In re Mountjoy, 3260.

• Court: U.S. District Court — Western District of Missouri
• Writing for the Court: Jack N. Bohm, Thomas E. Thompson, Kansas City, Mo., for petitioners
• Citation: In re Mountjoy, 368 F.Supp. 1087 (W.D. Mo. 1973)
• Decision Date: 31 October 1973
• Docket Number: No. 3260.,3260.
• Parties: In the Matter of Ernest W. MOUNTJOY, Bankrupt. John A. ROBINSON and Marjorie L. Robinson, Petitioners, v. Ernest W. MOUNTJOY, Bankrupt.

368 F. Supp. 1087

In the Matter of Ernest W. MOUNTJOY, Bankrupt John A. ROBINSON and Marjorie L. Robinson, Petitioners, v. Ernest W. MOUNTJOY, Bankrupt.

No. 3260.

United States District Court, W. D. Missouri, W. D.

October 31, 1973.

Howard W. Bevins, Raytown, Mo., for bankrupt.

Jack N. Bohm, Thomas E. Thompson, Kansas City, Mo., for petitioners.

AMENDED¹ ORDER DENYING BANKRUPT'S PETITION FOR REVIEW AND AFFIRMING ORDERS OF REFEREE IN BANKRUPTCY OF JANUARY 12, 1973, VACATING PERMANENT INJUNCTION AND OVERRULING BANKRUPT'S MOTION TO DISMISS CREDITORS ROBINSONS' APPLICATION TO DETERMINE DISCHARGEABILITY WITHOUT PREJUDICE, AND OF JANUARY 31, 1973, DENYING BANKRUPT'S PETITION FOR RECONSIDERATION.

WILLIAM H. BECKER, Chief Judge.

This cause comes before this Court on the bankrupt's petition for review filed herein on February 20, 1973,^1a pursuant to Section 39c. of the Bankruptcy Act. Although the petition herein is apparently untimely in that it was formally filed beyond the expiration period which ended on February 10, 1973,² it appears that bankrupt actually attempted to file the petition on February 9, 1973.³ This Court has been telephonically informed by counsel for bankrupt that said petition and the required filing fee were left with the Clerk of the Bankruptcy Court here in Kansas City, Missouri, on February 9, 1973, but that the petition was inadvertently filed on February 20, 1973.⁴ In light of this inadvertent late filing which does not appear to be the fault of the bankrupt, this Court will construe bankrupt's petition as timely filed.⁵

In his petition herein, bankrupt seeks to review and attain reversal of orders of the Referee in Bankruptcy entered on January 12, and January 31, 1973. In the order of January 12, 1973, the Referee ordered that a permanent injunction issued May 12, 1972, be vacated insofar as it pertained to John A. Robinson and Majorie L. Robinson, creditors of the bankrupt. Said order of January 12, 1973, further overruled the bankrupt's motion to dismiss Robinsons' application to determine dischargeability without prejudice. The effect of this was to allow the Robinsons to proceed in the State Circuit Court in the case of Robinson v. Mountjoy, et al., Civil Action No. 724,864. This latter suit had been pending in the Circuit Court of Missouri, 16th Judicial Circuit, Division Two, since April 11, 1969.⁶ In the order of January 31, 1973, the Referee denied the bankrupt's petition of January 19, 1973, to reconsider the Referee's order of January 12, 1973.

On May 4, 1973, pursuant to Local Rule 29, the parties herein filed the General Order 47 Stipulation therein agreeing and stating that no additional evidence is to be offered before this Court by any party and that this petition for review is submitted to this Court solely upon the evidence adduced before the Referee. The parties further state that this cause is submitted on the same briefs heretofore presented to the Referee on the issues presented herein and that supplemental briefs will not be filed.

In order to clarify the matters herein for consideration, a brief chronological summary of the record is presented.

On April 11, 1969, creditors Robinson initiated a civil suit against the bankrupt, Ernest W. Mountjoy and his wife, Mary Mountjoy, and a corporation, Riverside Concrete, Incorporated, in the Circuit Court of Missouri, 16th Judicial Circuit, Division Two, therein alleging that in respect to the bankrupt, said party, as stockholder and an officer of said corporation, did engage in fraud, embezzlement, misappropriation, and defalcation while acting as an officer of said corporation and in a fiduciary capacity, and did willfully and maliciously convert the property of these creditors.

Bankrupt filed his voluntary petition for bankruptcy herein and was adjudicated a bankrupt on April 12, 1972, some three years after the filing of the State Court action described above.

On April 26, 1972, the last day for filing applications to determine dischargeability under Section 17c(2)⁷ was fixed at June 14, 1972, pursuant to paragraph (1) of subdivision b of Section 14 of the Bankruptcy Act.

On May 17, 1972, the Court, on its own initiative,⁸ extended the time⁹ for filing applications under Section 17c(2) until September 14, 1972, in light of certain testimony at the first meeting of creditors. Mr. Howard Bevin, counsel for bankrupt, was mailed a copy of the order of extension.

