In re Kassuba

Decision Date25 June 1975
Docket NumberNo. 73 B 6938-73 B 6979.,73 B 6938-73 B 6979.
Citation396 F. Supp. 324
PartiesIn the Matter of Walter J. KASSUBA et al., Debtors.
CourtU.S. District Court — Northern District of Illinois

Solomon, Rosenfeld, Elliott, Stiefel & Engerman, Chicago, Ill., for appellant.

Gerald F. Munitz, Nachman, Munitz & Sweig, Ltd., Chicago, Ill., for debtors.

MEMORANDUM OPINION

WILL, District Judge.

Southwestern Bell Telephone Company (Bell) has appealed from an order of the Bankruptcy Judge denying its application for a payout order for telephone service charges incurred by Walter J. Kassuba, et. al. (Debtors) prior to the filing of the Chapter XI petitions.

The facts are as follows:

1. The Debtors in possession are primarily engaged in the development and management of apartment buildings, townhouses and motels throughout the United States. Bell supplies telephone service to certain of the Debtors' operations in Missouri, Texas and Kansas.

2. At the time the Chapter XI petitions were filed, December 21, 1973, the Debtors owed Bell $28,392.13. On December 28, 1973, the Bankruptcy Judge ordered Bell to continue servicing the Debtors' existing telephone numbers without payment of the past due charges and the Debtors and Bell entered into security arrangements satisfactory to Bell concerning the payment of current charges. Accordingly, Bell has continued to provide telephone service to the Debtors at the existing numbers.

3. On June 25, 1974, Bell filed an application for payout of the $28,392.13 for pre-Chapter XI services. In its application Bell asserted that the December 28, 1973 order requiring it to continue serving the Debtors at their existing telephone numbers was void since the numbers were not the property of the Debtors over which the Bankruptcy Court could exercise summary jurisdiction. It further asserted that, in order for the Debtors to keep the existing telephone numbers, they would have to pay any and all outstanding charges or, in the alternative, make application for new numbers with satisfactory security deposits.

4. On January 15, 1975, the Bankruptcy Judge denied the application for a payout and, in effect, reaffirmed his order of December 28, 1973, requiring Bell to continue to provide service to the Debtors' existing numbers. Bell thereafter filed this appeal.

Bell's principal contention on appeal is that the Bankruptcy Court under section 311 of the Bankruptcy Act (11 U.S.C.A. § 711) does not have summary jurisdiction over the Debtors' assigned telephone numbers. That section confers exclusive jurisdiction on the Bankruptcy Court over "the debtor and his property, wherever located."

Bell asserts that, since its Missouri tariff expressly provides that a customer has no property right in his telephone number and that Bell may change the telephone number of a customer whenever it deems it desirable in the conduct of doing its business to do so, the Debtor's existing telephone numbers are not "property of the debtor" and, accordingly, are not subject to the Bankruptcy Court's jurisdiction.

In support of its position Bell cites In re Best Re-Manufacturing Co., 453 F.2d 848 (9th Cir. 1971), cert. den. 406 U.S. 919, 92 S.Ct. 1771, 32 L.Ed.2d 118 (1972); Slenderella Systems of Berkeley v. Pacific T. & T. Co., 286 F.2d 488 (2nd Cir. 1961); and Chemical Lime Co., Inc. v. West Penn Power Co., 24 F. Supp. 217 (M.D.Pa.1938), all of which conclude that the Bankruptcy Court does not have summary jurisdiction to enter an order requiring continuation of existing service.

The Debtors, on the other hand, rely on South Central Bell Telephone Co. v. Simon, 508 F.2d 1056 (5th Cir. 1975), and the decision of the Public Utilities Commission of California in 101 Plating Corporation v. The Pacific Telephone and Telegraph Company, Case No. 9313, Decision No. 83824, decided December 17, 1974. The Fifth Circuit decision concludes that the Bankruptcy Court does have jurisdiction to order continuation of service to existing telephone numbers.

The California Commission concluded that requiring a Chapter XI debtor in possession to pay prefiling charges as a condition to retaining its existing numbers would constitute a state-created priority of payment in contravention of Section 64 of the Bankruptcy Act. On the other hand, it found that disconnection of existing numbers in the event of non-payment even though of limited duration pending connection of new telephone numbers and requiring the use of new numbers would frustrate the overall rehabilitation policy of the Bankruptcy Act. It therefore ordered the telephone company to cease and desist from disconnecting the existing service for failure to pay pre-Chapter XI telephone charges.

In the instant case, the Bankruptcy Judge rejected the contention that the provisions of Bell's Missouri tariff specifying that...

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8 cases
  • In re Connecticut Pizza, Inc., Bankruptcy No. 92-1-6259-DK. Adv. No. 94-1-A842-DK.
    • United States
    • U.S. Bankruptcy Court — District of Maryland
    • February 28, 1996
    ...See In re Fontainebleau Hotel Corp., 508 F.2d 1056, 1059 (5th Cir.), reh'g denied, 512 F.2d 1406 (5th Cir.1975); In re Kassuba, 396 F.Supp. 324, 326 (N.D.Ill.1975); Directional Int'l, Ltd. v. Illinois Bell Telephone Co. (In re Personal Computer Network, Inc.), 85 B.R. 507, 508 (Bankr.N.D.Il......
  • In re Burnside
    • United States
    • U.S. Bankruptcy Court — Northern District of Ohio
    • January 21, 1997
    ...has possession, either actual or constructive. It is not limited to property title to which is in the debtor." In the Matter of Kassuba, 396 F.Supp. 324, 325 (N.D.Ill.1975), citing Thompson v. Magnolia Petroleum Co., 309 U.S. 478, 481, 60 S.Ct. 628, 630, 84 L.Ed. 876 Further, a greater weig......
  • U.S. Financial, Inc., Matter of, 77-2257
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • April 9, 1979
    ...the basis for their holdings. Other courts faced with similar requests have uniformly denied relief. In the case of In re Kassuba, 396 F.Supp. 324, 326 (N.D.Ill.1975), the bankruptcy judge found that "allowing Bell (the telephone company) to recover its pre-filing charges, an unsecured clai......
  • In re Personal Computer Network, Inc.
    • United States
    • U.S. District Court — Northern District of Illinois
    • March 28, 1989
    ...adversary complaint, the bankruptcy court relied on In re Fontainebleau Hotel Corp., 508 F.2d 1056 (5th Cir.1975), and In re Kassuba, 396 F.Supp. 324 (N.D.Ill.1975). In both Fontainebleau and Kassuba, the debtor filed for reorganization and continued operating its business as a debtor-in-po......
  • Request a trial to view additional results
1 books & journal articles
  • Bertrand Pan & Jennifer Taylor, Sustaining Power: Applying 11 U.s.c. Sec. 366 in Chapter 11 Post-bapcpa
    • United States
    • Emory University School of Law Emory Bankruptcy Developments Journal No. 22-2, June 2006
    • Invalid date
    ...(5th Cir. 1975) (termination of service under existing telephone number would substantially impair debtor's business); In re Kassuba, 396 F. Supp. 324, 326 (N.D. Ill. 1975) (termination of telephone service detrimental to debtor's rehabilitation); Marion Steel Co. v. Ohio Edison Co. (In re ......

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