In re Federal Facilities Realty Trust, No. 58334

CourtUnited States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
Citation140 F. Supp. 522
Docket NumberNo. 58334,58335.
PartiesIn re FEDERAL FACILITIES REALTY TRUST, a common law trust, Debtor. In re NATIONAL REALTY TRUST, a common law trust, Debtor.
Decision Date25 April 1956

140 F. Supp. 522

In re FEDERAL FACILITIES REALTY TRUST, a common law trust, Debtor.
In re NATIONAL REALTY TRUST, a common law trust, Debtor.

Nos. 58334, 58335.

United States District Court N. D. Illinois, E. D.

April 25, 1956.


140 F. Supp. 523

Urban A. Lavery, Chicago, Ill., for intervening plaintiff, Paul E. Darrow.

Murphy, Pearson & O'Connor, Chicago, Ill., for intervening defendants, Kulp and the Estate of Johnson.

CAMPBELL, District Judge.

When these cases were first assigned to me from the calendar of Judge Holly on May 24, 1948, I asked to be relieved of the assignment. It became immediately apparent from even a cursory reading of the then pending report and findings of Special Master Archie Cohen that the affairs of these two debtors in reorganization were in horrible condition as a result of the gross mismanagement and questionable practices of one Darrow, a Trustee appointed by Judge Holly, who had resigned during the course of an investigation of his conduct of the estates. That surcharges might have to be taxed and possibly disciplinary proceedings for misconduct instituted against the resigned Trustee, and two of his employees, Kulp and Johnson seemed quite certain. At that time I did not know and had never previously heard of Darrow, Kulp or Johnson. The Executive Committee refused my request to be relieved of this distasteful assignment, however, on the ground that Master Cohen's report had been pending, without action thereon for some time, that some judge had to proceed to act on it, that Judge Holly was retiring from the Court, and that my name had been drawn by lot in the regular procedure of reassignment provided in our Rules. I thereupon reluctantly undertook these two reorganization proceedings which now are completely terminated with the fortunate result of payment of security holders and creditors in full despite many delays and difficulties.

Upon further and full consideration of Referee Cohen's report, the various objections thereto, and of the briefs and arguments filed and heard thereon, I became convinced that Kulp and Johnson, with the full knowledge and acquiescence of Darrow, had acted contrary to the best interests of the estates and to their own personal benefit in which disgraceful conduct Darrow was guilty at least of woeful neglect of duty. I thereupon filed my memorandum and order herein dated April 12, 1949 in which I concluded that the former Trustee should be surcharged thereon. I thereafter made certain that all three of these persons were severed from any further contact with the estates and the various subsidiaries. It was then my opinion based upon the clear and well supported findings of the Special Master, that Darrow, Kulp and Johnson were equally guilty of this breach of trust and that all knew what each was doing. Years of close association with the administration of these estates has confirmed that opinion and it still remains my sincere conviction.

140 F. Supp. 524

More recently in the administration of these estates, it became my disagreeable duty to have to deal officially with Kulp and Johnson in effecting a settlement with them concerning certain property claimed both by them and by the estates. In so doing, I dealt with them to the exclusion of Darrow, not because I felt them any less culpable than Darrow, but because they had or controlled possession of the property which the estates sought. I approved a settlement of the dispute with the representatives on these two of the three unfaithful servants because I was persuaded upon full consideration of the entire matter, that the estates would profit more by the settlement than they could ultimately realize from the lengthy and costly litigation that was the only alternative. Having made that decision, I wanted to have done completely with the distasteful business as soon as possible and thus I insisted upon both of my Trustees promptly and fully carrying out the terms of my order even though one of them and his attorney obviously disagreed with certain parts of it. How Kulp and Johnson divided these reluctantly given and ill-gotten gains, and whether or not they shared any part of it with Darrow, their joint malefactor in trust, I felt, and indeed stated in Court, was no concern of mine. I had made the best settlement possible for the estates with the two malefactors in the regrettable position to deal with the estates and thought I was at last finished with all three. That I was mistaken has been made painfully apparent in the recent opinion of the Court of Appeals, Federal Facilities Realty Trust v. Kulp, 7 Cir., 220 F.2d 495, and it now becomes my duty, under that Court's mandate, to see to the division of the aforesaid gains upon the intervention petition of Darrow for a portion of them.

In that regard, the matter is now before me on Darrow's affidavit which had been filed, after the lodging of the above mandate, under the alleged authority of the provisions of Title 28 U.S.C. § 144. Affiant attacks the duty of this Court to proceed to a final adjudication in these debtor proceedings, alleging that the presiding judge has a personal bias and prejudice against him. It becomes my duty, therefore, as the presiding judge, to pass upon the legal sufficiency of Darrow's affidavit, but not upon the truth or falsity of the facts therein alleged. Berger v. United States, 255 U.S. 22, 41 S.Ct. 230, 65 L.Ed. 481; Tucker v. Kerner, 7 Cir., 186 F.2d 79. If the reasons and facts set forth in the affidavit give fair support "to the charge of a bent of mind that may prevent or impede impartiality of judgment", then it is my duty to allow the affidavit and certify the case to the Executive Committee for reassignment to another judge. Berger v. United States, supra, 255 U.S. at page 33, 41 S.Ct. at page 233. However, my duty to "deny the affidavit on insufficient allegations is no less imperative than to allow it on sufficient allegations." Tucker v. Kerner, supra, 186 F.2d at page 85. That Section 144 must be strictly construed is not open to question. Cf. Ex parte American Steel Barrel Co. (Seaman), 230 U.S. 35, 33 S.Ct. 1007, 57 L.Ed. 1379; Marquette Cement Mfg. Co. v. Federal Trade Commission, 7 Cir., 147 F.2d 589. With these fundamental rules in mind, I shall consider the legal sufficiency of Darrow's affidavit.

