Court Opinion

ID: 6913894
Source: CourtListenerOpinion
Date Created: 2022-07-23 22:34:11.902266+00
Date Added: 2024-06-11T16:06:35.778107
License: Public Domain

SCHNACKENBERG, Circuit Judge,
(concurring).
By his petition, Dyner seeks to set aside the confirmed sale to Intelectron on the ground that it was for a grossly inadequate price. But that ground was not among those urged when Marathon, the debtor, (all of whose stock Dyner owns), objected to the confirmation of the sale. We affirmed an order overruling the stated objections and confirming the sale. In re Marathon Foundry & Mach. Co. (Marathon v. Schwartz), 7 Cir., 228 F.2d 594. A court of bankruptcy may, in a subsequent proceeding, set aside a confirmed judicial sale, but the general rule is that, if the parties in the subsequent proceeding are the same as in the prior proceeding in which the confirmation of the same sale was unsuccessfully opposed and an order entered accordingly, the doctrine of res judicata applies in the subsequent proceeding. That is true as to all grounds urged against confirmation in the prior proceeding. It is also true as to all grounds which were not but could have been there urged, unless the later proceeding is based on a different cause of action. Cromwell v. Sac County, 94 U.S. 351, 353, 24 L.Ed. 195. Both proceedings now in question were attempts to defeat the sale to Intelectron. They involved the same cause of action, asserted first by filing of objections to confirmation and secondly by presenting a petition to set aside the sale. Undoubtedly a bankruptcy court in the exercise of its equitable powers may set aside a judicial sale on equitable grounds, such as fraud, accident or mistake. However, none of these grounds is set forth in Dyner’s petition. Even if the petition dfd charge fraud, that charge is not directed at the purchaser. If gross inadequacy be the basis of the petition, it will not state an equitable cause of action for setting aside the sale unless Intelectron is charged with unfairness or the taking of an undue advantage. Graffam v. Burgess, 117 U.S. 180, 192, 6 S.Ct. 686, 29 L.Ed. 839. Therefore, I conclude that Dyner’s petition is a second attempt by the same party to litigate the same cause of action and is barred by res judicata.
It is not necessary to decide whether a sufficient charge of fraud against Intel-ectron, if made in the present proceeding, would constitute a cause of action different from that involved in the prior proceeding. Such fraud is not charged, as above pointed out. If fraud were properly charged and if thereby a different cause of action were stated, then the rule is that only points actually raised and passed on in the prior proceeding would be binding in the present proceeding as an estoppel by judgment. Cromwell v. Sac County, supra. It is evident that the referee below based his ruling on the doctrine of res judicata. The court stated no grounds for its order. It would have been better if they had permitted the filing of Dyner’s petition and had permitted the defense of res judicata to be raised by a proper pleading. Instead, Dyner was not permitted to file his petition, and was therefore never in a position to submit evidence as *131to the merits of the Thompson-Starrett offer.
For the reasons herein stated, the order from which this appeal was taken is properly affirmed.