In re Globe Laundry

SANFORD, District Judge. The referee was of opinion that the trustee’s motion to re-examine and disallow the claim of the American Paper Box Company as a claim against the individual estate of J. B. Brown should be overruled’ on the ground merely that the objection and motion for reconsideration was filed too late, that is, more than twelve months after the claim had been filed. I am of opinion that this was error. Section 57k of the Bankruptcy Act provides that claims which have been allowed may be reconsidered for cause' “before, but not after, the estate has been closed.” This provision indicates that as a general rule reconsideration should be allowed before the estate has been closed, there being no other limitation expressed in the Act as to the time within which such reconsideration may be made. It is true that in Loveland on Bankruptcy (4th Ed.) § 349, p. 721, it is said that: “A trustee has been helcl to be barred by. laches to petition for a re-examination of a claim once allowed.” Two cases are cited in support of this proposition. In one, In re Hinckel Brewing Co. (D. C.) 123 Fed. 942, it was held that where the claim of a landlord for rent of premises occupied by the bankrupt’s receiver had been filed against the estate and 'allowed without objection, and so stood until after the receiver had settled his accounts and been discharged and no claim therefor could be made against him, the trustee was precluded by reason of laches from thereafter having the allowance reviewed; the basis of this decision being that to allow a-review at that time would aid in the perpetra367 lion of a fraud upon the claimant, who, relying upon the allowance of the claim, had changed his position for the worse and lost remedies he might otherwise have asserted. In the other, In re Hamilton Furniture Co. (D. C.) 116 Fed. 115, it was held that, where one creditor petitioned for the re-examination arid disallowance of a number of claims after they had been allowed and participated in a dividend, and the trustee appeared and objected to the re-examination of such claim, the petitioning creditor was barred by his laches. I am of opinion that these cases rest upon entirely different principles from that involved in the present case. In the only one of these cases which deals with a petition of the trustee for re-examination of claims, namely, the Hinckel Brewing Co. Case, the trustee’s petition was disallowed for laches that if not held a bar would have worked great: prejudice to the creditor whose claim had been allowed, by reason of the change of status. No such state of affairs is shown here. The claim in question on its face appeared to be a claim against the individual estate of Brown. It is virtually conceded, as I understand from the briefs, that no dividend has yet been declared. There is no element of estoppel or of prejudice to the American Paper Box Company by change of status which should prevent the trustee, upon ascertaining the facts in reference to this claim, from" asking for its re-examination and disallowance as a claim against the estate of Brown. At least no such state of affairs appears from the record, which presents merely the question of whether a delay of more than' one year, without other facts appearing, and before a dividend has been declared or paid, is of itself such laches as to bar a 're-examination. I am of opinion that on the facts now appearing such laches is not shown. The petition for review will accordingly be allowed, the order of the Referee overruled, and the case remanded to the Referee for further proceedings in accordance with this opinion. The costs incident to the petition to review will he paid by the American Paper Box Company.