Duggan v. Franklin Square Nat. Bank

• Decision Date: 24 November 1948
• Docket Number: No. 51,Docket 21084.,51
• Citation: 170 F.2d 922
• Parties: DUGGAN v. FRANKLIN SQUARE NAT. BANK.
• Court: U.S. Court of Appeals — Second Circuit

170 F.2d 922 (1948)

DUGGAN v. FRANKLIN SQUARE NAT. BANK.

No. 51, Docket 21084.

United States Court of Appeals Second Circuit.

November 24, 1948.

Herman G. Robbins, of Brooklyn, N. Y. (Israel Harkavy, of Brooklyn, N. Y., on the brief), for bankrupt-appellant.

Morris Shapiro, of New York City (Bernhardt, Sahn, Shapiro & Epstein and Harvey Cohen, all of New York City, on the brief), for creditor-appellee.

Before L. HAND, Chief Judge, and AUGUSTUS N. HAND and CLARK, Circuit Judges.

CLARK, Circuit Judge.

Richard W. Duggan, the appellant herein, filed a voluntary petition in bankruptcy on January 31, 1942, and was adjudicated a bankrupt the same day. On February 3, 1942, the bankruptcy referee to whom the proceeding was referred wrote the bankrupt's attorney for the "first meeting indemnity and discharge indemnity"; and on March 6, 1942, he sent a second request for the indemnity. It was not paid, however, and so on July 16, 1943, the referee entered an order closing the case. On May 21, 1947, the bankrupt petitioned for an order reopening the proceeding; and this was granted ex parte on May 23, 1947. The Franklin Square National Bank, a judgment creditor of the bankrupt, then moved that this order be vacated; and upon consideration of opposing affidavits, the court ordered testimony to be taken "regarding the bankrupt's failure to comply with the Referee's request of February 3, 1942." Hearings were thereupon had, wherein both the bankrupt's attorney and the bankrupt testified; and thereafter, on November 12, 1947, the district court entered an order vacating and setting aside its order for the reopening of the proceeding. This appeal followed.

The bankrupt's explanation of his long delay is his war service, from his enlistment in the United States Army on March 20, 1942, until his ultimate discharge as a major on March 5, 1947. The testimony, however, showed that from late 1945 on, although he was technically still subject to recall by the Army, he was actually engaged in business in Florida as a civilian not in uniform, and that in 1946, when the creditor was pressing its action to recover upon its judgment in Florida, he was actively negotiating with the creditor's attorney for a settlement of the claim of over $21,000 for $2,000. His attorney testified that when the proceeding was started in 1942 the bankrupt placed funds in his hands to the extent of $100, from which he paid the initial filing fee; but he did not pay the further sum asked by the referee, because, as he said, he had asked the referee or the latter's clerk to put the matter "on the military calendar." In cross-examination he said that he had not paid the indemnity, because he did not want the case "to come up" at the time. The referee's docket shows one letter from the attorney, received on March 6, 1942, advising that the bankrupt was in a hospital in Washington, D. C., and that he would forward the indemnity when the bankrupt was able to come to New York for a hearing, and another of April 13, 1942, stating that the bankrupt had been commissioned as captain in the Army. There was further evidence that another attorney purporting to represent the bankrupt, and of whose activities the bankrupt admitted knowledge, had written the creditor in 1946 in an endeavor to adjust the matter, and that the bankrupt himself had also written in February, 1947, apologizing for "the long delay" in "the settlement" and reporting the "good news" that he hoped to effect a specific loan to provide "the necessary cash."

On the basis of the testimony the court stated that it was going to vacate the reopening order, saying that it was satisfied from the testimony that the bankrupt had abandoned the bankruptcy proceeding. It went on to hold that the bankrupt's attorney had funds to pay the indemnity fee and did not pay it because he did not want the matter "to come up," that the matter was deliberately neglected or held in abeyance for unpersuasive reasons, and that the attempts at later settlement showed that the bankrupt considered the proceeding abandoned. Its resulting order here under...