In re Capitano
| Citation | 315 F. Supp. 105 |
| Decision Date | 10 May 1970 |
| Docket Number | No. 67-793.,67-793. |
| Parties | In re Sam CAPITANO, Sr. |
| Court | U.S. District Court — Eastern District of Louisiana |
George W. Gill, Jr., New Orleans, La., for bankrupt.
Anthony J. Graffagnino, Metairie, La., for petitioner.
Associates Finance, Inc., here seeks review of the order of the referee granting Sam Capitano, Sr., its debtor, a discharge in bankruptcy. The bankrupt moves to dismiss the petition on various grounds.
Acting under Section 14(b) of the Bankruptcy Act, 11 U.S.C. § 32, on January 22, 1968, the referee fixed the last day for filing objections to the discharge of the bankrupt at March 25, 1968. On information from the trustee that the bankrupt had failed to comply with certain orders of the bankruptcy court, the date set for the hearing on discharge was extended eight times, the final order fixing it at January 27, 1969. Each such order of extension stipulated that it "in no way extends the time for filing, by creditors, of an opposition to the bankrupt's discharge," but that it did not preclude opposition by the Trustee "for failure of the bankrupt to comply with the Court's orders."
Associates failed to file an objection to discharge within the time allowed. Ultimately, after considering the Trustee's objections, the referee granted the discharge. Capitano says that, since Associates did not object timely, it is thereby barred from seeking review of the discharge.
This argument overlooks the difference between an objection to a discharge and a petition for review of an order granting a discharge. Objections must be filed before the discharge is granted; review can be had only after it is granted. The time limit within which a petition for review can be filed is fixed by Section 39(c), 11 U.S.C. § 67, at 10 days following entry of the referee's order. The order granting discharge was entered June 23, 1969, and the petition for review was filed July 2, 1969. It was therefore timely.
The bankrupt urges that, since Associates neither filed a proof of its claim in the bankruptcy proceedings nor objected to his discharge, it has no standing to petition for review of the order granting it. The statute permits "a person aggrieved" by the order of discharge to seek its review. Section 39(c), 11 U. S.C. § 67. The bankrupt's argument is in effect tantamount to saying that only a creditor who has filed a proof of claim and objections to a discharge can be a person aggrieved.
But nothing in the statute requires it to be so restrictively or so awkwardly interpreted. Its plain words allow objections to be filed by aggrieved persons, without further restricting the right to those aggrieved persons who have filed proof of claim or who have unsuccessfully objected to a bankrupt's discharge.
The test of whether a petitioner is a person aggrieved is whether his "property may be diminished, his burdens increased or his rights detrimentally affected by the order sought to be reviewed," In re Terrace Superette, Inc., W.D.Wis., 1964, 229 F.Supp. 371. "A legal interest in the orders sought to be reviewed" is the formulation used in the Second Circuit. In re Camp Packing Co., N.D.N.Y., 1956, 146 F.Supp. 935.
Whether the petitioning party is a "person aggrieved" is basically a question of fact for the district court, In re Camp Packing Co., N.D.N.Y.1956, 146 F.Supp. 935; Rosehedge Corp. v. Sterett, 9 Cir. 1960, 274 F.2d 286; In re Sunningdale Country Club, 6 Cir. 1965, 351 F.2d 139. In most of the cases making this determination, the controversy has centered on whether the petitioner's injury was a sufficiently direct result of the particular order appealed from.
For example, in Stone v. Huffstutler, 5 Cir. 1955, 227 F.2d 217, petitioners were the owners of the bankrupt corporation. When they incorporated their partnership the corporation assumed their individual income tax liability for certain years. Their attempt to appeal the referee's denial of the government's claim against the corporation for those taxes was denied by the Fifth Circuit, on the basis that they were "not in any way parties to the bankruptcy proceeding in respect of which the order was entered," 227 F.2d at 218. See also, Rogers v. Bank of America, 9 Cir. 1944, 142 F.2d 128, cited in Stone, supra. In that case the Bank had sued the bankrupt to quiet title to land, the income from which was the estate's sole asset. While that suit was pending, the referee allowed fees to the lawyer who was representing the estate in the property suit. The Bank sought review of the order, contending those fees would be paid out of the rents that it was claiming; the Court held that, while the order would diminish the property that might eventually be found to belong to the Bank, the authority to petition for review "is granted only to those who have immediate interests in the bankrupt estate as such and does not include those who would be indirectly affected by the order." 142 F.2d at 129.
Several cases hold that a creditor has standing to object to discharge, though he has not filed a claim. In In re Ulrich, S.D.N.Y.1937, 18 F.Supp. 919, aff'd 2 Cir., 95 F.2d 1018, the creditor had objected below, and had petitioned the district court for review of the discharge. The court found her a person aggrieved, stating, 18 F.Supp. 921. Other cases where petitions were allowed although the petitioners had not filed proofs of claim, for various reasons, include Rosehedge Corp. v. Sterett, supra; In re Camp Packing Co., supra; In re Dockins, C.A. 7, 1939, 107 F.2d 33; In re Purrier, W.D.Wash. 1947, 73 F.Supp. 418.
This is in accordance with the language of the statute, which seems to authorize "all parties in interest" to object, § 14(b). Factually, the direct injury to property that a creditor would suffer if his debtor were discharged is the same at the initial proceeding and on review. Indeed, a creditor who has not filed proof of claim is more likely to suffer a total loss from the order of discharge than one who has, since the former cannot participate in the bankruptcy distributions.
Nor is the trustee alone the proper person to file the petition. In re Madway, E.D.Pa.1959, 179 F.Supp. 400, a well-considered opinion by Judge Clary, relates to this problem, though it does not indicate whether the petitioning...
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Fondiller, Matter of
...354. Such an order would not diminish the debtor's property, increase his burdens, or detrimentally affect his rights. In re Capitano, 315 F.Supp. 105, 107 (E.D.La.1970). This rule of appellate standing, the so-called "person aggrieved" test, derives from section 39c of the Bankruptcy Act o......
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In re de la Salle
...Such an order would not diminish the debtor's property, increase his burdens, or detrimentally affect his rights. In re Capitano, 315 F. Supp. 105, 107 (E.D. La. 1970).Fondiller v. Robertson (In re Fondiller), 707 F.2d 441, 442 (9th Cir. 1982). Generally, an insolvent debtor does not have s......
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In re Goodwin's Discount Furniture, Inc.
...district court for review. 11 U.S.C.A. app. § 67(c). Whether an appellant is a "person aggrieved" is a question of fact. In re Capitano, 315 F.Supp. 105 (E.D.La.1970). Ordinarily under the Act a bankrupt was found not to be a "person aggrieved" because adjudication absolved the bankrupt of ......
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In re Sheehan
...from the bankrupt. 6 The district court may independently make findings from the record made in the bankruptcy court. See In re Capitano (D.La.) 315 F.Supp. 105. 7 These were the only relevant findings in this regard. Any failure to go further and discuss this evidence is a formal defect an......