St. Regis Paper Co. v. Jackson
Decision Date | 29 December 1966 |
Docket Number | No. 23040.,23040. |
Citation | 369 F.2d 136 |
Parties | ST. REGIS PAPER CO., and all other creditors similarly situated, Appellants, v. Billy R. JACKSON, Trustee in Bankruptcy for Harry D. Stone, Bankrupt, Appellee. |
Court | U.S. Court of Appeals — Fifth Circuit |
Carroll Dunscombe, Stuart, Fla., for appellants.
Paul G. Hyman, Feibelman, Friedman, Hyman & Britton, Miami, Fla., for appellee.
Before BROWN, GEWIN and GOLDBERG, Circuit Judges.
The appellants, creditors of the bankrupt estate of Harry D. Stone, seek to review two orders of the Referee in Bankruptcy. The following chronology illustrates the appellate posture of the case. On September 24, 1964, Roy Dickinson, being in ill health, resigned as trustee of the bankrupt estate of Harry D. Stone. The Referee entered on that date an order appointing the creditors' new choice for trustee, R. H. Dewey. Dewey then failed to qualify by failing to post bond within five days as required by Bankruptcy Act § 50, 11 U.S.C.A. § 78 (b).
On September 30th the Referee entered the first order in question here, a refusal to grant a turnover order directed at the bankrupt Stone and his assignee. On October 28th in the second action in question here, the Referee ordered the appointment of the appellee Jackson as trustee. On November 2nd the appellant petitioned for an extension of time to file a petition for review of the September 30th order. On November 12th the appellant petitioned the Referee to revoke the appointment of appellee Jackson as trustee, and to appoint one Raymond Lorenz in his place. On November 16th the appellee petitioned for review of the September 30th and October 28th orders.
On review in the District Court for the Southern District of Florida, the District Judge found that there had not been a timely petition for review of either order under § 39c of the Bankruptcy Act. 11 U.S.C.A. § 67(c).
emphasis supplied
Section 39c was amended in 19601 by adding the words italicized here to make compulsory the requirement that a petition for extension of the ten day period be filed during the original ten days. Before 1960 the courts had split on the question of whether the ten day period for filing a petition for review was mandatory and whether non-filing within that period made any petition fatally defective.2 The 1960 amendment to § 39c was intended to make filing during the ten day period mandatory. The amendment was recommended by the Judicial Conference of the United States, and the Senate report says in part:
S.Rep.No. 1689, 86th Cong. 2d Sess.; 1960 U.S.Code Congressional and Administrative News, pp. 3194, 3195.
Section 39c is now clearly inelastic in its command that some paper (either a petition for review itself or a petition to extend the filing time for a petition for review) be filed within ten days of the issuance of the order complained of.3 That command went unsatisfied in this case: the November 2nd petition to extend filing time was filed more than ten days after the September 30th order;4 and the November 16th petition for review was filed more than ten days after the October 28th order. Even if the November 12th petition be construed as a petition for review, it did not come within the ten days.
The creditors claim that their attorney should have been given notice of both orders, and that failure to receive notice relieves the late filing from the stricture of § 39c.
These claims are based on different portions of the Bankruptcy Act and will be treated separately. We are compelled to reject each.
First. With regard to the October 28th order, the creditors claim that notice was due them because the Bankruptcy Act, § 58a(3), 11 U.S.C.A. § 94(a) (3), says that creditors must receive notice of a creditors' meeting; and under § 44a, 11 U.S.C.A. § 72(a), a creditors' meeting is needed to fill a vacancy in the office of trustee, but § 44a also states:
"If the creditors do not appoint a trustee or if the trustee so appointed fails to qualify as herein provided, the court shall make the appointment."
All the creditors were then as now represented by the appellant's counsel, Dunscombe, who requested Dewey's appointment.
When Dewey failed to qualify, the Referee properly appointed another trustee without calling a meeting of the creditors. Since there was to be no meeting of creditors, no notice to the creditors was required by § 58a(3).
Second. The creditors' other contention makes this a harder case. Dewey was appointed on September 24th. A trustee has five days after appointment to qualify.5 Dewey did not post bond and so failed to qualify. On September 30th the Referee entered the order denying the turnover of assets. The Referee sent notice of this order to Dewey, but September 30th (a Wednesday) was the sixth day after Dewey had been appointed and was the day after the last day on which he could have qualified (without further action by the Referee). Dewey received the notice, but he informed no one about it until October 23rd, when he sent a letter to Dunscombe, the attorney for the creditors, enclosing the notice of the September 30th order and stating that he would not serve as trustee. On November 2nd the creditors filed the petition for extension of time to petition for review of the September 30th order.
The creditors argue that sending the notice to Dewey was a mistake which infected the proceedings with error, because the Referee knew or should have known that Dewey had not qualified, and that in the absence of a trustee the proper person to have sent the notice to was Dunscombe, the attorney for the creditors. The creditors argue that had they received such notice, they would have filed a timely petition for review.
Even assuming that the Referee had a practice of sending notice of orders, such notice is not required by the Bankruptcy Act.6 It has been held that the failure to give notice does not avoid the inelasticity of the amended § 39c.7 The creditors concede the lack of the requirement of notice in the Act and base their claim instead upon the invocation of the Federal Rules of Civil Procedure by General Order in Bankruptcy No. 37. General Order 37 reads:
General Order 37 does not effect the wholesale importation of the Rules. It specifically excludes those Rules which are "inconsistent" with the Bankruptcy Act. We note that § 39c is in terms "inconsistent" with Federal Rules 77(d), 73(a), and 6(b), which the creditors seek to apply here by analogizing appeal in a civil case to review in bankruptcy.
Rule 77(d) of the Federal Rules states:
Lack of notice under Rule 77(d) does not in itself extend the time, but such lack may be a factor in showing excusable neglect under Rule 73(a), and such a showing is the only method open under the Rules to extend time for appeal. Rule 6(b)8 governs the method of applying extensions of time under Rule 73(a). Rule 6(b) allows an application for extension both before and after the expiration of the original period sought to be extended, but § 39c of the Act states that a petition for extension must be filed within the first ten day period,...
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