The facts upon which the affiant relies to support his charge of prejudice are set forth in paragraphs 6, 7, 8 and 9 of the affidavit. Paragraphs 7(a) and 7(b) contain certain statements, previously made by Referee Ward,...

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26 practice notes
  • Commonwealth of Pa. v. Local U. 542, Int. U. of Op. Eng., Civ. A. No. 71-2698.
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
    • December 4, 1974
    ...388 F. Supp. 159 supra, 478 F.2d at 1073; Simmons v. United States, supra, 302 F.2d at 75; In re Federal Facilities Realty Trust, 140 F.Supp. 522, 524 (N.D.Ill.1956). "The section withdraws from the presiding judge a decision upon the truth of the matters alleged." Berger v. United States, ......
  • Duplan Corporation v. Deering Milliken, Inc., Civ. A. No. 71-306
    • United States
    • United States District Courts. 4th Circuit. United States District Court of South Carolina
    • June 12, 1975
    ...66 138 F.2d at 654, quoted in United States v. Richmond, 178 F.Supp. 44, 47 (D.Conn. 1958); In re Federal Facilities Realty Trust, 140 F.Supp. 522, 527 67 Knapp v. Kinsey, 232 F.2d 458, 467 (6th Cir. 1956), cert. denied, 352 U.S. 892, 77 S.Ct. 131, 1 L.Ed.2d 86; Whitaker v. McLean, 73 App.D......
  • Lindsey v. City of Beaufort, Civ. A. No. 3:93-1145-0
    • United States
    • United States District Courts. 4th Circuit. United States District Court of South Carolina
    • September 29, 1995
    ...(7th Cir. 911 F. Supp. 973 1950); United States v. Hanrahan, 248 F.Supp. 471, 476 (D.D.C.1965); In re Federal Facilities Realty Trust, 140 F.Supp. 522, 524 (N.D.Ill.1956). The "facts" and conclusions alleged in the affidavit do not establish the existence of a personal bias. My disqualifica......
  • United States v. Gilboy, Crim. No. 12880.
    • United States
    • United States District Courts. 3th Circuit. United States District Court of Middle District of Pennsylvania
    • May 9, 1958
    ...1567, 89 L.Ed. 2001; Craven v. United States, 1 Cir., 1927, 22 F.2d 605, 608; In re Federal Facilities Realty Trust, D. C.N.D.Ill.1956, 140 F.Supp. 522, 524; Cuddy v. Otis, 8 Cir., 1929, 33 F.2d 577, at page 578; Beland v. United States, 5 Cir., 1941, 117 F.2d 958, at page 960; United State......
  • Request a trial to view additional results
26 cases
  • Commonwealth of Pa. v. Local U. 542, Int. U. of Op. Eng., Civ. A. No. 71-2698.
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
    • December 4, 1974
    ...388 F. Supp. 159 supra, 478 F.2d at 1073; Simmons v. United States, supra, 302 F.2d at 75; In re Federal Facilities Realty Trust, 140 F.Supp. 522, 524 (N.D.Ill.1956). "The section withdraws from the presiding judge a decision upon the truth of the matters alleged." Berger v. United States, ......
  • Duplan Corporation v. Deering Milliken, Inc., Civ. A. No. 71-306
    • United States
    • United States District Courts. 4th Circuit. United States District Court of South Carolina
    • June 12, 1975
    ...66 138 F.2d at 654, quoted in United States v. Richmond, 178 F.Supp. 44, 47 (D.Conn. 1958); In re Federal Facilities Realty Trust, 140 F.Supp. 522, 527 67 Knapp v. Kinsey, 232 F.2d 458, 467 (6th Cir. 1956), cert. denied, 352 U.S. 892, 77 S.Ct. 131, 1 L.Ed.2d 86; Whitaker v. McLean, 73 App.D......
  • Lindsey v. City of Beaufort, Civ. A. No. 3:93-1145-0
    • United States
    • United States District Courts. 4th Circuit. United States District Court of South Carolina
    • September 29, 1995
    ...(7th Cir. 911 F. Supp. 973 1950); United States v. Hanrahan, 248 F.Supp. 471, 476 (D.D.C.1965); In re Federal Facilities Realty Trust, 140 F.Supp. 522, 524 (N.D.Ill.1956). The "facts" and conclusions alleged in the affidavit do not establish the existence of a personal bias. My disqualifica......
  • United States v. Gilboy, Crim. No. 12880.
    • United States
    • United States District Courts. 3th Circuit. United States District Court of Middle District of Pennsylvania
    • May 9, 1958
    ...1567, 89 L.Ed. 2001; Craven v. United States, 1 Cir., 1927, 22 F.2d 605, 608; In re Federal Facilities Realty Trust, D. C.N.D.Ill.1956, 140 F.Supp. 522, 524; Cuddy v. Otis, 8 Cir., 1929, 33 F.2d 577, at page 578; Beland v. United States, 5 Cir., 1941, 117 F.2d 958, at page 960; United State......
  • Request a trial to view additional results

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