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In re GRIGNARD LITHOGRAPHIC CO.
(District Court, E. D. New York. July 30, 1907.)
BANKRUPTCY-CLAIMS AGAINST TRUSTEE-RENT.
Where the receiver and trustee continue to occupy premises leased by the bankrupt without agreement as to rent, the landlord is entitled to rent on a quantum meruit, but cannot recover for power which was not used.
[Ed. Note.-For cases in point, see Cent. Dig. vol. 6, Bankruptcy, $ 352.]
CHATFIELD, District Judge. On the 14th of June, 1906, a receiver was appointed of the assets of the Grignard Lithographic Company, against which a petition had been filed in bankruptcy; and this receiver was elected trustee, and immediately qualified, upon July 17, 1906. Certain machinery which had been purchased by the bankrupt company from the Trow Directory Company, and certain other assets, were in a loft occupied by the Grignard Lithographic Company,
upon the second floor of the Trow Directory Company building: The Trow Directory Company claimed the title to the machinery and plant, including the greater portion of the assets upon the property mentioned, under a conditional bill of sale, which it appears had not been filed prior to the appointment of the receiver, and about the validity of which there may have been question. The bill of sale was for the sum of $12,311, and upon June 14, 1906, $7,331 had been paid, leaving a balance of $4,980. The trustee, by a sale of the property not claimed under the conditional bill of sale, realized about $2,000, and now has in his possession as funds of the bankrupt estate $1,044.21. The premises in which the property was located were occupied by the receiver and trustee from June 14, 1906, until November 28, 1906, substantially 51/2 months. The rental which was paid by the company before the bankruptcy was $133 a month, and this rental value had been agreed upon because of certain business relations between the Trow Directory Company and the bankrupt, which did lithographic business for the Trow Directory Company. The Trow Directory Company has now demanded the sum of $1,650 for the rent and occupation of the premises, upon the affidavit of a real estate agent that floor space in said building is worth from 25 to 30 cents per square foot per annum, and that electric power is worth $125 to $150 per horse power. The premises in question comprise 8,675 square feet, as shown by the affidavit of Robert W. Smith, verified July 16, 1907.
During the pendency of the receivership, and before the premises were delivered by the trustee to the Trow Directory Company, considerable dispute and litigation arose from the claim made by the Trow Directory Company to the machinery covered by the conditional bill of sale. Without considering the merits of the previous contentions of the respective parties, it is apparent that the receiver and trustee,
under the authority of the court, occupied the premises and disputed the title to the machinery in question with the Trow Directory Company until a time when, it appearing to be impossible to effect a sale, the property was turned back to the Trow Directory Company for the balance due upon the bill of sale. In the meantime the receiver had been occupying the premises, perhaps unwillingly, but yet because of his best judgment, as directed by the court, that there was nothing else to do. The fact that he did not wish to occupy the property, and did everything that he could to avoid doing so, does not alter the situation that, by the exigencies of legal methods of proceeding on the part of the trustee, he continued as a tenant of the premises. The lease, however, was ended, so far as being an obligation against the estate is concerned, by the bankruptcy proceedings, and under the circumstances the equities do not show that upon a quantum meruit the possibility of the Trow Directory Company receiving compensation for power, if it had obtained a new tenant, should be taken as any portion of the value of the premises to the estate. The claim of the Trow Directory Company should be for use and occupation, and not for damages.
Taking the real estate expert's value of 25 cents a square foot per annum for the floor space, the amount of rent for 51/2 months would be $994.01, and to this extent the claim of the Trow Directory Company will be allowed, and the trustee directed to pay this amount from the funds in his possession, if sufficient for the purpose after meeting prior obligations.
ATLANTIC TRUST CO. V. OSGOOD.
(Circuit Court, S. D. New York. July 22, 1907.) 1. REFERENCE-REPORT-REVIEW ON MOTION IN TRIAL COURT.
The practice of moving for new trials in causes in federal courts heard by referee has practically fallen into disuse since the creation of the Circuit Courts of Appeals, and, while the right to make such motions remains, the court, in considering the same, will not retry the case, nor consider any question which may be brought before the Circuit Court of Appeals by writ of error, nor will it substitute its conclusions on con
flicting proofs for those of the referee. 2. SAME-ADMISSION OF IMPROPER EVIDENCE.
The admission of improper evidence on a trial before the court without a jury, or before a referee, is of no moment, and not ground for a new trial, unless such evidence was necessary to support the finding of facts.
Simpson, Thacher & Bartlett, for plaintiff.
LACOMBE, Circuit Judge. The practice of moving for new trial in causes heard by referee has practically fallen into disuse, because, since the creation of the Circuit Courts of Appeal, it has generally become unnecessary. Nevertheless the phraseology of the rule has not been altered, and technically the right to make such motion remains. Upon such a motion the court will not retry the case (Kilduff v. Roeblings' Sons Co. [C. C.) 150 Fed. 240), nor will it consider any question which may be brought before the Court of Appeals by writ of error, nor will it substitute its conclusions on conflicting proofs for those of the referee who saw and heard the witnesses; but there are some points which it may consider and pass upon. In illustration: Defendant's brief contends that there are facts important to be found, sustained by uncontroverted proof, which the referee refuses to find. Such a matter may legitimately be considered. On the other hand, it is suggested that some evidence was "improperly admitted.” The admission of improper evidence on a trial before the court without a jury, or before a referee, is a matter of no moment. The only important question is whether it was necessary to rely on such evidence for finding of facts. This practice is rarely followed now, and entails such delay in final disposition of the cause that security as on appeal should be given for the full amount.
