Court Opinion

ID: 6641037
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:45:15.812228+00
Date Added: 2024-06-11T15:59:14.537759
License: Public Domain

HUNT and EUDKIN,
Circuit Judges (concurring in part). If there is such conflict of interest between creditors of the individual and creditors of the corporation as to require a separate administration of each estate, it would seem that orders appointing the same person trustee of both estates should not be affirmed; but, in the view we take of the case, that fact becomes immaterial. We agree with Judge EOSS that the court below has prejudged the rights of creditors without a hearing. Thus, in the opinion confirming the order approving the appointment of a trustee, the court said: “I am of the view that the two estates are of the same ownership- — that the property of Foley and of Foley, Incorporated, is to be considered as one sum of assets subject to the claims of all creditors, and for that reason I think that a consolidation of the two estates can appropriately bo made. The business was always the business of E. Y. Foley, while the operations wore being carried under his individual name as well as afterwards when conducted by E. Y. Foley, Incorporated, with Foley as president.”
 This conclusion may or may not be correct; but that question was not before the court, and the rights of creditors should not he foreclosed or determined by any such order. Acting' upon the suggestion of the court, the referee entered an order wherein it was decreed that the two proceedings involve the same identical assets and liabilities; that for the purpose of administration they should be deemed consolidated in one proceeding; that all of the assets of both estates should be consolidated; that all liabilities of both estates should be consolidated; that all claims which have been duly allowed or which may hereafter be duly allowed should be considered as claims against the consolidated estate; and that all acts of the trustee, whether done under the proceeding in the one estate or in the other, should he considered as done and performed under the consolidated proceeding. This order the court below has affirmed. 4 F.(2d) 152. It will thus be seen that the referee and the court have determined in advance that the assets of the two estates are of the same ownership, and that creditors of one hank-rapt are creditors of the other. It seems manifest to us that no such adjudication should be made without first giving the creditors their day in court.
However, wo do not think that it is necessary, or that it would bo the part of wisdom to undo all that has boon done. The appellants and all other creditors may present their claims to the trustee of the consolidated estate; they may contest or controvert the claims of any other creditor in that proceeding, and their rights can be as fully protected as if the two estates were divorced for the purposes of administration. Any other disposition of the ease will necessitate a separate administration of each estate, to bo followed, perhaps, by protracted litigation between the two trustees and the dissipation of assets which should go to the creditors. We are satisfied that the rights of the appellants and of all other creditors can be amply protected by simply modifying the order of consolidation in such manner as to leave the rig’hts of creditors open so that any creditor may assert such claims as he may desire and may controvert and Contest the claims of any other creditor, if so advised.
The order of consolidation will be modified in accordance herewith and, as thus modified, the order is affirmed.