In re Scholz, Bankruptcy No. B76-1450

• Decision Date: 27 January 1986
• Docket Number: Bankruptcy No. B76-1450,B76-1451.
• Citation: 57 BR 259
• Parties: In re Donald J. SCHOLZ and Gerhild Scholz, Bankrupts.
• Court: U.S. Bankruptcy Court — Northern District of Ohio

57 B.R. 259 (1986)

In re Donald J. SCHOLZ and Gerhild Scholz, Bankrupts.

Bankruptcy Nos. B76-1450, B76-1451.

United States Bankruptcy Court, N.D. Ohio, W.D.

January 27, 1986.

Robert B. Gosline, Toledo, Ohio, for bankrupts.

Verne K. Armstrong, Asst. U.S. Atty., Toledo, Ohio, Jason P. Green, U.S. Dept. of Justice, Washington, D.C., for the I.R.S.

MEMORANDUM OPINION AND ORDER

RICHARD L. SPEER, Bankruptcy Judge.

This cause comes before the Court upon the Motion of the Bankrupts For Leave To File Amended Tax Claim and the Joint Motion To Consolidate the United States' Proof of Claim filed by the Bankrupts and by the Internal Revenue Service (hereinafter IRS). The Court has conducted a Hearing on these Motions and has heard the arguments of counsel. The Court has reviewed those arguments as well as the entire record in this case. Based upon that review and for the following reasons the Court finds that both Motions should be DENIED.

FACTS

The facts in this case do not appear to be in serious dispute. The Bankrupts in these two cases are husband and wife. They each filed an individual voluntary Chapter 7 Petition with this Court on December 3, 1976. In those Petitions they listed identical debts owing to the IRS which arose out of their tax liability for several years which preceded the filing of the Petitions. The similarity in the obligations results from the fact that the Bankrupts filed joint returns for the years in question. The remaining lists of creditors, however, are not the same in both cases.

In the Orders which were issued upon the filing of the Petitions, June 20, 1977, was established as the last day for the filing of claims in both cases. It does not appear that this date was ever extended. On June 6, 1977, the IRS filed a proof of claim in the Husband-bankrupt's case. On August 24, 1977, the IRS amended that proof of claim. No proof of claim was ever filed in the Wife-bankrupt's case. However, on June 21, 1977, the Internal Revenue Service sent a letter to the Bankrupts in care of the Trustee who had been appointed to administer both cases. In that letter, the IRS indicated that there existed tax liability over and above that which was paid by the Bankrupts for the years in question. The letter went on to outline the procedure available to the Bankrupts for contesting the determinations of deficiency. It should be noted that the letter is addressed to both the Husband and the Wife, but does not bear the number of any case filed with this Court.

On August 31, 1979, the Bankrupts filed a Complaint To Determine the Dischargeability of their tax obligations for the years in question. On November 20, 1979, the Court issued an Order consolidating, solely for the purpose of determining the dischargeability of the tax obligations, the Husband's and the Wife's cases. After protracted litigation and a subsequent appeal therefrom, the parties have apparently resolved their differences as to the issues addressed in that Complaint. However, in anticipation of a closing of the case by the Trustee, the Bankrupts have moved this Court for an Order which would allow the filing of the IRS's Proof of Claim in the Husband's case to constitute the filing of a Proof of Claim in both cases. In the alternative, they have moved this Court for leave to file an Amended Proof of Claim on behalf of the I.R.S. in the Wife's case. These Motions appear to be motivated by the fact that there will be a distribution to creditors in both cases, although the extent of that distribution is unclear as of this time. The scheme of distribution in these cases will be directly effected by the disposition of these Motions. If the IRS claim is allowed to be consolidated, or if the Bankrupts are allowed to file a claim on behalf of the IRS in the Wife's case, then the IRS will receive its distribution as a priority creditor in both cases, thereby reducing the Bankrupts' nondischargeable tax liability which will remain in the event the claims are not paid in their entirety. On the other hand, if the Bankrupts are denied the opportunity to consolidate or to file a claim, then the IRS will receive its distribution in the Wife's case subsequent to the payment of most all other creditors. In that event, it does not appear that there will be sufficient funds in the Wife's case to make any distribution to the IRS. As a result, the Bankrupts' nondischargeable tax obligation will be larger than it would have been had the IRS's claim been given a priority status.

In support of their Motions the Bankrupts argue that because of the fact that the Trustee was aware of the deficiencies which had been assessed, the filing of a proof of claim is unnecessary. They also argue that the letter sent by the IRS to the Trustee which set forth the deficiencies was sufficient to put the Trustee on notice of the claim and to constitute the filing of a claim in both cases. They further argue that because the cases have been treated throughout the course of their administration as one case, equity would require that they be similarly treated for the purposes addressed in these Motions.

LAW

I

The provisions of Bankruptcy Rule 301(a) state in pertinent part:

(a) . . . A proof of claim shall consist of a statement in writing setting forth a creditor\'s claim and . . . shall be executed by the creditor or by his authorized agent.

Under this rule, any statement in writing which is executed by a creditor and which sets forth the creditors claim may constitute a proof of claim. However, the claim must be sufficiently detailed and substantial so as to allow it to be considered as prima facie evidence of its validity, irrespective of whether the bankrupt included the debt in the schedules. See, 3 Collier on Bankruptcy 14th ed. ¶ 57.03. In that regard, it is generally held that in order to suffice as a proof of claim, an informal proof of claim must: 1) be in writing, 2) contain a demand on the debtor's estate, 3) express an intent to hold the debtor liable for the debt, 4) be filed with the Court, and 5) be based upon facts which would allow, as a matter of equity, to have the document accepted as a proof of claim. See generally, In re McCoy Management Services, Inc., 44 B.R. 215 (Bkcy.W.D.Ky.1984).

The provisions of Bankruptcy Rule 906(b) state in pertinent part:

(b) . . . When by these rules or by a notice given thereunder or by order of court an act is required or allowed to be done at or within a specified time, the court for cause shown may at any time in its discretion . . . upon application made after the expiration of the specified period permit the act to be done where the failure to act was the result of excusable neglect . . .

Under this rule, the Court may, at its discretion, permit a party to perform an act subsequent to the specified term in which it must otherwise be done if the party can show that the failure to do the act within the time was the result of excuseable neglect. Although the determination as to whether or not excuseable neglect is present must be made on a case-by-case basis, it is generally held that if the delay resulted from factors which were within the control of the delinquent party, then the failure is not the result of excuseable neglect. Beneficial Finance Co. of Hartford v. Manning (Matter of Manning), 4 B.C.D. 304 (Bkcy.D.Conn.1978), In re Grethen, 14 B.R. 221 (Bkcy.N.D.Iowa 1981).

II

With regard to the Motion to consolidate claims, a review of the record reflects that the Bankrupts do not share the same assets, nor do they have identical obligations. Accordingly, the creditors of each Bankrupt have the right to look to the assets of each individual estate for satisfaction of the obligations. In doing so, they also have the right to rely on the distribution scheme as it will operate in each case. The fact that the cases were consolidated for purposes of the dischargeability determination does not mean they were consolidated for purposes of administration. While it is true that the cases have generally, during the course of their...