Forty days given to make up case and exceptions as prayed. Stay in the meanwhile. Five days after entry of order to file security. If not filed within five days, stay will be vacated.
In re FANNING.
(District Court, E. D. New York. June 18, 1907.) BANKRUPTCY-DISCHARGE-DENIAL-GROUNDS.
Where a bankrupt did not willfully conceal testimony preventing his creditors from obtaining property, the fact that he apparently gave evasive and disrespectful answers to questions concerning the same was not ground for denying his discharge.
George F. Stackpole, for bankrupt.
CHATFIELD, District Judge. This is a motion for the confirmation of the special commissioner's report upon a reference to him on objections to the application by the bankrupt for a discharge.
The special commissioner has sufficiently set forth the facts in his report, and has correctly stated and interpreted the law. The bankrupt apparently gave evasive and disrespectful answers, but there is nothing to show that he willfully concealed testimony, preventing the creditors from obtaining the property, and it does not seem that his conduct was such as to merit punishment by refusing to grant him a discharge, inasmuch as the referee apparently did not consider the conduct of the bankrupt when a witness to be worthy of any discipline. The purpose of the penalties of the bankruptcy statute is to prevent bankrupts from concealing their property and defrauding their creditors. Ordinary questions of contumacy or contempt of court can be disposed of directly, and of themselves are not to be corrected by the withholding of a discharge.
The special commissioner's report will be confirmed in all respects, and the application for a discharge granted.
In re KRAUSE.
(District Court, S. D. New York. July 15, 1907.) BANKRUPTCY-RECEIVERSHIP-EXPENSES.
Where the proceedings of a receiver in bankruptcy were beneficial to the estate, and the items of expense seemed reasonable and necessary at the time they were incurred, the receiver and his attorneys having acted according to their best judgment and on sufficient cause at the time, such expenses would be allowed, though it thereafter appeared that the receivership had cost more than the necessities justified.
Henry L. Slobodin, for creditors.
CHATFIELD, District Judge. This motion comes up upon the report of a special commissioner, allowing the receiver and his attorneys certain sums' for their services in involuntary bankruptcy proceedings. The estate was small, but much of the property now in the hands of the trustee seems to have been obtained through the efforts of the receiver and his attorneys. A number of claimants for wages objected to the expenses of the receiver, and to the allowances given him and his attorneys, for the reason that the sum which will be left, applicable to the payment of wages claims, is not sufficient to pay the whole of those claims, and that the receivership has been too expensive.
It certainly appears, in the light of present circumstances, that this receivership has cost more than the necessities, viewed from the point of results, would justify, but, as found by the referee, the items of expense appear to have seemed reasonable and necessary at the time they were incurred, and it does not seem that the receiver and his attorneys can be blamed or held responsible, inasmuch as they apparently acted according to their best judgment and upon sufficient cause at the time. The amount allowed them for their services is not excessive, and while the hardship to the claimants, who are wage earners, would have had an effect upon the situation, if it could have been viewed from the present standpoint, nevertheless it seems that, if the receiver and his attorneys had not acted as they did, the wage earners would receive even less than they will under the present circumstances,
The report of the special commissioner will therefore be confirmed in all respects.
In re BURKE.
(District Court, E. D. New York. June 18, 1907.) BANKRUPTCY-SUPPLEMENTARY PROCEEDINGS-STAY.
Where bankruptcy proceedings intervened pending supplementary proceedings against the bankrupt, which were thereupon stayed, and the claim of the creditor conducting the proceedings was one provable in bankruptcy proceedings, and from which the bankrupt might obtain a discharge, he was entitled to have any further examination either of himself or third persons conducted in the bankruptcy proceedings, and hence the creditor could not obtain a vacation of the stay on the ground that the supplementary proceedings could be carried to a termination in the state court with less expense.
Frank M. Franklin, for bankrupt.
CHATFIELD, District Judge. In this proceeding a creditor, one Solomon B. Davega, has appeared and conducted the examination of some witnesses before the referee, on a judgment obtained in the Municipal Court of the city of New York, for the sum of $336.90. An order was obtained for the examination in supplementary proceedings of the judgment debtor, who is the bankrupt here, and this examination was stayed by an order of this court made and entered on the 29th day of March, 1907. The present application is to vacate this stay, and to allow the supplementary examination in the state court to proceed. The reasons stated for this application are that considerable money has already been spent, without results satisfactory to the creditor in the bankruptcy proceeding; that the witnesses before the referee have not appeared; and that the examination in the state court can be conducted without the expense alleged to be incident to an examination before the referee in bankruptcy.
Assuming that these statements are true, the bankrupt nevertheless has a right to have proceedings in a state court action, brought upon a claim provable and dischargeable in bankruptcy, stayed, and to have the matter disposed of in the bankruptcy proceedings. 'If petitioning creditors should discover assets, the trustee would be in duty bound to take possession or to follow up these assets, and the order of the state court, in the usual form, providing for the payment of the judgment to the sheriff, could not be carried out. Further proceedings would be necessary in order to have the trustee put in a position where the estate would benefit by the examination.
Under these circumstances, the motion should be denied, and the stay continued, but without prejudice to any application for the examination of the bankrupt or third parties in the bankruptcy proceedings.