Court Opinion

ID: 9442281
Source: CourtListenerOpinion
Date Created: 2023-08-03 18:42:13.786404+00
Date Added: 2024-06-11T17:29:02.542951
License: Public Domain

KERNER, Circuit Judge
(concurring in part and dissenting in part).
I agree that the trial court, for the reasons stated in the majority opinion, properly limited the Simonsen claim. I cannot, however, bring myself to the conclusion reached by my colleagues, that the claims, of the appellees in appeals Nos. 9843 and 9844 should not likewise have been limited.
I desire to add but a few words concerning the facts. In No. 9843, most of Robert W. Schroeder’s bonds were purchased while his father was both a member of the bondholders’ committee and its managing agent and during the pendency of the involuntary Chapter X petition. During a great part of this period Robert shared office space with his father, and the purchase 'of many of his bonds was arranged by him. Robert relied upon his father’s business judgment, and gave him complete discretion and authority to effect purchases for him.
In No. 9844, Mollie Schroeder’s bonds and all of June Kuptz’s bonds were acquired while William A. Schroeder was a member of the bondholders’ committee. During most of the period in which June’s bonds were purchased she lived with her parents. All the purchases of these bonds were arranged by William except for an occasional purchase arranged by Robert, yet William had complete discretion and authority in making the purchases.
The trial court’s decision in both appeals was bottomed on the ground that these claimants purchased their bonds with their own funds. There is no question, however, that the acquisition of these bonds was a family enterprise directed by William who had complete discretion and authority to make purchases, and it is reasonable to infer that the bonds purchased by Robert W. Schroeder, Mollie Schroeder and June Kuptz were acquired in contemplation of reorganization proceedings and when the debtor was a prospective subject of judicial relief.
A bankruptcy court is essentially a court of equity, applying principles and rules of equity jurisprudence. It is empowered to allow or disallow claims and to determine controversies in relation thereto. It has full power to inquire into the validity of any claim asserted against the estate and to sift the circumstances surrounding any claim, to see that injustice or unfairness is not done in the administration of the bankrupt estate. Pepper v. Litton, 308 U.S. 295, 304-308, 60 S.Ct. 238, 84 L.Ed. 281. A trustee must exclude all considerations of the welfare of third persons, 3 Bogert’s Trusts & Trustees, § 543, and administer the trust solely in the interest of the beneficiary. Restatement of the Law, Trusts, § 170. Hence, in the situation here appearing; it seems to me that Robert W. and Mollie Schroeder, as well as June Kuptz, must be charged with the same equities that were charged to William when he purchased bonds in his own behalf, and the principles enunciated in Re Norcor Mfg. Co., 7 Cir., 109 F.2d 407; Meinhard v. Salmon, 249 N.Y. 458, 164 N.E. 545, 62 A.L.R. 1; Magruder v. Drury, 235 U.S. 106, 35 S.Ct. 77, 59 L.Ed 151; In Re Midland United Co., D.C., 64 F.Supp. 399, 416, affirmed 3 Cir., 159 F.2d 340; and In re The Van Sweringen Co., 6 Cir., 119 F.2d 231, govern those appeals.