Baker v. Gold Seal Liquors, Inc.,
417 U.S. 467 (1974)

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U.S. Supreme Court

Baker v. Gold Seal Liquors, Inc., 417 U.S. 467 (1974)

Baker v. Gold Seal Liquors, Inc.

No. 73-804

Argued April 23, 1974

Decided June 17, 1974

417 U.S. 467


Petitioners, trustees of a railroad in a § 77 reorganization proceeding, brought suit for freight charges against respondent shipper, and respondent counterclaimed for cargo loss and damage. The District Court granted petitioners' motion for summary judgment for entry of one judgment on their claim and another on the counterclaim, but set off one judgment against the other, resulting in a net judgment against petitioners for some $11,000. The Court of Appeals affirmed.

Held: The Court of Appeals erred in allowing the setoff, since it thereby granted a preference to the claim of one creditor that happened to owe freight charges over other creditors that did not, and thus interfered with the Reorganization Court's duty under § 77e, 11 U.S.C. § 205(e), to approve a "fair and equitable plan" that duly recognizes the rights of each class of creditors and stockholders and does not discriminate unfairly in favor of any class. Pp. 417 U. S. 468-474.

484 F.2d 950, reversed.

DOUGLAS, J., wrote the opinion of the Court, in which BURGER, C.J., and BRENNAN, MARSHALL, WHITE, and BLACKMUN, JJ., joined. STEWART, J., filed an opinion concurring in the result, in which POWELL, J., joined, post, p. 417 U. S. 474. REHNQUIST, J., filed a dissenting opinion, post, p. 417 U. S. 478.

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