On July 11, 1972, creditors Robinson timely filed their Section 17c(2) application to have the debt due them declared not discharged under subdivision a of Section 17.

Discovery procedures were commenced and on November 20, 1972, an order on pretrial procedures was entered setting the creditors' application for trial on December 20, 1972.

At a pretrial conference held in the Referee's chambers on December 18, 1972, all counsel being present, an extension of time for additional motions and suggestions was granted.

On December 29, 1972, creditors Robinson filed a motion for a jury trial and on the same date filed their motion to dissolve the original injunction together with suggestions in support thereof.

On January 10, 1973, the bankrupt filed his motion to dismiss the Robinsons' application to determine dischargeability alleging that the application "was untimely filed." On this same date, bankrupt filed his suggestions in opposition to the creditors' motion to dissolve the injunction order.

On January 12, 1973, the Court entered an order vacating the permanent injunction issued May 12, 1972, in this cause insofar as said order pertained to creditors Robinson. The order of January 12, 1973, also overruled the bankrupt's motion to dismiss the Robinsons' application to determine dischargeability without prejudice. The effect of the order was to allow the Robinsons to proceed in the State Court in the matter of Robinson v. Mountjoy, et al., Civil Action No. 724,864, then pending in the Jackson County Circuit Court.¹⁰

On January 19, 1973, the bankrupt timely filed his petition for reconsideration of the Referee's order of January 12, 1973.¹¹ On January 23, 1973, bankrupt filed his suggestions in support of his petition for reconsideration. On this same date, bankrupt also filed a "Motion for Order of Discharge" including therewith suggestion in support thereof.¹² On January 31, 1973, said petition for reconsideration was denied by the Referee on the basis that no new evidence or applicable law had been presented to warrant ruling otherwise.

On February 20, 1973,¹³ bankrupt filed herein his petition for review¹⁴ of the Referee's order of January 12, 1973. Creditors Robinson filed their respective answer thereto on March 2, 1973.

In his petition herein for review of the Referee's orders of January 12 and January 19, 1973, the bankrupt makes the following contentions:

"That Bankrupt, your petitioner herein, is aggrieved by the said order of January 12, 1973 and January 31, 1973, in that said orders are arbitrary and capricious, based upon no evidence or inadequate evidence, exceeded the jurisdiction of said Referee and are in contravention of the rights and protections afforded to Bankrupt by the Bankruptcy Act, in that:

"(a) Said Referee erred in denying Bankrupt's Motion to Dismiss the Application of Petitioners Robinson to Determine the Dischargeability of Bankrupt's indebtedness to them.

"(b) Said Motion to Dismiss must as a matter of law have been granted by Referee by reason of the fact that the Application of Petitioners Robinson to Determine Dischargeability was untimely filed.

"(c) Said Referee erred in permitting creditors, Robinson, to pursue their pending action in the state court of Missouri for an accounting, replevin, conversion, and fraud.

"(d) That as a matter of law, creditors Robinson are prohibited from pursuing in state court, an action of the type now pending against Bankrupt for the reason that this Court has exclusive jurisdiction over Bankrupt and said creditors and said jurisdiction is non-delegable.

"(e) That the finding by Referee in his Order of January 12, 1973, that `good cause exists to allow plaintiff to proceed in the state court for determination of the liability, if any, of the bankrupt' was arbitrary and capricious in that no hearing was conducted by said Referee, nor was any evidence introduced to determine the issue of `good cause'.

"(f) That said finding was erroneous in that a determination of liability at this time is irrelevant and moot as bankrupt is now entitled as a matter of law, to a discharge in bankruptcy, discharging all liabilities to creditors, including indebtedness to creditors Robinson, excepting only those type liabilities set forth in Section 17(a)(2) of the Bankruptcy Act, properly pleaded and timely filed.

"(g) That said Referee has no jurisdiction to order a determination of liability, his sole jurisdiction under the Bankruptcy Act being to determine dischargeability.

"(h) That said order of the Referee was in direct violation of Section 17 of the Bankruptcy Act.

"(i) That said Referee erred in failing and refusing to order Bankrupt's discharge in Bankruptcy on the expiration of 90 days following the first date set for the First Meeting of Creditors since no objections to bankrupt's discharge have been filed by any creditors.

"(j) That the Referee erred in failing and refusing to order Bankrupt's discharge in bankruptcy upon the expiration of ninety (90) days after May 12, 1972, the first date set for the First Meeting of Creditors.

"(k) That Bankrupt's discharge in bankruptcy is, as a matter of law, mandatory after the expiration of the statutory period provided in Section 14(b)(1) and (b)(2) (Title 11, U.S.C. Sec. 32(b)(1) and 32(b)(2)) and the Referee's order requiring Bankrupt to defend state court actions of accounting and replevin constitutes a denial of a discharge to Bankrupt and exceeds the Referee's jurisdiction.

"(l) That the Referee erred in overruling Bankrupt's Motion

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