Where the question whether the claim against the bankrupt be
allowed or not has been settled by an order of the court, questions
remaining as to how the order shall be carried out are purely
administrative, and as they do not involve the rejection or
allowance of a claim, this Court has no power under § 25
b
of the Bankruptcy Act to review the decision of the circuit court
of appeals.
Appeal from 196 F. 357 dismissed.
The facts, which involve the jurisdiction of this Court of
appeals under § 25
b of the Bankruptcy Act, are stated in
the opinion.
Page 227 U. S. 6
Memorandum opinion, by direction of the Court, by MR. CHIEF
JUSTICE WHITE:
A corporation known as the Paris Modes Company was adjudicated a
bankrupt on March 28, 1910. Gaines, the appellee, owned half of the
stock of the company and was its president. His relatives, during
the active life of the corporation, made large loans to the
company. The claims for these advances were assigned to Gaines
shortly before the bankruptcy, and he made proof of the same in the
bankruptcy proceeding. Subsequently the Wynkoop, Hallenbeck,
Crawford Company, the appellant, a creditor of the bankrupt estate
which had proved its claim, filed an intervening petition asking
for the reexamination and disallowance as against it of the Gaines
claim. The ground for the relief prayed was that Gaines was
equitably estopped from collecting his claim against the bankrupt
estate to the prejudice of the petitioner because of
misrepresentations and concealment of material facts as to the
financial condition of the bankrupt, made by him as an officer of
the company, upon which the intervening company relied to its
injury. The referee found that Gaines had made the representations
complained of and that, although intentional fraud on his part was
not shown, yet, if he had been the owner and holder of the notes
upon which he had proved at the time of the making of the
statements, they were of such a character as to cause him to be
equitably estopped from asserting the claims to the prejudice of
the intervener. As, however, it was found that Gaines had no
interest in the claims embraced in his proof of debt at the time
the representations were made by him, because he had acquired the
claims by assignments subsequent thereto, the referee concluded
that Gaines was entitled to assert the rights of his assignors, and
was not
Page 227 U. S. 7
estopped as against the Wynkoop, Hallenbeck, Crawford Company.
In reviewing the action of the referee, the district court
disapproved the same, and, on June 22, 1911, directed that the
claim of Gaines, insofar as it represented demands against the
bankrupt which were in existence at the time the representations
were made by Gaines, should be postponed to the claim of the
intervener. Neither party appealed from this order.
Thereafter, on August 3, 1911, the referee made an order that
the dividend on the sum of $199,000 of the claim of Gaines, being
the portion representing the indebtedness at the time of the
misrepresentations, should be paid to the intervener. On petition
to review, this order was affirmed by the district court. Gaines
then carried the matter, by both appeal and petition for review, to
the circuit court of appeals, complaining of the mode of
distribution which had been adopted to execute the decree of June
22, 1911. That the controversy was thus limited and that no issue
was raised or contention made concerning the decree of June 22,
1911, itself, which had become final, is certain. Thus, in August,
1912, in announcing its decision, the circuit court of appeals thus
stated the controversy before it:
"There is no occasion to go back of the order of June 22, 1911,
or to inquire into its propriety. No appeal was taken or petition
to review filed, and appellant here concedes that it lays down the
rule for distribution in this case, and announces that he has no
criticism to make as to the propriety of that rule. That is to say,
although in his opinion the facts did not warrant the adoption of
such a rule, he is willing to accept it and let the case be
disposed of in conformity to its terms."
The court then considered whether the distribution ordered by
the referee and approved by the district court accorded with the
order of June 22, 1911, and held that it did not, and directed
distribution of $12,250, the
Page 227 U. S. 8
balance of dividends in the hands of the trustee, in accordance
with views expressed in the opinion. 196 F. 357. The Wynkoop
Company thereupon prosecuted this appeal, and a motion has been
made to dismiss the same for want of jurisdiction.
That the motion to dismiss must be granted is manifest from the
statement we have made. Whatever may have been the nature of the
original controversy presented by the intervention of the Wynkoop
Company, the acquiescence of both parties in the order of June 22,
1911, settled that controversy, and the questions remaining were
purely administrative, concerning as they did merely the carrying
out of the order according to its true intent and purpose. This
being the case, the question whether the order of June 22, 1911,
was correctly interpreted by the referee and the district court in
the distribution directed by the subsequent administrative order is
not one concerning an allowance or rejection of a claim within §
25
b of the Bankrupt Act, but is a matter arising in the
administration of the bankrupt estate, which we are not empowered
to review.
Appeal dismissed.