In re Fiegel
| Decision Date | 20 September 1937 |
| Citation | 22 F. Supp. 364 |
| Parties | In re FIEGEL. |
| Court | U.S. District Court — Southern District of New York |
J. Leonard Stoll, of New York City (Saul E. Rogers, of New York City, of counsel), for trustee.
Root, Clark, Buckner & Ballantine, of New York City (Arthur A. Ballantine and V. Henry Rothschild, 2d, both of New York City, of counsel), for Criterion Advertising Co., Inc.
The motion is by a creditor for leave to file an amended proof of claim against a bankrupt estate. The referee granted the motion over the opposition of the trustee in bankruptcy.
The bankrupt was in the advertising business. On obtaining contracts from advertisers, it was his practice to assign the contracts to the creditor for performance. By contract of August 17, 1932, it was agreed that the creditor would pay him a commission of 16 2/3 per cent. of moneys collected on the contracts, to be paid as collections came in from the advertisers. The creditor, however, was to advance to the bankrupt one-third of the commissions at the time of assignment. The contract also recited that advances beyond the agreed one-third had been made, such advances being evidenced by the bankrupt's notes, and it was agreed that commissions as collected by the creditor were "to apply to all advances, including the interest on the notes."
The bankrupt filed a voluntary petition on October 6, 1934, and was adjudicated on the same day. The original proof of claim, filed on April 5, 1935, set forth a claim on notes and advances for $110,979, less commissions credited to the bankrupt of $25,238.15, leaving an unpaid balance of $85,740.85. The creditor received moneys from time to time on the assigned contracts and applied the part representing the bankrupt's commissions in reduction of the indebtedness on the notes. On June 16, 1937, the trustee demanded that the creditor turn over all commissions received after the bankruptcy, stating among other things that the creditor had filed proof of claim as an ordinary creditor, and was therefore not authorized to apply commissions against the notes. The creditor thereupon brought the present motion for leave to file an amended proof of claim. The proposed amended proof is for $111,604 advanced to the bankrupt, less commissions credited ($15,494 prior to bankruptcy and $9,282.09 since bankruptcy) and to be credited in the future, and less also the value of two chattel mortgages securing an advance of $3,000. The contract of August 17, 1932, is annexed, and the right to apply commissions payable against the advances is claimed. The notes and advances representing the claim are, with one minor variance, the same as in the original proof of claim. In the moving papers the creditor states that it did not intend to waive any of its rights under the contract when it filed the original proof of claim, and that the original proof of claim was prepared by the comptroller after consulting an attorney, without discussion about the need...
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