In re Atlantic Gulf & Pacific S. S. Corp.

WILLIAM C. COLEMAN, District Judge. Judge. Tbe question bere presented is whether an amended proof of claim should be allowed after tbe expiration of tbe period of limitations provided for in section 57(n) of tbe Bankruptcy Act, which is ,as follows: “Claims shall not be proved against a bankrupt estate subsequent to one year after tbe adjudication; or if they are liquidated by litigation and tbe final judgment therein is rendered within thirty days before or after tbe expiration of such time, then within sixty days after tbe rendition of such judgment: Provided, that tbe right of infants and insane persons without guardians, without notice of tbe proceedings, may continue six months longer.” II USCA § 93 (n). It appears that tbe Atlantic Gulf & Pacific Steamship Corporation was adjudicated an involuntary bankrupt on August 15th, 1922. Within tbe required year thereafter, tbe Standard Oil Company filed a petition m the bankruptcy proceedings, claiming a lien upon certain freight money earned by vessels of the bankrupt, to which oil, etc., had been furnished by petitioner. This matter was beard, and tbe lien allowed in part and denied in part. In re Atlantic, Gulf & Pacific S. S. Co. (D. C.) 3 F.(2d) 311. Tbe petitioner, assuming that it would receive a dividend upon tbe balance as an unsecured creditor, made no further proof of claim. A dividend was declared during the past year, but nothing was allowed petitioner upon such unsecured balance. Thereupon petitioner presented an amended proof of claim to tbe referee, setting forth tbe claim in full, tbe portion accorded a lien, and tbe unpaid balance. Tbe referee refused to accept it. Tbe court is now asked to review tbe referee’s action. It is well settled that, if there is upon record in tbe bankruptcy proceedings, within tbe year specified, anything which is sufficient to show tbe existence, nature, and amount of tbe claim, it may be amended after tbe expiration of tbe period into a formal claim. Thus it is sufficient if tbe original claim is a preferred one, and tbe subsequent amended claim, a general one, as here. In re Strobel (D. C.) 163 F. 787; In re Fant (D. C.) 21 F.(2d) 182; In re Coleman & Titus Co. (D. C.) 286 F. 303; In re Kardos (C. C. A.) 17 F.(2d) 706; In re Salvator Brewing Co. (C. C. A.) 193 F. 989. But allowance of tbe amendment is discretionary with tbe court, In re Salvator Brewing Co., supra; though it is tbe policy of courts to be liberal in this regard. See In re Thompson (C. C. A.) 227 F. 981, 983. 'The present ease is distinguishable from those where proceedings are taken outside of bankruptcy to assert liens and priorities. There tbe 60-day limitation applies, since there is nothing upon tbe bankruptcy record which may be amended into a formal proof of claim. In re Clover Creamery Association (C. C. A.) 176 F. 907; In re Baker’s Baking Co. (D. C.) 285 F. 652. As was said in Re Fant, supra (page 183): “Tbe trend of modem decisions on this question, without exception, is to tbe effect that, where there is cmythmg m the record in the bankruptcy case wMeh establishes at claim [752] against the bankrupt, it may be used as a basis for amendment after tbe expiration of tbe statutory year, where substantial justice will be clone by (Mowing the amendment.” (Italics inserted.) Therefore the amended proof should be allowed, as the record of the prior proceeding to assert a lien is a part of the record in bankruptcy, unless, however, there is some sound reason to the contrary. Such unquestionably exists in the present case, because the entire estate has been distributed; nothing remains out of which to pay petitioner, so the allowance of the claim would be a futile act. Petitioner’s own laches are responsible for a condition which the court is powerless to remedy.