Source: http://openjurist.org/327/us/726
Timestamp: 2017-05-22 23:49:32
Document Index: 416385057

Matched Legal Cases: ['§ 63', '§ 103', '§ 103', 'art, 317', '§ 93', '§ 93', '§ 93', '§ 93']

327 US 726 Heiser v. Woodruff | OpenJurist
327 U.S. 726 - Heiser v. Woodruff Homethe United States Reports327 U.S.
327 US 726 Heiser v. Woodruff 327 U.S. 726
66 S.Ct. 853
90 L.Ed. 970
HEISERv.WOODRUFF et al.
Rehearing Denied May 27, 1946.
See 328 U.S. 879, 66 S.Ct. 1335.
[Argument of Counsel from page 727 intentionally omitted]
Woodruff, the bankrupt, was adjudicated as such on his voluntary petition on July 5, 1939. Petitioner, proceeding under § 63, sub. a(1), of the Bankruptcy Act, 11 U.S.C. § 103, sub. a(1), 11 U.S.C.A. § 103, sub. a(1), which provides that a fixed liability, evidenced by a judgment, is a provable claim in bankruptcy, filed his proof of claim in the bankruptcy court upon a default judgment against Woodruff for the sum, including accrued interest and costs, of more than $278,000. The suit in which the judgment was procured was filed in the United States District Court for the Southern District of California in July, 1935. Judgment was entered for petitioner on March 20, 1939, on proof taken of service of summons on January 31, 1939, and of Woodward's default and on evidence given by the petitioner.
We need not consider whether, apart from the requirements of the full faith and credit clause of the Constitution, the rule of res judicata applied in the federal courts, in diversity of citizenship cases, under the doctrine of Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487; cf. Guaranty Trust Co. v. York, 326 U.S. 99, 65 S.Ct. 1464; Holmberg et al. v. Armbrecht, 66 S.Ct. 582, can be other than that of the state in which the federal court sits. For nothing decided in Erie R. Co. v. Tompkins, supra, requires a court of bankruptcy, in applying the statutes of the United States governing the liquidation of bankrupts' estates, to adopt local rules of law in determining what claims are provable, or to be allowed, or how the bankrupt's estate is to be distributed among claimants. Cf. Board of Com'rs v. United States, 308 U.S. 343, 60 S.Ct. 285, 84 L.Ed. 313; Deitrick v. Greaney, 309 U.S. 190, 60 S.Ct. 480, 84 L.Ed. 694; D'Oench, Duhme & Co. v. Federal Deposit Ins. Corporation, 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956; Helvering v. Stuart, 317 U.S. 154, 161, 162, 63 S.Ct. 140, 144, 145, 87 L.Ed. 154; Sola Electric Co. v. Jefferson Co., 317 U.S. 173, 176, 63 S.Ct. 172, 87 L.Ed. 165; Wragg v. Federal Land Bank, 317 U.S. 325, 328, 63 S.Ct. 273, 275, 87 L.Ed. 300; Clearfield Trust Co. v. United States, 318 U.S. 363, 63 S.Ct. 573, 87 L.Ed. 838. In passing upon and rejecting or allowing the proof of claim in this case the court of bankruptcy proceeds—not without appropriate regard for rights acquired under state law—under federal statutes which govern the proof and allowance of claims based on judgments. In determining what judgments are provable and what objections may be made to their proof, and in determining the extent to which the inequitable conduct of a claimant in acquiring or asserting his claim in bankruptcy, requires its rejection or its subordination to other claims which, in othe respects are of the same class, the bankruptcy court is defining and applying federal, not state, law. See Prudence Realization Corporation v. Geist, supra, 316 U.S. 95, 96, 62 S.Ct. 982, 983, 86 L.Ed. 1293 and cases cited; cf. United States v. Pelzer, 312 U.S. 399, 402, 403, 61 S.Ct. 659, 660, 661, 85 L.Ed. 913.
Although the trustee in bankruptcy in Pepper v. Litton had unsuccessfully attacked the judgment in another proceeding in the state courts, this Court pointed out that in that proceeding no question was presented 'whether or not the * * * judgment might be subordinated to the claims of other creditors upon equitable principles,' 308 U.S. 302, 303, 60 S.Ct. 243, 84 L.Ed. 281, and that 'the only decree which was asked or could be given in the plaintiff's favor (under the pleadings) was for cancellation of the judgment as a record obligation of the bankrupt.' 308 U.S. 303, 60 S.Ct. 243, 84 L.Ed. 281. It was thus made plain that the theory relied upon as requiring disallowance or subordination of the contested claim rested upon grounds not previously adjudica ed, and we explicitly noted that the state court did not adjudicate it. 308 U.S. 302, 303, 60 S.Ct. 243, 84 L.Ed. 281.*
I concur in the result. In my judgment it is necessary, in this case, to do no more than to rule that equitable principles, applicable in bankruptcy in accordance with Pepper v. Litton, 308 U.S. 295, 60 S.Ct. 238, 84 L.Ed. 281, and prior decisions, do not require reexamination by the bankruptcy court, in the circumstances now presented, of the foundations of the judgment which is the basis of the claim in issue. If, as the Court declared in Pepper v. Litton, the bankruptcy court has power to reject claims, even when previously allowed, "in whole or in part, according to the equities of the case," 308 U.S. at 304, 60 S.Ct. at 244, 84 L.Ed. 281,1 see 11 U.S.C. § 93, sub. k, 11 U.S.C.A. § 93, sub. k, I find no reason for qualifying that rule in this case. It necessarily comprehends tha the bankruptcy court in the allowance or rejection and ordering of claims shall not be bound by any broad or rigid rule of res judicata. That, I think, is the essential ruling of the Pepper case.2
11 U.S.C. § 93, sub. a, 11 U.S.C.A. § 93, sub. a provides: 'A proof of claim shall consist of a statement under oath, in writing and signed by a creditor, setting forth the claim; the consideration therefor; whether any and, if so, * * * what payments have been made thereon; and that the claim is justly owing from the bankrupt to the creditor.' (Emphasis added.)