Court Opinion

ID: 6684648
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:31:48.933182+00
Date Added: 2024-06-11T16:00:54.149086
License: Public Domain

Hamilton, Judge,
delivered tlie following opinion:
1. This is an application by the petitioners seeking to bring themselves within the principle of the West India Oil Company, reported in 6 Porto Rico Fed. Rep. 567. It is based upon the case of Fosdick v. Schall, 99 U. S. 235, 25 L. ed. 339. Preliminary to any question of the measure of relief is that of the standing of the applicant in court. They regularly filed their claim in this receivership under an order of court calling for claims, and it was allowed as an unsecured claim by master’s report of October 14, 1913. TsTo exception was filed to this report, and it seems that there was no formal confirmation of the report. But under equity rule 66, prescribed by the Supreme Court, it “stands confirmed” after twenty days. It may well he that the confirmation of a report, whether automatic as here, or by a formal decree as has usually been done, stands on no higher plane than any other decree of the court, and it might he subject to revision on proper showing during the same term. In the case at bar, however, several terms have elapsed, and the court feels that it not only has no right to reopen the matter, but it would destroy all sense of reliance upon the proceedings of this court if, after several terms, it should undertake to reconsider a decree of any kind. The whole matter of classifying the priorities in this case was referred to Special Master Mott on July 2, 1914. It is true that the applicants were not strictly within the terms of this refer*172ence, as their claims had not been given priority; but, nevertheless, in the meantime had come the decree in the West India Oil Co. Case, giving priority to that claim on the principle of' Fosdick v. Schall, and if there is any merit in the present application, it should have been made ■within a reasonable time after that decree of March 6, that is to say, before the court adjourned for the summer, in 1914. The fact seems to be that the applicant undertook to manage his own case, possibly in the absence of his regular counsel, and for that reason the matter was not brought up. This, however, cannot be taken into account, especially now after almost a year. Hatch v. Indianapolis & S. R. Co. 11 Biss. 138, 9 Fed. 856, 860.
2. It is argued that certain claims have been allowed preference which have no higher standing than the one at bar, and which, in fact, do not come within the principle of the West India Oil Co. Case. The claims in question were duly referred to the master without opposition from the purchasers, who are the parties who would be prejudiced by them, were reported by him, and were not excepted to, and, therefore, duly confirmed. It is too late now to discuss them. The court cannot undertake to find exceptions, whether of fact or of law, to a master’s report when the parties themselves do not do so, especially after the report has been confirmed. If this was done there would be no certainty in any confirmation. It may be added, however, that, if these claims so confirmed do relate to local law, and are not within the West India Oil Co. decision, they will not be regarded as a precedent. They may be settled as a matter of litigation between these parties, but they form no basis for fixture decisions. The parties are bound by masters’ reports if they do not except to them. The principle, how*173•ever, of such, a report not discussed before the court is not necessarily binding upon the court itself. Burke v. Davis, 26 C. C. A. 675, 53 U. S. App. 414, 81 Fed. 907, 910.
3. It is set up that no exception is necessary to a report upon a matter of law. This is correct where it is a pure legal matter to he reviewed.
This, however, does not mean that after the term at which there was a confirmation, whether automatic or by special decree, a party can come in and have a decree set aside. 'In a master’s finding a defect of law can no doubt be set up without formal exception at any time within the twenty days allowed for formal exceptions, and it may well be that at the same term the .court will, for special reasons revise such a confirmation. But the practice should go no further. This should not be done at a subsequent term.
4. Attention should further be called to the proper matter of procedure in exceptions. Rule 83 of this court provides that an exception must set out a reference to the evidence in respect of which it is claimed that the master erred. Unless this is done, it is impossible for the court to consider anything except a matter of law with certainty, and there is nothing before it except the master’s report. Ho court will presume error in a judgment which it is reviewing. In the exception now made to-the master’s report there is no such reference. This may be due, however, to the fact that the master'filed no testimony with his report. The master’s report should consist of, first, his finding, and, second, the evidence upon which it is based. The two together are necessary to make up the report. A report simply of the findings must, upon application, *174be sent back as irregular. There is no snch application in the case at bar.
5. The principle is invoked, however, that in the matter of a fnnd in court proper applications will be considered up to the time of distribution. New York Secur. & T. Co. v. Lombard Invest. Co. 73 Led. 537. As there has been no final decree upon all preferences, it is contended that it is not too late to press the one at bar.
This principle, however, is not applicable. There was in this instance a sale of the receivership property on February 8, 1915. The bid accepted was not in the usual form of an offer of so much money for the property. In such case the court would have paid whatever claims were properly allowable out of the fund and turn the balance over to the bondholders or other parties in interest. The fund, however, in court, if that term be correct, would have been the amount of money offered and accepted. In the case at bar the bid consisted of a certain amount cash, and an offer to satisfy all claims preferred or to be held as preferred by the court. This bid has been accepted and must relate to the time of the sale. There was no exception to this form of bid, and it was accepted and the sale confirmed sub modo. The principle of a cash offer, however, must be followed. The amount should not be increased or diminished over what was fairly within the scope of the March sale. This petition was filed before the sale, and so was notice of the facts of the claim, but it was also evidence of the lack of diligence of the claimants.
6. This, however, is not conclusive in the case. The fact is that the purchasers at this March sale'have acquired cane cars which were not paid for. While it must be decided that *175there was no lien npon the fund in the hands of the receiver under the doctrine of the West India Oil Oo. Case, the purchasers at this sale were put on notice by the proceedings in the case as to this part of the property they purchased. It is inequitable that they should receive this property under the circumstances without making good its value at the time of their purchase. It is therefore referred to the master to ascertain,- state, and report the reasonable market value of this property on February 8, 1915, and, if the purchasers wish to retain such of the cars as passed to them, they must pay to the claimants the amount so found. It may be that with greater diligence the claimants would have been able to establish a lien under the West India Oil Oo. Case principle. At present, however, they can only follow what was once their property in the manner above indicated.
The lien claimed by the claimants is denied, except so far as may be found by the master at the reference above ordered.
This is not to be taken as a precedent for any other case. The petition at bar was filed before the sale and has been kept alive, although informally, since that time.
The exceptions of the Hew Orleans Acid & Fertilizer Company to the master’s report of May 10, 1915, seek to bring that claimant within the principle of the Orenstein-Arthur-Koppel Company Case. The facts as to claim and procedure are different, however, and so far as appears none of the property so covered now exists in specie. These exceptions are therefore overruled.
It is so ordered.