Philbrick v. Burbank

• Decision Date: 29 May 1958
• Citation: 141 A.2d 888,101 N.H. 311
• Parties: A. E. PHILBRICK v. Alfred BURBANK.
• Court: New Hampshire Supreme Court

Page 888

141 A.2d 888

101 N.H. 311

A. E. PHILBRICK v. Alfred BURBANK.

Supreme Court of New Hampshire.

Argued May 7, 1958.

Decided May 29, 1958.

William F. Batchelder, Plymouth, for plaintiff.

Bernard I. Snierson and John P. Chandler, Laconia, for defendant.

KENISON, Chief Justice.

As briefed by the parties the issue in this case is whether a discharged bankrupt has sufficient ownership in unscheduled and unadministered assets (accounts receivable) of his bankrupt estate to institute suit to recover them. The balance of the loan which the plaintiff bankrupt now seeks to recover after his discharge was omitted from his schedule of assets because he 'had forgotten all about it,' since he considered it 'dead' and worthless. There is some conflict in the authorities as to whether the bankrupt can bring suit in such circumstances and if so, upon what theory he is allowed to do so. People v. Hess, 7 Ill.2d 192, 130 N.E.2d 280, 54 A.L.R.2d 1165; annotation 111 A.L.R. 835. Property unadministered because it was unscheduled presents a practical problem as well as a legal one in straight bankruptcy cases. 'It affords a basis for reopening the estate, but unless and until the reopening takes place, there is doubt whether the title remains conceptually in the discharged trustee, goes in gremio legis, or revests in the bankrupt subject to divestment on the reopening.' MacLachlan, Bankruptcy, s. 128, p. 120 (1956).

Under section 70 sub. a of the Bankruptcy Act as amended, the plaintiff's claim against the defendant passed to the trustee in bankruptcy. 11 U.S.C.A. § 110, sub. a. Since this asset was not scheduled it was not known to the trustee and any theory of abandonment of the asset by the trustee would be untenable. First Nat. Bank of Jacksboro v. Lasater, 196 U.S. 115, 25 S.Ct. 206, 49 L.Ed. 408; annotation 19 A.L.R.2d 890. The view that the bankrupt after his discharge cannot recover an unscheduled asset finds support in First Nat. Bank of Jacksboro v. Lasater, supra, and In re Lighthall, D.C., 221 F. 791. A contrary view indicating that the bankrupt has title after discharge and may assert the claim is found in Stipe v. Jefferson, 192 Minn. 504, 257 N.W. 99, 111 A.L.R. 831; note 19 Minn.L.R. 470. See Watson v. Motley, 201 Ala. 25, 75 So. 147; 6 Remington on Bankruptcy, s. 2986 (1952). An intermediate view of the authorities, which we adopt, is set forth in 4 Collier on Bankruptcy (14th ed.) s. 70.07, pp. 973-974. 'However, full unrestricted title to an unadministered asset does not automatically revert to the bankrupt upon the closing of the estate, absent circumstances showing the trustee's abandonment. As noted previously, the legal title to such an asset, while necessarily resting in the bankrupt for such purpose as the bringing of a suit thereon, is in custodia legis in the bankruptcy court if the property in question was never abandoned or disposed of. The bankrupt merely holds bare legal title for the trustee who is appointed upon the reopening...