In re Stevens

• Decision Date: 11 November 1909
• Docket Number: 1,344.
• Citation: 173 F. 842
• Parties: In re STEVENS et al.
• Court: U.S. District Court — District of Oregon

173 F. 842

In re STEVENS et al.

No. 1,344.

United States District Court, D. Oregon.

November 11, 1909

Mahlon Purdin, for mortgage claimant.

WOLVERTON District Judge.

The referee has certified certain facts, upon which are desired the judgment and advice of the court touching what interest a secured creditor is entitled to receive upon his demand or claim against the estate.

A. W Sturgis filed and proved his claim against the estate, being evidenced by a promissory note secured by a mortgage on certain realty of the bankrupt. The claim is proven, with interest to the date of the adjudication in bankruptcy, was the sum of $520.78. The realty was sold by the trustee, with the consent of the claimant, and the sum of $900 realized thereupon. At the final hearing it was found that there were sufficient funds to pay the expenses of the administration and the mortgage debt; but the labor claims, having priority could not be paid in full, and the general creditors received nothing. Under this state of facts, it was held by the referee that the mortgage claimant was entitled to interest upon his demand to the date of the adjudication in bankruptcy, while the claimant insists that he is entitled to interest up to the date of its payment by the trustee. Thus is presented the question for determination here.

The bankruptcy act (Act July 1, 1898, c. 541, 30 Stat. 544 (U.S Comp. St. 1901, p. 3418)) contemplates that secured claims shall be proved. This is deducible from section 57a, which prescribes of what the proof of claims shall consist. A claim may be allowed for the purpose of enabling the claimant to participate in the meetings of creditors. For this purpose the value is ascertained in a summary way; the amount to be allowed being the residue of the claim above the value of the security. Section 57e. Subsequently, but for another purpose, it is provided (subdivision 'h') how the value of the security shall be determined, which is by converting the same into money in pursuance of the agreement by which the lien was created, or by agreement, arbitration, compromise, or litigation, as the court may direct. Thereupon it is declared that the value thus ascertained shall be credited upon the claim, 'and a dividend shall be paid only on the unpaid balance.' The balance thus found due upon the secured claim, which, in the event, would be only partially secured, constitutes the amount of the creditor's claim against the estate of the bankrupt, and is made the basis for striking dividends as it respects the demand.

The rule governing general claims against the estate, bearing interest, is that they will continue to draw interest to the date of the filing of the petition in bankruptcy, but not subsequent thereto. Such is the manifest intendment of the bankruptcy act itself. Section 63a. This section prescribes that debts may be proven and allowed against the estate which are a fixed liability as evidenced by a judgment, or an instrument of writing absolutely owing at the time of the filing of the petition, whether then payable or not, 'with any interest theron which would have been recoverable at that date or with a rebate of interest upon such as were not then payable and did not bear interest. ' Thus is evinced a purpose of fixing the date of the filing of the petition as a time with reference to which all claims shall be computed with a view to ascertaining their amounts, and thus is a basis established for striking and paying dividends. The estate pays no accruing interest thereafter. In re Haake...