In re Jayrose Millinery Co.
| Decision Date | 15 June 1937 |
| Parties | In re JAYROSE MILLINERY CO., Inc. |
| Court | U.S. District Court — Southern District of New York |
Feiring & Bernstein, of New York City, for trustee.
Paul Windels, Corp. Counsel, of New York City (Sol Charles Levine and Max Brofman, both of New York City, of counsel), for the City of New York.
The referee's certificate on trustee's report and petitions for allowances brings up for review the denial of an application made orally by the city of New York at the final meeting of creditors held on May 14, 1937, to transform a claim theretofore allowed in a reduced amount as a general claim, into a priority claim.
On January 30, 1936, the city of New York filed a claim for the sum of $2,883.56, demanding a priority under the provisions of a local law (enacted by the municipality), No. 20 (published as No. 21) of 1934, p. 143 ().
Hearing was brought on February 25, 1936, before the referee, who disallowed the priority following his previous ruling in Re Lazaroff, which had been confirmed by Judge Goddard and upon appeal affirmed by the Circuit Court of Appeals, Second Circuit, 84 F.(2d) 982, and reduced the claim to $2,122.91 and allowed it in that sum as a general claim, reserving for future determination a further possible deduction of $217.84 as a penalty. The referee's order was entered March 27, 1936.
Following the decision in Re Lazaroff, there was considerable misunderstanding and uncertainty as to the status of the city's right to priority in other cases. The Appellate Division of the New York Supreme Court in the Second Department, In re Rockaway Point Center, Inc., 249 App.Div. 66, 291 N.Y.S. 341, upheld the contentions of the city, and the Appellate Division, in the First Department (In re Atlas Television Co., Inc., 248 App.Div. 853, 291 N.Y.S. 138) held to the contrary. The latter ruling was reversed upon appeal to the New York Court of Appeals. In re Atlas Television Co., Inc., 273 N.Y. 51, 6 N. E.(2d) 94.
The city had sought to review the decision of the Circuit Court of Appeals in the Lazaroff Case, but certiorari was denied. However, after decision by the New York Court of Appeals, the United States Supreme Court granted a reargument, and on January 20, 1937, reversed In re Lazaroff sub nom., City of New York v. Saul Goldstein, 299 U.S. 522, 57 S.Ct. 321, 81 L.Ed. ___.
The trustee had applied on July 27, 1936, to re-examine the claim and further reduce it to $1905.07. The hearing thereon was held September 3, and by order entered September 8, 1936, the referee granted that application and also directed payment of a first dividend of 5 per cent. which was paid to claimant.
No appeal was taken from and no petition to review said orders of March 27, 1936, and September 8, 1936, was made, and no stipulation was entered into between the city of New York and the trustee to preserve the city's claim pending the final outcome of In re Lazaroff, and no action was taken by the city after the decision of the United States Supreme Court until the final meeting of creditors.
It is the contention of the city that both the referee and the trustee, and his...
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In re Jayrose Millinery Co.
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