In re Schreiber

• Decision Date: 09 January 1928
• Docket Number: No. 106.,106.
• Citation: 23 F.2d 428
• Parties: In re SCHREIBER.
• Court: U.S. Court of Appeals — Second Circuit

23 F.2d 428 (1928)

In re SCHREIBER.

No. 106.

Circuit Court of Appeals, Second Circuit.

January 9, 1928.

Zalkin & Cohen, of New York City (Nathan Coplan and Louis S. Ehrich, both of New York City, of counsel), for appellant.

Moses & Singer and Henry Caplan, of New York City (Henry B. Singer, of New York City, of counsel), for appellee.

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

SWAN, Circuit Judge.

On February 23, 1923, Rudolph Schreiber was adjudicated a bankrupt upon his voluntary petition. He was granted a discharge June 27, 1923, and the estate was formally closed February 9, 1924. Thereafter on May 24, 1927, an order reopening the estate for the purpose of administering subsequently discovered assets was granted ex parte upon the petition of the Public National Bank & Trust Company of New York, a creditor whose claim had been proved and allowed. The order also referred the matter to a referee for the purpose of calling a meeting of creditors for the election of a trustee and for further proceedings. On June 2, upon notice to said creditor, the bankrupt moved to vacate the order of May 24, 1927. The present appeal is from an order denying this motion.

It appears that the United States, although scheduled as a creditor of the bankrupt on account of an additional assessment for taxes for preceding years, was in reality his debtor; that the bankrupt, who first learned of the existence of his claim against the government after the estate had been closed, succeeded in 1926 in obtaining a sum in excess of $100,000 as a refund of taxes paid for the years 1918 and 1919; and that he has used "nearly all" of this money to pay certain of his former creditors "to whom he considered himself under moral obligation." He now objects to the reopening of the bankruptcy proceedings, and to being questioned and perhaps required to account for this money.

Section 2 (8) of the Bankruptcy Act (11 USCA § 11) invests courts of bankruptcy with jurisdiction to "close estates, whenever it appears that they have been fully administered, * * * and reopen them whenever it appears that they were closed before being fully administered." Section 11d (11 USCA § 29) provides that "suits shall not be brought by or against a trustee of a bankrupt estate subsequent to two years after the estate has been closed." The bankrupt contends that the latter section limits the time within which the power conferred by the former may be exercised.

This position is untenable. Section 11d relates to "suits by or against a trustee." Clearly a creditor's application to reopen the estate is not such a suit. In re Paine (D. C. Ky.) 127 F. 246. Numerous cases have allowed the estate to be reopened after a much longer period than 2 years. In re Paine, supra, 4 years; Pollack v. Meyer Bros. Drug Co. (C. C. A. 8) 233 F. 861, 5 years; In re Pierson (D. C. S. D. N. Y.) 174 F. 160, 10 years; In re Lighthall (D. C. N. D. N. Y.) 221 F. 791, 12 years. See, also, Bilafsky v. Abraham, 183 Mass. 401, 67 N. E. 318; Duncan v. Watson, 198 Ala. 180, 73 So. 448; Remington, Bankruptcy (3d Ed.) § 2971 et seq. Neither decision nor text-writer, so far as we have been able to discover, has ever suggested that the court's power to reopen is subject to the 2-year limitation for which the bankrupt now contends. Section 11d can have no possible bearing on the reopening of an estate, where unadministered assets are in hand or are obtainable without suit. If the United States, instead of paying the tax refund to Schreiber himself, had paid it to his former trustee in bankruptcy, no one could doubt the power of the court to reopen the proceedings for the purpose of administering this sum.

The notion which underlies the bankrupt's argument is really that section 11d bars any proceeding which the trustee hereafter to be elected may bring to compel the bankrupt to account, and therefore there is no unadministered asset, without which the reopening of an estate is not only futile, but unauthorized. It would seem to be a sufficient answer to reply that the defense of the 2-year limitation should be raised in the proceeding which the trustee may hereafter bring, rather than by motion to vacate the order reopening the estate. But we are willing to discuss the question upon broader ground. Even if it be assumed arguendo — an assumption contrary to Bilafsky v. Abraham, 183 Mass. 401, 67 N. E. 318 — that reopening an estate is not justified when the only unadministered asset is a claim upon which suit by the trustee in bankruptcy will be barred by section 11d, such a principle would not save the argument, because a proceeding to compel a bankrupt to hand over estate property is not a suit within the meaning of section 11d. An analogous provision...