Court Opinion

ID: 9739784
Source: CourtListenerOpinion
Date Created: 2023-08-26 20:20:43.667839+00
Date Added: 2024-06-11T07:24:13.876772
License: Public Domain

On Petition for Eehearing.
Hunter, P. J.
The appellees, as a basis for sustaining the petition for rehearing, have raised the issue of the appellant’s failure to comply with the terms of Section 70 (b) of the Bankruptcy Act, 11 U.S.C.A. 110 (b), which requires that a Trustee in Bankruptcy shall elect to assume or reject all executory contracts of the bankrupt within 60 days, or the contracts are deemed rejected. At the time of the initiation of the bankruptcy proceedings of Northern Indiana Oil Company, Inc., Charles L. Surprise was appointed Trustee in Bankruptcy, and he served in that capacity during the 60 day period set forth in Section 70(b) of the Bankruptcy Act, supra. As stated in our opinion the record fails to show that said trustee elected to assume the executory contracts, and the reasonable *510presumption is that the trustee thereby determined that the contracts should not be assumed. However, the plaintiff-appellant, who served as a subsequent trustee for the bankrupt company, has alleged in the amended complaint filed in the cause, that the original trustee, Charles L. Surprise, participated in the conspiracy by allowing Robert B. Fletcher to appropriate the business as his own, and by further failing to notify the bankruptcy court of assets of the bankrupt company in the possession of Mr. Fletcher which should have been listed on the schedule.
Inasmuch as the amended complaint contained allegations that Fletcher and Surprise conspired to take advantage of the bankrupt company by allowing the 60 day period to lapse, this court is of the opinion that that issue should also be decided in a full trial on the merits of the complaint. We recognized and supported the position of the appellant that equity will not permit the parties to retain the benefits of the alleged fraud, and this doctrine, we think, is applicable to the case at bar. This position is not to be interpreted as meaning that this court is attempting to thwart the functioning of the Bankruptcy Act, but merely means that such provisions should not be utilized ^as a shield to protect the perpetrators of an alleged fraud on creditors and interested parties.
The petition of appellees for rehearing is denied.
Note.—Reported in 196 N. E. 2d 422. Rehearing denied 197 N. E. 2d 183.