In re Branner, 89.

• Decision Date: 07 December 1925
• Docket Number: No. 89.,89.
• Parties: In re BRANNER. Ex parte HAAS BROS. FABRICS CORPORATION et al.
• Court: U.S. Court of Appeals — Second Circuit

9 F.2d 883 (1925)

In re BRANNER.

Ex parte HAAS BROS. FABRICS CORPORATION et al.

No. 89.

Circuit Court of Appeals, Second Circuit.

December 7, 1925.

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Arthur Mayer and Frank C. Fisher, both of New York City, for appellants and petitioners.

William F. Columbus, of New York City, for appellee and respondent.

Before HOUGH, HAND and MACK, Circuit Judges.

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

Our only jurisdiction over the order discharging the rules is by petition to revise under section 24b (Comp. St. § 9608). The proceedings involve none of the "judgments" covered by section 25 (Comp. St. § 9609). The nearest subdivision of that section is (a), (2): "A judgment granting or denying a discharge." An order affirming or denying a composition must indeed be reviewed by appeal. In re Gottlieb, 262 F. 730 (C. C. A. 2); In re O'Gara Coal Co., 260 F. 742, 171 C. C. A. 480 (C. C. A. 7); In re Bay State Milling Co., 223 F. 778, 139 C. C. A. 598 (C. C. A. 2). But the order under review neither denied nor confirmed the composition, which had already been confirmed. While the time had not expired under section 13 (Comp. St. § 9597) within which the composition might be set aside and the case reinstated, the only ground mentioned in that section is fraud, and there was no fraud here. The theory of the petitioner and appellants is that the confirmation was non coram judice from the outset, that it adjudicated nothing, and that any evidence of it should be cleared from the record. If so, the question is not of confirming or denying the composition, but of whether the whole proceedings were so far beyond the court's jurisdiction as to be open to collateral attack, to be a mere factitious nullity. Although success would involve a denial in effect of the bankrupt's discharge, the case is only within our supervisory power to revise. The appeal is dismissed; we proceed under the petition to revise.

The petitioner's position is this: That since section 12b (Comp. St. § 9596) requires as a condition precedent that a majority of all claims allowed must accept the offer before the application for confirmation, the court had no jurisdiction. This depends upon the fact that, on February 26th, 16 creditors had secured allowance of their claims, of whom 7 only had accepted. But the argument presupposes that February 26th was the day when the application to confirm was made. Under bankruptcy rule 14 of the Southern District of New York, as it then stood, the filing of the offer is to be taken as an application for confirmation, and the consents must then be filed. The record does not show when the offer was filed, though it was necessarily before February 26th. As the date when it was filed is not shown, we cannot say what the allowed claims then were. If it was filed before January 17, 1924, we know that the allowed claims were 13, because the commissioner so reports.

It is true that on any showing the referee disregarded bankruptcy rule 14, because he did not require the consents to be filed with the offer; but that was not a jurisdictional defect, however irregular the practice. Section 12b does not require the consents to be filed before the application, or indeed at any time, and the record does not show whether they were in fact got before or after the application; i. e., the filing of the offer. Therefore, on the record before us, we cannot say whether the consents of a majority of allowed claims were got before the application for confirmation, and the petitioner's case was not proved.

However, he argues that we should look at the actual offer itself, which, though not in the record, was tendered on the argument. The referee, in transmitting the papers to the court for confirmation, apparently included the acceptances and probably the offer as well. To avoid a motion to enlarge the record, we have therefore examined both papers on the files of the District Court, and we find that the offer was filed on January 24, 1924, and therefore after the receipt by the referee of the claim filed on January 17, 1924. If this was a proved claim, the total number of such claims was 14, of which 7 is not a majority, whenever the acceptances were obtained. Hence we must first consider the question whether that claim was in fact allowed before January 24, 1924.

The commissioner has not reported whether he allowed the claim filed January 17, 1924. On the contrary, he has contented himself with saying that when a claim is filed it is ipso facto allowed. He has, however, added that the claim was filed and put into a basket, where on February 26, 1924, it awaited further action, to wit, docketing in some undisclosed book, and placing in the folder with the other papers. We are at a loss to know what this means, but we think that at least it shows that the claim had not been allowed on January 24, 1924.

A claim is not ipso facto allowed because the referee receives it and places upon it a filing date. For aught we can know, all claims are received by the referee's clerk and stamped as filed on the date of their receipt, without any personal examination or allowance whatever. More is necessary for allowance than that. Section 57a (Comp. St. § 9641) prescribes certain formalities for the proof of claim; section 57b, others. General Order XXI prescribes still more; the forms are in addition. Only when the proof of claim conforms with these provisions is it "duly proved" under section 57d and entitled to allowance. Moreover, we are not prepared to say that a claim must be allowed, though not objected to, if on its face for an unprovable debt under section 63a (Comp. St. § 9647); e. g., one arising after petition filed. That question we...