. 1982).

Opinion

OPINION

EMIL F. GOLDHABER, Bankruptcy Judge:

The cases before us, which are being jointly administered, arise from objections made at the audit of the successor trustee’s fifth and final account. The cases are almost ten years old and the issues raised by those objecting to the account having been raised and finally ruled upon heretofore, it should be crystal clear to any impartial observer that the principle of res judicata is applicable.

Moore’s Federal Practice says it succinctly:

The term res judicata is often used to denote two things in respect to the effect of a valid final judgment: (1) that such a judgment, when rendered on the merits, is an absolute bar in a subsequent action, between the same parties or those in privity with them, upon the same claim or demand; and (2) that such a judgment constitutes an estoppel between the same parties or those in privity with them, as to matters that were necessarily litigated and determined although the claim or demand in the subsequent action is different.

1 B Moore’s Federal Practice ¶ 0.405[1],

All of the objections raised at the audit of the trustee’s account meet the above qualifications: (1) the judgments were rendered on the merits, they were between the same parties or those in privity with them, and they were upon the same claim or demand; and (2) all of said judgments constitute an estoppel between the same parties or those in privity with them, as to matters that were necessarily litigated and determined although the claim or demand in the audit now before us is different.

Although there are 204 creditors in the case of Botany Industries, Inc. (“the Botany estate”), not a single one of them raised any objection at the audit. On the contrary, the creditors’ committee of that estate voiced its approval of the trustee’s account and the other issues which were being considered. Although there were 453 creditors of the estate of H. Daroff & Sons, Inc., (“the Daroff estate”), not a single one of them (except Michael Daroff) raised an objection. The creditors’ committee, on the other hand, was represented at the audit by its chairman who voiced the committee’s complete approval of the trustee’s account and the other applications presented at the audit. Michael Daroff, as we have stated, [633]*633objected, although technically he has no position to object. He filed a claim (No. 157) but it was disallowed years ago, so he is not even a creditor. The Botany estate, the Daroff estate and Michael Daroff were all represented by one lawyer and his objections to the trustee’s account were a redundant declaration of accusations these objectors made years ago, which objections were tried years ago and which were adjudicated years ago.

As we must, let us examine the trustee’s account, analyze the objections, determine whether the objectors are raising new issues or merely a reiteration of old accusations (which have previously been tried and adjudicated) and, in short, determine whether there is one iota of substance to these repetitious objections.

With the exception of the $200,000.00 in new money received by the trustee in compromise of his suit against the First National Bank of Boston, almost the entire balance of the receipts set forth in the trustee’s fifth and final account consists of interest earned on the trustee's certificates of deposits. Hence it is crystal clear that the objections are filed in a vain effort to retry issues which were finally adjudicated years ago and are therefore res judicata.

For example, the objectors allege that the sale (in 1974) of the corporate stock of Baltimore Luggage Company, Inc., a wholly owned subsidiary of the Botany estate, was improper. They alleged that eight years ago in an effort to prevent the approval of that sale by the bankruptcy court. We dismissed the objection by an opinion and order dated July 25,1975: See In re Botany Industries, Inc., 9 C.B.C. 653. That order not having been appealed, is final and res judicata. Now, in 1982, the objectors seek to relitigate the exact same issue.

In that case (as in the eases of the others later discussed) the objectors were either the Botany estate, the Daroff estate or Michael Daroff, acting individually. The objections raised at the current audit, unearthing the same issues adjudicated seven and a half years ago, are by an attorney representing all three objectors. Hence, the qualification that the previously rendered judgment, in order to be res judicata, must have been “between the same parties or those in privity with them,” is fully met. The Botany estate, the Daroff estate, and Michael Daroff are like three peas in a legal pod, — each in privity with the others, seeking individually and collectively to litigate and relitigate each issue ad infinitum, ad nauseum.

We think the United States Supreme Court put it clearly, when it said:

The general rule of res judicata applies to repititious suits involving the same cause of action. It rests upon considerations of economy of judicial time and public policy favoring the establishment of certainty in legal relations. The rule provides that, when a court of competent jurisdiction has entered a final judgment on the merits of a cause of action, the parties to the suit and their privies are thereafter bound not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose. . . The judgment puts an end to the cause of action, which cannot again be brought into litigation between the parties upon any ground whatever, absent fraud or some other factor invalidating the judgment.

Com’r v. Sunnen (1948) 333 U.S. 591, 597, 68 S.Ct. 715, 719, 92 L.Ed. 898.

This fundamental principle of law applies to the sale of the Baltimore stock, supra, the sale of the stock of Glenoit Mills (infra ), the sale of the Botany trademarks (infra ) and the compromise of the suit against The First National Bank of Boston (infra).

For another example the objectors contend that the sale of the corporate stock of Glenoit Mills, Inc., (likewise in 1974) another wholly owned subsidiary of the Botany estate was improper. After hearing all the facts we filed an opinion and order on October 7, 1974, confirming the sale. Michael Daroff promptly appealed and, on December 2, 1974, District Judge John Morgan Davis dismissed the appeal. Unconvinced, [634]*634on December 31, 1974, Michael Daroff appealed to the Court of Appeals for the Third Circuit. On February 13, 1975, that court dismissed the appeal: 511 F.2d 1392. That order is final and res judicata. Now, seven years later, the objectors seek to retry that case.

In 1976 (almost six years ago) these same objectors sought the removal of the then trustee, Max Robb, now deceased. Included among their reasons for urging his removal, the objectors charged the trustee, inter alia, with misconduct in the sales of the corporate stock of Baltimore Luggage Company, Inc., and Glenoit Mills, Inc. (the self-same charges which comprise the present objections and which were decided in 1974). On July 13, 1976, after hearing all the testimony, we filed an opinion and order, dismissing all of the objectors’ accusations.

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Related

In re Botany Industries, Inc.
19 B.R. 599 (E.D. Pennsylvania, 1982)

Cite This Page — Counsel Stack

Bluebook (online)
17 B.R. 631, 1982 Bankr. LEXIS 4888, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-botany-industries-inc-paeb-1982.