187 F.2d 271 (5th Cir. 1951), 13011, United States v. Paddock

Docket Nº:13011.
Citation:187 F.2d 271
Party Name:UNITED STATES v. PADDOCK.
Case Date:February 09, 1951
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 271

187 F.2d 271 (5th Cir. 1951)

UNITED STATES

v.

PADDOCK.

No. 13011.

United States Court of Appeals, Fifth Circuit.

February 9, 1951

Page 272

[Copyrighted Material Omitted]

Page 273

Frank B. Potter, U.S. Atty., Fort Worth Tex., O. Morris Harrell, Asst. U.S. Atty., Dallas, Tex., for appellant.

Richard U. Simon, Fort Worth, Tex., for appellee.

Before HOLMES and RUSSELL, Circuit Judges, and DOOLEY, District Judge.

HOLMES, Circuit Judge.

This appeal is from a judgment confirming an order of the referee with respect to certain claims filed by the United States in the bankruptcy court. The initial proceeding in this case was instituted pursuant to Chapter X of the Bankruptcy Act, 11 U.S.C.A. § 501 et seq. and was given consideration by this court in United States v. Paddock, 5 Cir., 178 F.2d 394; Id., 5 Cir., 180 F.2d 121. At the time of the initial proceeding, Globe Aircraft Corporation, acting first as agent of the Defense Plant Corporation, created under an amendment to the Reconstruction Finance Corporation Act, 15 U.S.C.A. § 601 et seq., and later as agent of the War Assets Corporation, likewise created under said amendment, had sold and was selling surplus war materials.

Under Contract No. SIA-5-5 with the Defense Plant Corporation, the bankrupt, as agent, agreed to handle and sell government-owned surplus aircraft components on a cost-plus commission basis as provided in said contract, under which the bankrupt, as agent, was entitled to reimbursement for certain costs incurred in the performance of this contract. The contract was terminated on February 6, 1946, and the bankrupt entered into another contract called the Industry Agency Agreement, with War Assets Corporation, under which it was entitled to retain out of the proceeds of such sales a 40% commission. Globe became delinquent in its payment of the remaining 60% due on sales made thereunder, and on December 13, 1946 (14 days before its bankruptcy), entered into a working arrangement with the War Assets Administration, which had then replaced the War Assets Corporation in the administration of the contract. Under this arrangement, Globe was to remit the full 100% of all moneys received as the result of the sale of surplus war materials. It being apparent that Globe was indebted to the War Assets Administration, and the amount of the indebtedness being unknown, the trustees, with the approval of the court, agreed to continue the working arrangement and to remit the full proceeds collected by them from sales of war surplus materials.

At a later date the appellee, as liquidating trustee, did not continue paying the full 100% to the War Assets Administration, but, under direction of the bankruptcy court paid only 60% of the money collected

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by him as proceeds of sales. Globe had sold some surplus war materials to Culver Aircraft Corporation that were not paid for when delivered. An account receivable was set up for them against Culver, and this account fell into the hands of the trustee as did many others, and the trustee proceeded to collect it. Culver was bankrupt at the time appellee sought to collect the account; so, as trustee, appellee filed a proof of claim in another bankruptcy proceeding. The War Assets Administration later intervened in the proceeding, and appellee, under the assumption that Globe was still indebted to the War Assets Administration, agreed that the Culver claim could be paid by the Culver trustee directly to the War Assets Administration. In the latter part of 1947, it became apparent to appellee that the bankrupt estate was no longer indebted to the War Assets Administration, and he ceased making payments.

The War Assets Administration filed proofs and amended proofs of claims in the estate of this bankrupt. Upon a hearing and consideration of these claims, the referee entered his order allowing a claim for rent in the principal sum of $2222.23, together with interest in the amount of $175, making a total of $2397.23. The War Assets Administration's claim for cost of inventory was allowed in the amount of $4500, and its claim under the Industry Agency Agreement was allowed in the principal amount of $19, 393.44, together with interest in the amount of $736.22, making a total of $20, 129.66. Included in the allowance of $19, 393.44, under the Industry Agency Agreement, was the bankrupt's claim against Culver, which had been allowed in the sum of $3682.59. The total amount of these allowances in favor of the government was $27, 026.89. The referee found that the government had admitted payments on its claims in the sums of $10, 500 and $2077.37, and a credit thereon of $7, 364.18. He further found that the bankrupt was entitled to reimbursements in the amount of $10, 929.10 under the terms of Contract No. SIA-5-5. The total amount of payments and credits thus found by the referee in favor of the bankrupt's trustee was $30, 870.65. When the allowed claims were offset against the credits due the bankrupt and the payments made by it, there was found to be an overpayment on the part of the trustee in the sum of $3, 843.76. The referee ordered that, when the government...

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