In re Realty Associates Securities Corporation, 45024.

• Decision Date: 08 January 1944
• Docket Number: No. 45024.,45024.
• Citation: 53 F. Supp. 1015
• Parties: In re REALTY ASSOCIATES SECURITIES CORPORATION.
• Court: U.S. District Court — Eastern District of New York

53 F. Supp. 1015

In re REALTY ASSOCIATES SECURITIES CORPORATION.

No. 45024.

District Court, E. D. New York.

January 8, 1944.

Halpin & Keogh, of New York City (Eugene J. Keogh and Edward S. St. John, both of New York City, of counsel), for trustees.

George Zolotar and Kiva Berke, both of New York City, for Securities and Exchange Commission.

Lewis, Marks & Kanter, of Brooklyn, and Julius Silver, of New York City (Jack L. Rappaport, of New York City, of counsel), for Bondholders Protective Committee.

Percival E. Jackson, of New York City (Theodore N. Tarlau, of New York City, of counsel), for John Vanneck and others.

Herrick & Feinstein, of New York City (Abraham Feinstein, of New York City, of counsel), for Bondholders' Directors' Committee.

Archibald Palmer, of New York City, for Anna A. and Catherine Kuhlmann.

Irving L. Schanzer, of New York City, for Prudence Realization Corporation.

Auchincloss, Alley & Duncan, of New York City (Charles R. Lowther, of New York City, of counsel), for debtor.

Newman & Bisco, of New York City (David Barnett and Leo P. Cappelletti, both of New York City, of counsel), for Manufacturers Trust Co.

MOSCOWITZ, District Judge.

The trustees of the debtor have applied for instructions as to the appointment of an attorney to represent all parties who do not appear in this proceeding personally or by attorney and who are or may be in the military service of the United States at any time during the pendency of this proceeding. The application in substance seeks a determination as to whether or not the Soldiers' and Sailors' Civil Relief Act, Section 200, 50 U.S.C.A.Appendix, § 520, applies to a proceeding under Chapter X of the Bankruptcy Act, 11 U.S.C.A. § 501 et seq.

Section 100 of the statute, 50 U.S.C.A. Appendix, § 510, provides that the purpose of the Act is to suspend the enforcement of civil liabilities of persons in the military service of the United States and to provide for the temporary suspension of legal proceedings and transactions which might prejudice the civil rights of persons in said service.

Section 200, subdivision (1), of the statute, 50 U.S.C.A.Appendix § 520(1), provides that in any action or proceeding commenced in any court, if there be a default in appearance by the defendant, the plaintiff before entering judgment shall file an affidavit showing the defendant is or is not in military service or that the plaintiff is not able to determine whether or not he is in such service. The section further provides that no judgment shall be entered unless an affidavit is filed showing that the defendant is not in military service, without first securing an order of the court, but no order shall be made if the defendant is in such service until the court shall have appointed an attorney to represent the defendant. The statute provides that the court may require, as a condition before judgment, that the plaintiff file a bond to indemnify the defendant against any loss or damage that he may suffer by reason of any such judgment should that judgment thereafter be set aside.

Section 200, subdivision (3), of the same statute provides that in any action or proceeding in which a person in military service is a party, if such party does not personally appear or is not represented by an authorized attorney, the court may appoint an attorney to represent him, in which case a like bond may be required and an order made to protect the rights of such person. In connection with such appointment, the statute also provides that no attorney appointed under the Act shall have the power to waive any right of the person for whom he is appointed.

Section 200, subdivision (4), provides that if a judgment be rendered in an action or proceeding governed by this section against a person in the military service and it appears that such person was prejudiced, the judgment may, upon application made within 90 days after the termination of such military service, be opened by the court rendering the same and the defendant let in to defend, provided it appears that the defendant has a meritorious or legal defense to the action, but that vacating, setting aside or reversing any judgment because of any of the provisions of the statute shall not impair any right or title acquired by a bona fide purchaser for value.

From the purposes of the statute it would appear that Congress intended to protect any persons in the military service against any personal liability where such person had no opportunity to appear in the action either in person or through personal counsel, and that where the failure of a person to make such appearance is due to the fact that he is in the military service, his civil rights shall not be prejudiced. The provisions of section 200, subdivision (1) of the statute are consistent with such purpose. By barring the entry of a judgment against a person in the military service who is a defendant unless counsel is designated by the court, Congress has provided that the legal requirements shall be followed prior to the entry of any judgment. By further providing in subdivision (4) of the same section an opportunity for application to be made by the person in military service upon his return to civil life to reopen the proceeding if he has a meritorious defense. Congress has also provided against any possible miscarriage of justice if the facts which may be solely in the knowledge of the defendant justify a different judgment.

In a case involving a plaintiff against an individual defendant in the military service, it is clear that the provisions of section 200, subdivision (1) and...