In re Malkan

265 F. 867, 1920 U.S. Dist. LEXIS 1164

• Court: District Court, S.D. New York
• Decided: April 13, 1920
• Status: Published

Opinion

MAYER, District Judge

(after stating the facts as above). [1] Briefly stated, the point is this: That the year provided under section 57n of the Bankrúptcy Act (Comp. St. § 9641) expired, before the order sought to he vacated was made, and hence the-court was without power to make the order. Section 57n reads as follows:

“Claims shall not be proved against a bankrupt estate subsequent to one. year after the adjudication; or if they are liquidated by litigation and the final judgment therein is rendered within thirty days before or after the expiration of such time, and then within sixty days after the rendition of such judgment. * * * ”

Subdivision 2 of section 1 (Comp. St. § 9585) reads as follows:

“ ‘Adjudication’ shall mean the date of the entry of a decree that the defendant, in a bankruptcy proceeding, is a bankrupt, or, if such decree is appealed from, then the date when such decree is finally confirmed.”

The meaning of the word “confirmed,” as distinguished from “affirmed,” is discussed'in Black on Bankruptcy, p. 1129; Re Lee (D. C.) 171 Fed. 266. _ _

_ _ In the case at bar the decree of adjudication was not directly appealed, but a proceeding was had which in every practical sense was equivalent to an appeal. By virtue of the order made April 3, 1919, the adjudication was vacated. From April 3, 1919, to November 29, 1919, there was no officer with whom a creditor could file his claim. See General Orders XX and XXI; J. B. Orcutt Co. v. Green, 204 U. S. 96, 27 Sup. Ct. 195, 51 L. Ed. 390. See, also, Collier on Bankruptcy, p. 818 et seq. There was neither a referee, a receiver, nor a trustee; thus there was a period of nearly eight months when all proceedings in bankruptcy and the consequent administration of this estate were not “suspended,” but were in an absolutely blank state. There was nothing before the District Court, not an estate, not a referee, not a receiver, not a trustee, not a creditor — indeed, nothing.

Section 57n was enacted for purely administrative purposes, to the end that estates should be promptly administered; but it contemplated that creditors should have a full year within which to file their claims. If the mandate of the Circuit Court of Appeals had not come down until after January 7, 1920, we might have had the situation of no claims whatever having been filed, in which event, if the moving creditor herein is right, the- bankrupt would have escaped without his estate being subject to the payment of any of his debts — reductio ad absurdum. Here, if the motion is granted, this creditor may receive 100 cents on the dollar, and laymen creditors, relying on the court proceedings, will be barred from participating in the dividends on claims. No such result will be tolerated, if it can possibly be avoided.

Applying the fundamental principle of gathering the intent of a statute, when all its relevant provisions are read, I am satisfied that the year, under section 57n, will not expire until a year from November 29, 1919. If the situation is one of casus omissus, then surely a court of bankruptcy (which in many respects is a court of equity) will hold that the year began November 29, 1919, or, in any event, that the time from April 3, 1919, to November 29, 1919, should be deducted. Prom April 3, 1919, until November 29, 1919, was 241 days; 241 days after January 7, 1920 (as I figure it), will be September 4, 1920. By way of extra caution it would be well to notify creditors that they must file their claims by that date.

[2] There is another point, not raised by counsel, which may be worth considering. This creditor stood idly by until March 31, 1920 (the date of his motion papers), long after January 7, 1920. He thereby lulled the. receiver and the creditors into reliance upon the order of December 24, 1919. Had he moved seasonably, the claims could have been filed before January 7, 1920. lie should now be estopped, and not allowed to advance the contention that the order was void. I am fully aware of the proposition that a void order cannot be made valid, however hard the circumstances; hut, if no one attacks the order, it will stand. I conclude, therefore, as an additional ground, that the creditor, because of his delay beyond January 7,. 1920, will not be.heard to attack the order. On the other hand, it may be said that the order of December 24, 1919, was superfluous. If by operation of law the time will not expire until a year from November 29, 1919, or, in any event, until September 4, 1920, an order extending the time is not necessary. If, by operation of law, the time expired January 7, 1920, the order cannot extend it. In order, however, to allow the question to be reviewed promptly, if desired, the order will stand.

Motion denied.

I have not discussed the question as to the. validity of filing claims with a receiver, because uot here for consideration; but it may be observed, in passing, that such filing has, I think, been held good in this district.