168 F.2d 627 (2nd Cir. 1948), 223, Slocum v. Edwards

Docket Nº:223, 20932.
Citation:168 F.2d 627
Party Name:SLOCUM et al. v. EDWARDS et al.
Case Date:June 24, 1948
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

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168 F.2d 627 (2nd Cir. 1948)

SLOCUM et al.


EDWARDS et al.

Nos. 223, 20932.

United States Court of Appeals, Second Circuit.

June 24, 1948

Victor Levine, of Syracuse, N.Y. (Smith, Sovik, Levine & Richardson and

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Robert B. Anderson, all of Syracuse, N.Y., on the brief), for appellant Edwards.

Frank T. Sheridan, of Syracuse, N.Y., for appellant, McCarthy.

Gordon H. Mahley, of Syracuse, N.Y. (McElroy, Young & Mahley, of Syracuse, N.Y., on the brief), for appellees.

Before SWAN, CLARK, and FRANK, Circuit Judges.

CLARK, Circuit Judge.

This appeal turns upon the power of a bankruptcy referee, upon the reopening after some years of a closed bankruptcy estate, to set aside, on the ground of mistake, an order he had made during the bankruptcy administration confirming the sale of the bankrupt's interest in the estate of his deceased father. The matter is brought before us upon the appeal of the bankrupt and his present trustee from the district court's vacation of the referee's order for lack of jurisdiction.

On April 27, 1938, appellant Walker E. Edwards was adjudged a voluntary bankrupt and the proceeding was thereupon referred to Referee Wiles. The bankrupt's schedule listed creditors in the amount of $27, 371.07 and no assets. Actually he was a legatee under the will of his father, Daniel M. Edwards, who had died in May, 1929. By this will, the testator had sought to provide for his wife and four children: the bankrupt, Walker E. Edwards; his brother, Eleazer Wells Edwards; and his two sisters, the present appellees, Mrs. Dorothy E. Slocum and Mrs. Mary E. Rodormer. Hence he had established a testamentary trust and directed the named trustees to pay from the income $5, 000 yearly to each child, with the balance of the income to be paid to his widow. At the death of the latter, the principal was to be divided into equal shares corresponding to the number of the then living children, and each share was to be continued in trust for the benefit of a child until at his death it would pass to his next of kin free and clear of any trust. Daniel's widow died in September, 1945, and Eleanor Wells died without children and unmarried in April of the following year. At his death, therefore, there vested in each of the surviving sisters and brother a one-twelfth interest in the principal of the Edwards estate, amounting in value to upward of a million dollars each. Mrs. Slocum and Mrs. Rodormer claim not only their own respective shares, but also the share accruing to Walker E. Edwards, on the ground that they purchased his interest in his father's estate at a sale conducted by his trustee in bankruptcy in June, 1938. The interest of the Genesee Valley Trust Co. arises by virtue of their conveyance to it in February, 1947, of the interest in trust- for the benefit of the bankrupt and his minor children, as they assert in their brief, though the conveyance was not admitted in evidence. 1

The circumstances of the sale in 1938 were these. The then trustee, one Aronson, petitioned the court for an order of sale of the bankrupt's right, title, and interest in his father's estate. The court directed a sale, and notice was sent to all creditors and published in the official papers. Sale was made in the office of the referee. The only bidder represented the attorneys for the Edwards Estate, and he bid $75. The following day the trustee presented his verified petition and report setting forth the purchasers as Dorothy E. Slocum and Mary E. Rodormer and seeking confirmation of the sale. The referee granted an order confirming the sale and directing the trustee to make the conveyance to the named purchasers. The trustee executed a bill of sale to the two sisters on June 15, 1938, which was immediately filed in the Onondaga County Clerk's office. In September, 1938, he filed his final account and was discharged, no dividend having been paid to creditors.

The death of the brother having disclosed the value to what had formerly been a fairly remote contingent interest in remainder, proceedings were taken which culminated in the order here under attack. As early as October, 1946, the bankrupt and his original

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trustee petitioned the district court for the reformation and correction of the bill of sale and the order of confirmation. The first definite action of the district court appears to have occurred April 25, 1947, when, on petition of one of the bankruptS creditors, it reopened the bankrupt estate and referred it to Referee Wiles for further administration. On May 3, 1947, the referee ordered the present appellees to show cause why the contingent interest of the bankrupt in his father's estate should not be declared an unadministered asset. This order having been only served, the appellees attempted...

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