Massee & Felton Lumber Co. v. Benenson
| Decision Date | 10 August 1927 |
| Parties | MASSEE & FELTON LUMBER CO. v. BENENSON. |
| Court | U.S. District Court — Southern District of New York |
Root, Clark, Buckner & Howland, of New York City, for plaintiff.
Abraham Tulin, of New York City, for defendant.
Plaintiff moves for summary judgment under rule 113 of the New York Rules of Civil Practice. The motion must be denied. The questions of law and fact raised are too doubtful and difficult to justify this procedure. The issues should be tried out fully.
Plaintiff sues defendant upon a guaranty of a contract made by a corporation, of which he was president and principal owner, and which some years ago became a voluntary bankrupt. It scheduled an obligation to plaintiff of some $6,000. Plaintiff filed its claim for approximately $36,000. The claim as filed was for merchandise delivered. Objections having been filed thereto, plaintiff authorized the trustee's attorneys to reduce the claim to some $18,000, whereupon the attorneys by letter to the referee in bankruptcy withdrew their objections to the claim and it was allowed. By affidavit filed herein plaintiff now asserts that this reduction was based upon the elimination of certain items, and that the balance was for other specific items alleged to come within defendant's guaranty.
Plaintiff claims that this allowance of its claim in bankruptcy is equivalent to a judgment against the bankrupt, and as such at least prima facie evidence against the surety, within Moses v. U. S., 166 U. S. 571, 17 S. Ct. 682, 41 L. Ed. 1119, and the cases therein cited. While the authorities are in conflict as to whether a judgment against the principal debtor is conclusive or merely evidentiary, or inadmissible in evidence as against the surety (see annotation in 40 L. R. A. N. S. 698, 723 et seq., 734), I am of course bound by the decision in the Moses Case. It is unnecessary, therefore, to consider the other cases on this point.
The allegations, however, in Benenson's affidavit (see especially page 10) are to be weighed as against this prima facie proof, even if the allowance of the claim be considered a judgment. This in itself would suffice to defeat the motion. But the interesting legal question remains whether the doctrine in the Moses Case is to be extended to allowance of claim in bankruptcy. In other words, is such an allowance equivalent to a judgment against the bankrupt?
As is clearly pointed out in Gratiot County State Bank v. Johnson, 249 U. S. 246, 39 S. Ct. 263, 63 L. Ed. 587, the proceedings in bankruptcy are in their nature in rem, so that an adjudication of bankruptcy, while binding as such, is not admissible, except to establish the fact and date of adjudication, in an action by the trustee against an alleged preferred creditor to recover the preference, and that despite the fact that the alleged preference is the very basis of the adjudication in bankruptcy. The reason is that the alleged preferred creditor, although having a right to be made a party and to contest the adjudication, is not by reason of the allegations in the petition a party to the proceedings, so as to make the findings of the court either evidentiary or conclusive as against him in subsequent proceedings against him in personam.
I adhere to the views expressed by me in Re Continental Engine Co., 234 F. 58 (7th C. C. A.), in accordance with Judge Sanborn's dissenting opinion in Ayres v. Cone (C. C. A.) 138 F. 778, that an adjudication based upon the validity of the claim of the petitioning creditor, at first contested, and subsequently consented to by the bankrupt and one creditor, cannot estop the trustee or any other creditor from thereafter denying the validity of such claim, even though the adjudication of bankruptcy itself is binding in rem.
A claim filed against an estate in bankruptcy is in no sense a claim in personam against the bankrupt. It is in the nature of a petition to share in a fund held by the court for distribution. The allowance of the claim is a determination of the right to share in that fund for the amount allowed, but it is in no sense a determination that the bankrupt is personally...
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Larcon Company v. Wallingsford
...between the parties, not only in other suits, but in the bankruptcy proceedings themselves." Citing cases. In Massee & Felton Lumber Co. v. Benenson, D.C.S.D.N.Y., 23 F.2d 107, 11 Am.Bankr.Rep.,N.S., 301, the court in discussing the question at page 108 of 23 F.2d, "It may well be that, if ......
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Metco, Inc. v. Huffman
...judgment against the debtor, but only establishes the creditor's right to share in the bankruptcy estate. See Massee & Felton Lumber Co. v. Benenson, 23 F.2d 107 (S.D.N.Y.1927); United States v. Verrier, 179 F.Supp. 336 (D. Maine 1959); Parker v. Pledger, 269 Ark. 925, 601 S.W.2d 897 (Ark.A......
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United States v. Walley
...To the extent inconsistent with the result here reached, In re McChesney, D.C. S.D.Cal.1931, 58 F.2d 340, and Massee & Felton Lumber Co. v. Benenson, D.C. S.D.N.Y.1927, 23 F.2d 107, relied on by defendant, must be deemed to have been overruled sub silentio. See: United States v. Coast Winer......
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United States v. Verrier
...liquidation and is limited in its operation to the bankrupt estate. Thus, as far back as 1927, in the case of Massee & Felton Lumber Co. v. Benenson, D.C. S.D.N.Y.1927, 23 F.2d 107, the court was concerned with the effect of the allowance by a bankruptcy court of a claim against the estate ......