In re Kohl-Hepp Brick Co.

• Decision Date: 08 February 1910
• Docket Number: 224.
• Citation: 176 F. 340
• Parties: In re KOHL-HEPP BRICK CO.
• Court: U.S. Court of Appeals — Second Circuit

176 F. 340

In re KOHL-HEPP BRICK CO.

No. 224.

United States Court of Appeals, Second Circuit.

February 8, 1910

Joseph Duffy, for appellants.

R. R Howard and Guthrie B. Plante, for appellee.

Before LACOMBE, WARD, and NOYES, Circuit Judges.

LACOMBE Circuit Judge.

This record as presented is so imperfect and so inartificially prepared that it is very difficult to marshal the facts in proper chronological order. It may be assumed that at some time, by some proper authority, appellants were appointed guardians of William R. Ward, an incompetent, and it may further be assumed that they were so appointed prior to November 13, 1908. Their contention appears to be that $16,100 was obtained by some one from Ward without consideration and invested in the property, which was subsequently sold, and that they can trace the money into the property. The title to that property, a brick plant, at the time of the bankruptcy, was in the bankrupt.

Adjudication of bankruptcy was had November 12, 1907, and after various efforts to make the plant productive a meeting of creditors was called for November 5, 1908, to consider the propriety of selling it. After a long discussion adjournment was had to November 12, 1908, when it was decided to sell the property at public auction. On November 13th the trustees received a letter from the attorneys of the alleged guardians protesting against any sale of the property, except subject to a lien in their favor for $16,100, by reason of moneys advanced by the alleged lunatic. Such a claim thus advanced did not operate to prevent the court from selling the property free of that particular lien, provided the lien, if subsequently established, should apply to the proceeds, and provided further, that timely notice of the time and place were given to the persons who claimed such lien, so that they might have an opportunity to attend and by bidding or otherwise protect their interest. Collier on Bankruptcy (7th Ed.) pp. 838, 839. We have searched the record in vain to find that any such notice was ever given to them. Notices were given to every creditor who appeared in the bankrupt's schedule, or who had filed a claim in the office of the referee; but appellants were not enumerated in the schedule, nor did they file any claim with the referee. They elected to rely on their alleged lien against the res.

The property was offered at auction on January 14, 1909, and a bid of $20,500, the highest one, accepted by the trustees subject to the approval of the court. Thereafter, on notice to all creditors and lienors other than appellants, the question of confirming the sale was brought on for hearing before the referee on January 20, 1909, such hearing being continued on February 3d, 10th, 15th, 17th, and 19th. An offer by one Buell to purchase the property for $31,287.67 being then made, the successful auction bidder waived his bid and an order was made February 23d directing sale of the property for the last-named sum. The order sought to be reviewed amends this order of February 23d, so as to provide expressly that the property be sold free and clear of appellants' alleged lien, which, if any, shall be transferred to the proceeds. It was admitted on the argument that the trustees did not give appellants notice of any of these proceedings, because they 'ignored' their claim, considering it to be frivolous.

On the record, disregarding contributions to the facts advanced in counsel's argument, it does seem rather slim; but possibly, when they have their day in court, appellants may be able to make something out of it. That is not now the question. Concededly before the sale at auction, and the subsequent sale, when, the bid being rejected, the referee approved a private sale at a higher price, the trustees were advised that a lien on the property was claimed, and neither they nor the...