In re Munsie

• Decision Date: 03 June 1929
• Docket Number: No. 334.,334.
• Citation: 33 F.2d 79
• Parties: In re MUNSIE.
• Court: U.S. Court of Appeals — Second Circuit

33 F.2d 79 (1929)

In re MUNSIE.

No. 334.

Circuit Court of Appeals, Second Circuit.

June 3, 1929.

Morris Gottlieb, of New York City, for appellants.

Greenstein & Schwartz, of Bridgeport, Conn. (Harry Schwartz, of Bridgeport, Conn., of counsel), for appellee.

Before L. HAND, SWAN, and AUGUSTUS N. HAND, Circuit Judges.

SWAN, Circuit Judge (after stating the facts as above).

This is a most anomalous proceeding. It has resulted in the paradoxical situation of a debtor complaining because his creditor asserted too small a claim, and the creditor appealing from an order which allows more than was asked in her proof of claim. The purpose of the bankrupt's application was to compel the creditor to include in her proof of claim all future installments of the monthly deficiency between rent payable under the bankrupt's lease and that payable by the new tenant, upon the notion, apparently, that if such installments were held provable they would ipso facto be dischargeable, and thus the bankrupt would obtain a preliminary adjudication of the scope of his discharge, which might be useful in a suit brought by the creditor to recover one such installment falling due subsequent to the filing of the petition in bankruptcy. We cannot discover that the Bankruptcy Act gives the bankrupt any standing to initiate such a proceeding. As we said in Re Havens, 272 F. 975, involving a different type of proceeding, the granting of a discharge is the function of the bankruptcy court alone, but its effect is for any court in which it is duly pleaded or otherwise submitted for judgment.

Proof and allowance of claims is governed by section 57 (11 USCA § 93). Paragraph (d) thereof provides that claims which have been duly proved shall be allowed, "unless objection to their allowance shall be made by parties in interest"; and paragraph (k) declares that allowed claims "may be reconsidered for cause, and reallowed or rejected in whole or in part, according to the equities of the case. * * *" Although the record is silent, we may assume that Mrs. Gottlieb's claim, filed at the first meeting of creditors, was forthwith allowed, as hers was the only claim and a trustee was appointed at that meeting. Section 55(b); section 44 (11 USCA §§ 91, 72). Consequently, the bankrupt's petition to liquidate was really a petition to reconsider and reallow under section 57(k). Whether an insolvent bankrupt is a party in interest, in such sense that he may object to the allowance of a claim, or move for reconsideration of an allowed claim, on the ground that it should be expunged or diminished, we need not now decide. He was allowed to do so before the election of a trustee in Re Ankeny, 100 F. 614 (D. C. Iowa). In Gregg Grain Co. v. Walker Grain Co., 285 F. 156 (C. C. A. 5), certiorari denied 262 U. S. 746, 43 S. Ct. 522, 67 L. Ed. 1212, it was held that an insolvent bankrupt had no interest which entitled him to object to a creditor's claim. On the other hand, In re Rubin, 24 F.(2d) 289 (C. C. A. 7) considered the validity of claims upon objections of the bankrupt; but the point of the bankrupt's standing to question the claims was not mentioned. General Order XXI(6) implies that only the trustee or a creditor may ask for reconsideration of a claim, and Referee Wise so held in Re Levy, 7 A. B. R. 56 (S. D. N. Y.). See, also, In re Lewensohn, 121 F. 538 (C. C. A. 2); Rosenbaum v. Dutton, 203 F. 838 (C. C. A. 8). Cf. Jones v. Clower, 22 F.(2d) 104, 106 (C. C. A. 5); Remington, Bankruptcy (3d Ed.) § 1025.

We said in Re Sully, 152 F. 619, 620: "The term `parties in interest' applies to those who have an interest in the res which is to be administered and distributed in the proceeding. * * *" It is difficult to see what interest a bankrupt can have to reduce a claim where, though he succeeds, his estate will be distributed to other creditors, with no hope of anything...