Source: https://supreme.justia.com/cases/federal/us/297/230/
Timestamp: 2019-04-23 04:46:27+00:00

Document:
Justia › US Law › US Case Law › US Supreme Court › Volume 297 › Bronx Brass Foundry, Inc. v. Irving Trust Co.
1. The right of a plaintiff in equity to dismiss his bill when the defendant cannot have affirmative relief on the pleadings and can suffer no prejudice save for the vexation and expense of a second suit is subject to modification by rule of court. P. 297 U. S. 231.
2. Under a rule in the Southern District of New York, the bankruptcy court may refuse to permit the withdrawal of a creditor's claim after issue joined upon it. P. 297 U. S. 232.
3. Palmer Clay Products Co. v. Brown, Trustee, ante, p. 297 U. S. 227, followed on a construction of § 60(a), (b), Bankruptcy Act, concerning preferences. P. 297 U. S. 232.
Certiorari, 296 U.S. 565, to review the affirmance of an order denying a claim in bankruptcy.
aggregating $1,000 which were unlawful preferences. The creditor denied the allegations of preference.
On the issue thus raised, several hearings were had before the referee, and the evidence introduced clearly indicated that the payments would, upon bankruptcy, effect a preference over other creditors of the same class, and that the claimant had received them having reasonable cause to believe the debtor insolvent. But it left uncertain whether the amount received was more than its pro rata share would have been if the then existing assets had been ratably distributed among all the then creditors. Before the hearing closed, and in view of an adverse ruling on the admission of evidence, the creditor filed a withdrawal of its claim and left the hearing.
"When a creditor files a claim against the bankrupt estate, he elects a forum which may hear and determine whether a preference to him was made. Although judgment of recovery may not be granted, the finding thereon, subject to review, is conclusive as between the parties. It is not intended that a party shall have two trials of the same issue or be permitted to present the same issue to different tribunals for determination. When issue is joined upon the question whether a voidable preference has been received, the creditor may not withdraw, of his own motion, and thereby avoid such determination as the proof warrants."
which held that the creditor had received a preference, although the proof did not show that, at the times of the payments, the assets of the debtor were insufficient to pay proportional amounts to all the other creditors, 76 F.2d 935. We granted certiorari because the ruling on the right of the creditor to withdraw its claim appeared to conflict with Scholl Mfg. Co. v. Rodgers, 51 F.2d 971, decided by the Circuit Court of Appeals for the Eighth Circuit, and because the ruling on the question of preference conflicted with W. S. Peck & Co. v. Whitmer, 231 F. 893, also decided by that court.
"to permit the plaintiff to discontinue, even though the defendant cannot have affirmative relief under the pleadings and though his only prejudice be the vexation and expense of a possible second suit upon the same cause of action,"
that this modification of the right of voluntary discontinuance was within the judicial power, since it dealt with procedure, that the rule had been approved by the Circuit Court of Appeals, that it was applicable also to bankruptcy proceedings, and that it had been properly applied below. We agree with the reasoning and the conclusion reached.
Second. The ruling of the referee on the question of preference was correct for the reasons stated in Palmer Clay Products Co. v. Brown, ante, p. 297 U. S. 227.

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