Opinion ID: 334852
Heading Depth: 1
Heading Rank: 4

Heading: nature of the trust's claim against the debtor

Text: 32 The Trustees advanced a final argument before the Bankruptcy Court in the event that Judge Babitt ruled in favor of SIPC. The Trustees argued that their claim against the debtor was for securities as well as cash, thus entitling them to the $50,000 maximum advance available under SIPA for securities held by the debtor. 22 Both SIPC and Bondy disagreed, maintaining that the trust's claim was solely for a cash credit balance of $133,051.15. The parties' divergence of views arose from the fact that, following an order from the Trustees to sell certain securities, the debtor delivered certain of the securities to the Chemical Bank's Clearance Department, whereupon the bank refused to release them to purchasers and instead retained them to offset the debtor's loan obligations. 33 It was unnecessary for the Bankruptcy Court to reach this question since, under its holding, the trust's losses would be fully compensated irrespective of whether the $50,000 or $20,000 maximum were applied. Moreover, the issue appears to have received almost no attention before the Bankruptcy Court, the judge preferring to focus his attention on the status of the employee-beneficiaries. 23 34 When the parties designated the record on appeal pursuant to Fed.R.App.P. 10 and Bankruptcy Rule 806, the only submission relative to this issue was the affidavit of William Ragusin, liquidator of the debtor, and the accompanying exhibits thereto. 24 The District Court in its memorandum decision made no mention whatever of this issue. On appeal before this Court, the question received a minimum of attention by the parties. SIPC addressed itself to the nature of the trust's claim at the conclusion of its reply brief only. SIPC reply brief at 10-14. The Trustees devoted only brief space to the issue. Trustees' br. at 27-29. Bondy failed to discuss it entirely. In addition, there was some indication before the Bankruptcy Court that any determination regarding the nature of the trust's claim would require the resolution of certain factual issues. 25 Although the Trustees and SIPC presented similar versions of the transactions in question to this Court, we cannot say, in light of the Bankruptcy Court proceedings and the sparseness of the parties' discussion, that the facts surrounding those transactions have been satisfactorily developed. 35 The Supreme Court has cautioned against the consideration, on review, of issues not reached by the lower court and not adequately presented in the reviewing tribunal. Dandridge v. Williams, 397 U.S. 471, 475 n. 6, 90 S.Ct. 1153, 1157, 25 L.Ed.2d 491 (1970); Aetna Casualty & Surety Co. v. Flowers, 330 U.S. 464, 468, 67 S.Ct. 798, 800, 91 L.Ed. 1024 (1947). Where, as here, there may be a need for findings of fact before a decision can be rendered, that caution takes on an added dimension. Accordingly, we decline to rule on the nature of the trust's claim until that issue has been fully aired and decided by the court below. 36 Reversed and remanded to the Bankruptcy Court for further proceedings consistent with this opinion.