Donovan Wire & Iron Co., Matter of, 86-2515
Decision Date | 30 June 1987 |
Docket Number | No. 86-2515,86-2515 |
Citation | 822 F.2d 38 |
Parties | Bankr. L. Rep. P 71,870 In the Matter of: DONOVAN WIRE & IRON COMPANY, Debtor. Appeal of DONOVAN WIRE & IRON COMPANY. |
Court | U.S. Court of Appeals — Eighth Circuit |
Jerrold Wanek, Des Moines, Iowa and Allan W. Gilbert, Detroit, Mich., for appellant.
F.L. Burnett, II, Des Moines, Iowa, for appellee.
Before LAY, Chief Judge, HEANEY, Circuit Judge, and LARSON, * Senior District Judge.
Donovan Wire & Iron Company (Donovan) filed for Chapter 11 bankruptcy at the same time as its wholly owned subsidiary Central Steel Tube Company (Central). Bethlehem Steel Corporation (Bethlehem) sold steel to Central under three guaranties by Donovan for payment. At Donovan's insistence, each of the guaranties expired after one year and was replaced by the next guaranty. Bethlehem timely filed a proof of claim including the invoices for steel shipments to Central and a copy of only the third guaranty.
At a hearing held after the date barring filings of proof of claims, Bethlehem attempted to file the other two guaranties, but the bankruptcy court 1 ruled that such a filing was a new claim and therefore impermissible. That court also ruled that the unamended claim should be disallowed for lack of consideration. There was no consideration because the invoices only showed shipments on credit under the prior guaranties.
The district court 2 upheld the disallowance of the unamended claim, but allowed Bethlehem's amended proof of claim, reversing the bankruptcy court. We affirm the district court's decision in part and reverse in part.
In reaching its decision, the district court relied on this court's decision in In re Uhlenhopp, 508 F.2d 412 (8th Cir.1975) (per curiam). In that case, the proof of claim concerned a mortgage. The mortgage contained blanks where the terms of a note could be inserted. The creditor attached the wrong note, dated March 4, 1969, to the proof of claim. This court permitted him to amend his proof of claim by filing the correct note dated October 2, 1963, and stated:
As the referee aptly noted in his memorandum, "[t]o deny the claimant * * * permission to amend his claim because he forgot to append a note, and, in fact, appended the wrong note to his Proof of Claim form would be most inequitable and would be contrary to case law, including that of the Eighth Circuit."
In an earlier bankruptcy case, this court expressed the policy behind permitting untimely amendments to a proof of claim:
The limitation of time within which proofs of claim should be made must necessarily be observed. Such disposition of bankruptcy cases that creditors may expeditiously realize what they may is important and necessary; but the substance of things, and not the forms merely, should be observed. Bankruptcy proceedings are equitable in their nature, and should be as far as possible conducted on broad lines to accomplish the ultimate purpose of distributing the assets of a bankrupt pro rata among his creditors.
In re Faulkner, 161 F. 900, 903 (8th Cir.1908). In that case affidavits of unpaid balances due on certain notes were adjudicated as amendments to an earlier proof of claim against the debtor. "[T]he courts should be liberal in awarding amendments * * * 'at any stage in the proceedings as justice may require.' " Id. (quoting Loveland on Bankruptcy Sec. 92 (3d ed.)).
The appellant asserts that because Bethlehem made a formal proof of claim, its attempted substitution of the proper guaranties cannot be permitted. Donovan thereby attempts to limit the applicability of the many cases permitting amendment of informal proofs of claim if the informal proof of claim showed the amount, nature, and existence of a claim. See generally 3 W. Collier, Bankruptcy p 57.11 (14th ed. 1974). This court does not recognize such a fine distinction:
Tarbell v. Crex Carpet Co., 90 F.2d 683, 685-86 (8th Cir.1937) (emphasis added) (quoting with approval the opinion of the district court). In Tarbell a late proof of claim was not treated as an amendment, but in that case absolutely nothing had been timely filed. Therefore, the court held that there was nothing to amend. Id. at 686.
The Fifth Circuit Court of Appeals has also permitted amendment of a proof of claim under...
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MATTER OF BEST REFRIGERATED EXPRESS, INC.
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