Wilson v. Continental Bldg. & Loan Ass'n.
| Decision Date | 15 May 1916 |
| Docket Number | 2685. |
| Citation | 232 F. 824 |
| Parties | WILSON et al. v. CONTINENTAL BUILDING & LOAN ASS'N et al. |
| Court | U.S. Court of Appeals — Ninth Circuit |
B. M Aikins, of San Francisco, Cal., for petitioners.
Heller Powers & Ehrman, Hugo D. Newhouse, and Reuben G. Hunt, all of San Francisco, Cal., for respondents.
Nat Schmulowitz, of San Francisco, Cal., for bankrupt.
Before GILBERT, ROSS, and HUNT, Circuit Judges.
The Continental Building & Loan Association, a building and loan association formed under the laws of the state of California filed a petition in voluntary bankruptcy, and on August 9 1915, was adjudged a bankrupt. In its petition the corporation set forth that it owed debts which it was unable to pay in full, and accompanied the petition with a schedule in which it named its stockholders as creditors. The District Court referred the matter to A. B. Kreft, Esq., referee in bankruptcy.
The first meeting of creditors was held on August 30, 1915. A large number of the stockholders, creditors, appeared, and elected T. C. Tognazzi trustee. The referee disapproved of the selection, basing his disapproval upon the ground that 'the choice of Mr. Tognazzi had been influenced by the acts of the officers and attorneys connected with the bankrupt corporation. ' Thereupon the matter was continued until September 15, 1915, when a new election was held and the Anglo-California Trust Company was elected trustee over two other candidates whose names were presented. At this meeting the referee declined to allow directors, officers, and attorneys of the bankrupt to participate in the election of a trustee. The Anglo-California Trust Company had the support of 403 claimants, whose claims aggregated about $320,437; the next highest candidate for trustee, the Union Trust Company, had claimants whose claims represented $140,000; and the third candidate, Mr. Williams, was supported by 107 claims, aggregating $62,000. The only claimants who voted were shareholders of the bankrupt corporation.
Counsel representing the claimants who voted for the two unsuccessful candidates at once objected to the election of the Anglo-California Trust Company upon two grounds: (1) That that company was the depositary of the bankrupt, and had acted as trustee in its deeds of trust; (2) that its election was brought about by activity on the part of officers, directors, and attorneys of the bankrupt. The referee heard evidence upon these issues and disapproved of the selection. In the course of his opinion the referee states it to be the fact that the Anglo-California Trust Company is trustee under many deeds of trust for the Continental Building & Loan Association. He added:
'I would be pleased to have the creditors herein select as trustee a financial institution of equal standing with the Anglo-California Trust Company, but because of its relations with the bankrupt, and the association with it of attorney of the bankrupt, it is my opinion that it should not be the trustee herein.'
And later he expresses the opinion that:
'The evidence shows that the officers and attorneys of the bankrupt have dictated the steps leading up to the choice of the Anglo-California Trust Company and evidences a determination on their part to control the administration of this estate in this court.'
And in support of this he incorporates much of the evidence heard before him, which tends to show intimacy of association between one or more of the attorneys for the bankrupt association and the Anglo-California Trust Company.
Thereafter the petitioners herein, creditors, filed a petition for a review of the referee's order, and the referee filed his certificate on petition to review. The District Court affirmed the action of the referee in disapproving of the selection, upon the ground that the choice had been influenced, if not brought about, by the officers and attorneys of the bankrupt, whereupon the order denying the petition was brought before this court for review.
The petitioners rely upon 13 assignments of error, based substantially upon the following grounds: That the Anglo-California Trust Company was not disqualified by reason of any relationship it bore to the bankrupt, and that the election of the Anglo-California Trust Company was not brought about by any activity on the part of the...
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In re Los Angeles Lumber Products Co.
...should scrupulously avoid placing themselves in such a position that an adverse interest may be possible. Wilson v. Continental Building & Loan Association, 9 Cir., 1916, 232 F. 824. They are arms of the court and should govern themselves Judge Learned Hand, speaking for the Circuit Court o......
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In re Los Angeles Lumber Products Co.
...proceeding and his attorney should have no interest other than that of the estate itself, is fundamental. Wilson v. Continental Bldg. & Loan Ass'n, 9 Cir., 232 F. 824, 37 A.B.R. 444. The rules laid down by the courts for the conduct of fiduciaries, generally, are designed "to provide agains......
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In re National Grain Corporation
...the District Judge to reverse this finding of the referee. In re Franklin Brewing Co., 249 F. 333, 161 C. C. A. 341; Wilson v. Building Ass'n, 232 F. 824, 147 C. C. A. 18; In re Knox Auto Co. (D. C.) 210 F. The fact that the value of the real property to be sold was less than its recorded m......
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Monson v. Hibler
...District Judge have coincided in their conclusions. This court has so held in Re Dorr (C. C. A.) 196 F. 292, Wilson v. Continental Building & Loan Ass'n (C. C. A.) 232 F. 824, and In re Lake Chelan Land Co. (C. C. A.) 257 F. 497, 5 A. L. R. 557. See Rem. on Bankruptcy (3d Ed.) § 3871; In re......