Brown v. Leo

Citation34 F.2d 127
Decision Date17 June 1929
Docket NumberNo. 267.,267.
PartiesBROWN v. LEO.
CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Harry L. Allen, of Hornell, N. Y., for appellant.

John Griffin, of Hornell, N. Y., for appellee.

Before MANTON, L. HAND, and CHASE, Circuit Judges.

CHASE, Circuit Judge (after stating the facts as above).

The long and unexplained delay by the trustee in administering this estate was ample warrant for the disallowance of interest on money he advanced to pay expenses he incurred. There is nothing in the record to indicate that the estate lacked funds which could not under proper order have been applied to the payment of all necessary expenses, and, though we do not question the right of the trustee to be reimbursed for necessary expenses he paid out of his own funds, no reason has been made apparent why such advances should be made an interest-bearing investment for the years required by his dilatory conduct to settle this estate. On the record before us the decision of the court below respecting this interest claim will not be disturbed.

The disallowance of interest on claims of creditors presents a different question. It is true that ordinarily the creditors of a bankrupt cannot be paid in full, and that interest on unsecured claims stops when the petition is filed. With the exception of after-accruing interest on the security held, this applies to secured claims as well. Board of Com'rs of Shawnee County v. Hurley et al. (C. C. A.) 169 F. 92; Sexton v. Dreyfus and Sexton v. Lloyds Bank, 219 U. S. 339, 31 S. Ct. 256, 55 L. Ed. 244. The manifest reason for this is that on that date each creditor has an equitable interest in the bankrupt estate, which is that proportion of the net assets that the amount of his provable claim bears to the total of the provable claims. If his claim is proved and allowed, he is entitled to share in the net assets to the extent of the proportion it bears to the total amount of claims proved and allowed. The assertion that a result broadly as equitable could be reached if interest were allowed to the date of distribution cannot, perhaps, be denied as a matter of fact; but the time when interest stops had to be established as of some date, and it has already been fixed as a matter of law as the date of the filing of the petition. Bankruptcy Act, § 63 (11 USCA § 103), and cases supra.

But this estate will be solvent, and neither the rule nor the reason for stopping interest at the date of the filing of the petition applies...

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20 cases
  • In re Ultra Petroleum Corp.
    • United States
    • U.S. Bankruptcy Court — Southern District of Texas
    • October 26, 2020
    ...[But] when [solvency] ... occurs interest is payable out of this surplus to the date of payment." (citations omitted)); Brown v. Leo , 34 F.2d 127, 127 (2d Cir. 1929) ("[T]he time when interest stops ... has already been fixed as a matter of law as the date of the filing of the petition .........
  • Ultra Petroleum Corp. v. Ad Hoc Comm. of Opco Unsecured Creditors (In re Ultra Petroleum Corp.)
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • October 14, 2022
    ...as well as principal should be paid"). Three of the majority's cited cases relied on Johnson in similar fashion. See Brown v. Leo , 34 F.2d 127, 128 (2d Cir. 1929) ; Littleton v. Kincaid , 179 F.2d 848, 852 (4th Cir. 1950) ; In re Magnus Harmonica Corp. , 159 F. Supp. 778, 780 (D.N.J. 1958)......
  • United States v. Harrington
    • United States
    • U.S. Court of Appeals — Fourth Circuit
    • August 6, 1959
    ...U.S. 339, 31 S.Ct. 256, 55 L.Ed. 244; Board of County Com'rs of Shawnee County, Kan. v. Hurley, 8 Cir., 1909, 169 F.2d 92; Brown v. Leo, 2 Cir., 1929, 34 F.2d 127; Littleton v. Kincaid, 4 Cir., 1950, 179 F.2d 848, 27 A.L.R.2d 572; 3 Collier on Bankruptcy (14th Ed.) Sec. To this rule there h......
  • In re General Stores Corporation
    • United States
    • U.S. District Court — Southern District of New York
    • June 2, 1958
    ...interest at the non-accelerated rate of 4% per annum. See Sexton v. Dreyfus, 1911, 219 U.S. 339, 31 S.Ct. 256, 55 L.Ed. 244; Brown v. Leo, 2 Cir., 1929, 34 F.2d 127; In re Macomb Trailer Coach, Inc., 6 Cir., 1953, 200 F.2d 611; Castaner v. Mora, 1 Cir., 1956, 234 F.2d 710; In re Magnus Harm......
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