Currin v. Nourse, 10001.

• Decision Date: 26 November 1934
• Docket Number: No. 10001.,10001.
• Citation: 74 F.2d 273
• Parties: CURRIN et al. v. NOURSE et al. In re GENERAL UTILITIES CO.
• Court: U.S. Court of Appeals — Eighth Circuit

74 F.2d 273 (1934)

CURRIN et al. v. NOURSE et al.^* In re GENERAL UTILITIES CO.

No. 10001.

Circuit Court of Appeals, Eighth Circuit.

November 26, 1934.

William B. Bostian and Floyd E. Jacobs, both of Kansas City, Mo. (James A. McDermott, of Winfield, Kan., and Horace D. Payne and Thomas E. Deacy, both of Kansas City, Mo., on the brief), for appellants.

Roy B. Thomson, of Kansas City, Mo. (I. P. Ryland, Paul R. Stinson, Arthur Mag, and Robert E. Rosenwald, all of Kansas City, Mo., on the brief), for appellee Stern Bros. Inv. Co.

William G. Boatright, of Kansas City, Mo. (Ringolsky, Boatright & Jacobs, of Kansas City, Mo., on the brief), for appellee Brown-Strauss Corporation.

Ben L. Shifrin and Taylor, Mayer & Shifrin, all of St. Louis, Mo., for appellee Jacob Lasky.

Louis Mayer and Irl B. Rosenblum, both of St. Louis, Mo., for appellees J. J. Rubenstein and United Bank & Trust Co.

Frank P. Barker and Winger, Reeder, Barker & Hazard, all of Kansas City, Mo., for appellee Wheeler Kelly Hagney Trust Co.

Forest W. Hanna, of Kansas City, Mo., for appellees Allen E. Lonston & Co. et al.

James B. Nourse, of Kansas City, Mo., trustee, pro se.

Before GARDNER, SANBORN, and WOODROUGH, Circuit Judges.

WOODROUGH, Circuit Judge.

This is an appeal by certain unsecured creditors of the bankrupt General Utilities Company from an order confirming the sale of the assets of the bankrupt estate to Stern Bros. Investment Company. The sale in question was made February 8, 1933, and was on that date confirmed by the referee. A petition for review was filed and on March 21, 1933, the District Court confirmed the sale (Judge Otis sitting). Thereafter an appeal to this court was taken from the order of confirmation by the same parties who now prosecute the present appeal. On consideration of the former appeal, this court expressed no opinion as to the validity of the sale, but reached the conclusion that there had been an abuse of power by the referee in that he had denied the unsecured creditors an opportunity to be heard fully upon the question of the approval of the sale, and that the parties should be restored to the position which they occupied prior to the confirmation of the sale by the referee on February 8, 1933. The case was remanded with directions that the unsecured creditors be given a full and fair opportunity to be heard upon the question of the confirmation of the sale. (C. C. A.) 66 F.(2d) 137. After the remand, notice of hearing on the matter of confirmation was given and hearings were had before the referee extending over several days, in the course of which the trustee was examined and testified at great length and much testimony claimed to have a bearing on the question of the confirmation of the sale was offered and heard by the referee. After the hearing before the referee and on September 15, 1933, the referee again ordered confirmation of the sale to Stern Bros. Investment Company, finding that the sale was in all respects fairly made and for the best price and upon the best terms available to the trustee. After the referee had for the second time confirmed the sale to Stern Bros. Investment Company, the unsecured creditors petitioned the District Court for review and also applied for a re-reference to the referee on the grounds that the referee had failed to make a proper summary of the evidence and for the purpose of correcting or supplementing the record. It was also represented to the District Court, among other things, that since the date of the hearing, the petitioners had caused a certain report and valuation of the properties, which was in the course of preparation during the hearing before the referee, to be finally completed, and that "one McKee of Brokaw, Dixon, Garner & McKee, geologists and engineers enjoying a national reputation, * * * stated that * * * a cash bid for these properties would be made upon the report and valuation" and "that said McKee was of the firm opinion that the said bid would be a cash bid, would be a cash offer substantially greater than the bid of Stern Brothers Investment Company." It was also alleged that "an offer to purchase has been prepared and it is desired to submit this to the referee on re-reference of this cause. This offer to purchase is for a cash consideration of $300,000.00 * * * it is signed by George McBlair." On the hearing before District Judge Otis, he found that the referee had sent up with his certificate to the District Court a complete transcript of all the testimony taken at the hearing before him, including approximately 1,000 pages of testimony, but acceded to the complaint that the referee had not certified to the judge a summary of the evidence relating to the questions presented in conformity with General Order in Bankruptcy 27 (11 USCA § 53). The court ordered the referee to make summaries in accordance with the rules, and also ordered the referee to hear evidence on the question whether there was then any prospective bidder ready to make a better cash offer than that of the Stern Bros. Investment Company.

