Sloan's Furriers v. Bradley, 9805.

• Decision Date: 15 January 1945
• Docket Number: No. 9805.,9805.
• Citation: 146 F.2d 757
• Parties: SLOAN'S FURRIERS, Inc., et al. v. BRADLEY.
• Court: U.S. Court of Appeals — Sixth Circuit

146 F.2d 757 (1945)

SLOAN'S FURRIERS, Inc., et al. v. BRADLEY.

No. 9805.

Circuit Court of Appeals, Sixth Circuit.

January 15, 1945.

Sol Goodman and Albert Spievack, both of Cincinnati, Ohio, for appellants.

Maurice H. Koodish, of Cincinnati, Ohio (Maurice H. Koodish, and J. E. Rappoport, both of Cincinnati, Ohio, on the brief), for appellee.

Before HICKS, SIMONS, and MARTIN, Circuit Judges.

SIMONS, Circuit Judge.

The appellants in this bankruptcy appeal are merchandise creditors of the bankrupt who, at the election of a trustee, objected to the allowance of claims of other creditors for the purpose of voting, and to the appointment of the elected trustee, on the ground that his election was bankrupt-controlled. The referee overruled substantially all objections to proofs of claim, overruled the motion to set aside the election, and appointed the recommended trustee. The appellants' petition for review of the referee's order of appointment was overruled, and the order confirmed. It is from this order that appeal is taken.

The bankrupt was a corporation engaged in the retail fur business in the Fountain Square building in Cincinnati. Upon the filing of a petition in bankruptcy on June 22, 1943, one Bradley was appointed receiver by the United States District Court, to conserve its assets. The first meeting of creditors held July 19, 1943, in the office of the referee, at which the bankrupt was examined and claims of creditors discussed, was adjourned to July 24, to permit correction in some of the claims. At the adjourned meeting an election was held at which Bradley, the receiver, was elected trustee over the objection of present counsel for the appellants. A petition for review was based upon the grounds already stated. The objections to the voting of claims were, in the main, technical. They included, in addition to charges that attorneys who had performed services for the corporation, had, in reality, represented Grabfield, its sole stockholder, the charge that claims for personal services were not sufficiently specific; that some of the debts had not been liquidated; that some creditors were in reality secured, even though security was without reservation waived; and that claims evidenced by notes were ineligible to be voted because the notes had not been attached to the claim, though the referee had permitted such claims to be voted both for and against Bradley upon representation of counsel that the notes would be later attached.

There is, however, upon the record, no doubt as to the existence of the debts objected to, or the good faith of the creditors asserting them. It must be understood that the allowance of claims, for purposes of voting, is not their final allowance, and that upon a determination of their validity for voting purposes, when challenged, the only question for the court is whether there was reasonable ground for the determination made. In re Rosenfeld-Goldman Co., D.C., 228 F. 921. The mere filing of a proof of claim is prima facie evidence of its validity, with the burden of disproving it upon the objector. Whitney v. Dresser, 200 U.S. 532, 26 S.Ct. 316, 50 L.Ed. 584. The situation that faced the referee is important in order to determine whether he exercised a sound discretion in accepting the votes of the assailed creditors. At the time of the appointment of Bradley as receiver, the bankrupt's assets, located in the Fountain Square building, were in charge of a single employee who had remained after the resignation of the only officer of the corporation residing in Cincinnati. The premises of the bankrupt contained not only its own stock of furs, but much property of others held in its custody for storage and safekeeping. The landlord was concerned about its rent, which was substantial, and had already filed a motion with the district court to compel the bankrupt to vacate. It was important to the orderly liquidation of the bankrupt's assets, and in the release of furs belonging to customers, that a trustee be promptly chosen. The referee, nevertheless, gave careful consideration to the objections urged, and we perceive no abuse of discretion in permitting the assailed creditors to vote. This conclusion is fortified by the fact that the challenged claims were finally allowed by the referee, and that from such allowances the appellants failed...