In re Sully
| Decision Date | 06 February 1907 |
| Docket Number | 47,49,150.,46,149,48 |
| Citation | 152 F. 619 |
| Parties | In re SULLY et al. |
| Court | U.S. Court of Appeals — Second Circuit |
Davies Stone & Auerback (Julian T. Davies, A. I. Elkus and Garrard Glenn, of counsel), for appellants.
Boothby & Baldwin (John W. Boothby, of counsel), for the trustee.
Henry W. Taft and Turner, Rolston & Horan, for appellees.
Before WALLACE, LACOMBE, and COXE, Circuit Judges.
The orders under review upon the petitions of Hawley and Ray should be affirmed because these petitioners were not 'parties in interest' to the bankruptcy proceeding within the meaning of section 57 (Act July 1, 1898, c. 541, 30 Stat. 560 (U.S. Comp. St. 1901, p. 3443)), and therefore had no standing in court to ask for the orders granted by the referee. It is true that the trustee in bankruptcy was about to bring an action against them to recover a considerable sum of money, and it is argued that their defense will be seriously prejudiced by the adjudication in the bankruptcy proceeding fixing the amount of the claims of the Cotton Exchange creditors. However this may be, they are not parties in interest in the proceeding itself in any legal sense, or within the meaning of the bankruptcy act. It is not enough that their rights may be incidentally affected by the proceeding. 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; and does not include those who are merely debtors or alleged debtors of the bankrupt.
The orders under review upon the petitions of McCormick, Berg and Cahn should be reversed. In denying them leave to re-examine the claims of the Cotton Exchange creditors, the decision of the district judge proceeded upon two considerations. He was of the opinion, first, that the petitioners had been guilty of laches; and, secondly, that the application was not made in their own interests, but was made in the interests of Hawley and Ray. The facts are not in controversy which bear upon the questions involved, and whether there was an unreasonable delay on their part in making the application, or whether the application should have been denied because it was made in the interests of Hawley and Ray, are purely questions of law. The facts upon which laches have been suggested are fully set forth in the opinion of the referee, and more particularly in his opinion in considering the application of Hawley and Ray, and we fully agree with his conclusion that under the circumstances the application was made with sufficient diligence, and adopt his opinion.
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