Upon the re-reference so ordered and on December 20, 1933, a further hearing was had before the referee, at which hearing George McBlair was the only person appearing for the purpose of making any offer or proposal to bid. He filed a written document entitled "Offer of George McBlair to purchase property of General Utilities," which was analyzed and compared by the referee and found to be no better bid than that of Stern Bros. Investment Company. On December 23, 1923, after this hearing before the referee, George McBlair filed an affidavit of prejudice in the District Court charging that Judge Otis had personal bias and prejudice against him and the unsecured creditors for whom he was attorney in fact, and, thereafter, on December 26, 1933, an affidavit in very similar terms and for the same purpose was filed by one U. S. Hannum, a general creditor of the estate in the sum of $2,000.

Motions to strike the affidavits as insufficient in law were sustained and Judge Otis reviewed the order of the referee confirming the sale for the second time and sustained the findings and conclusions of the referee and confirmed the sale. On this appeal from the final order of Judge Otis it is presented that there was error in striking the affidavits of bias and prejudice and in the refusal of Judge Otis to hear additional oral testimony offered at the hearing upon the petition to review the referee's order of confirmation and the exceptions and objections taken to the action of the referee and that there was error in refusing to sustain the various exceptions and objections to the action of the referee and his confirmation of sale.

We consider first the question whether Judge Otis properly retained jurisdiction of the case. It appears that each of the affidavits of bias and prejudice presented to him contained what purports to be a certificate of counsel signed by one Horace D. Payne, describing himself therein as counsel of record for the affiant to the effect that "he prepared the document and is informed as to the proceedings," and he certifies "that the affidavit and application for the designation of another judge are made in good faith and not for the purpose of delay or hindrance of the proceedings." At the hearing of the motions to strike the affidavits, testimony was offered that the said Horace D. Payne was not a member of the bar of the District Court for the Western District of Missouri on or before the times when the affidavits and certificates were made or filed and, thereupon, the said Horace D. Payne, being present before the court, admitted that he had never been enrolled as such member of the bar of the federal court for the Western District of Missouri at the times the affidavits and the certificates were made or filed. The section of the applicable statute (section 21 Judicial Code, title 28 USCA § 25) provides that "no such affidavit an affidavit of bias and prejudice shall be filed unless accompanied by a certificate of counsel of record that such affidavit and application are made in good faith." The phrase "counsel of record" in the statute means an attorney at law admitted to the bar of the court who has been counsel of record in the case. One who is not a member of the bar cannot be counsel of record even though the record on its face may show he had undertaken to appear as counsel. Since Mr. Payne was not on the date of the filing of either of the affidavits a member of the bar of the court, he could not then or at any earlier time have been counsel of record in the case for either of the affiants. The purpose of the provision of the statute requiring certificate of good faith by counsel of record is that the court may be assured that the affidavit is made in good faith through the certificate to that effect made by one who is a sworn officer of the court, regularly admitted as an attorney to practice at the bar of the court. The requirement is not technical. It is one of the essential requirements of the statute. As the affidavits were not certified to be made in good faith by counsel of record, the motions to strike them for insufficiency in law were properly sustained and Judge Otis "having," as he stated, "no consciousness whatever of any prejudice against any of the parties or in favor of any," the duty to continue with the hearing on the matter of confirmation of the sale remained upon Judge Otis. Klose v. United States (C. C. A. 8) 49 F.(2d) 177; Cuddy v. Otis (C. C. A. 8) 33 F.(2d) 577; Morse v. Lewis (C. C. A. 4) 54 F.(2d) 1027; Saunders v. Piggly Wiggly Corp. (D. C.) 1 F.(2d) 582; Benedict v. Seiberling (D. C.) 17 F.(2d) 831; Ex parte Fairbank Co. (D. C.) 194 F. 978.

Passing to the matter of the confirmation of the sale, we take up the assignments of error based upon the claim that the trial court erroneously refused to receive testimony offered in opposition to the confirmation of the sale at the...