Court Opinion

ID: 9422918
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:05:07.570419+00
Date Added: 2024-06-11T17:22:40.325435
License: Public Domain

Mr. Justice White,
concurring.
In the typical Chapter XI case initiated by the debtor under § 322 it is the debtor that remains in possession and that has prepared and filed the petition and schedules and that proposes the arrangement. It is only after the arrangement has been approved by the creditors that a distributing agent is appointed and charged with the distribution to specified recipients of the deposit required by the Act. The agent, qua agent, has no reason or duty to know or to learn of unscheduled debts, priority or otherwise, and lacking such knowledge from-some other source such as his prior or current position with the debtor I would think he would be beyond the reach of 31 U. S. C. § 192 (1958 ed.) if a government priority claim is unscheduled and unpaid.*
*341But the agent does have the task of distributing the deposit and the deposit is required to include a sufficient sum to pay all priority claims (with some exceptions), even those which are scheduled as disputed and unliqui-dated. Bankruptcy Act, § 337 (2), 11 U. S. C. § 737 (2) (1958 ed.); 8 Collier on Bankruptcy, ¶ 5.33 [2], at 696 (14th ed. 1963). His responsibility under Chapter XI and under 31 U. S. C. §§ 191 and 192 extends far enough to impose the obligation to ascertain that the deposit he is handling is ample to pay the claims specified in the statute and is disbursed as required by law. And as to scheduled claims, liquidated or not, disputed or undisputed, the distributing agent is furnished with sufficient knowledge to fasten upon him the responsibility of not paying out the deposit so as to defeat the priority of the Government under § 191, at least without a court determination that he should do so.
There remains, however, a difficulty in this case. Although the papers filed with the petition revealed the debtor had certain contracts with the'Government, the schedules did not list the United States as a creditor. However, the Government later terminated the contracts and at the confirmation hearing the existence of a claim of the. United States was made known:. The referee himself brought up the question of providing for payment of the Government’s claim and was told, as I read the testb mony, that the deposit did not include any sum to defray any part of this claim but that the debtor would have ample sums available to satisfy the claim and would make any deposit for this purpose which it was directed to *342make. The debtor’s attorney, however, made it clear that the debtor was disputing the claim of the United States. In effect, the situation at that point was as though a disputed and unliquidated claim had been scheduled. In re Seeley Tube & Box Co., 219 F. 2d 389, cert. denied, 350 U. S. 821. An arrangement may not be confirmed if a deposit does not inchfde an amount to take care of. all scheduled priority claims including those which are unliquidated. 8 Collier on Bankruptcy, ¶ 5.32 [8]. If the referee, as he apparently did here, confirmed the arrangement without having in hand a deposit to pay the debt to the Government if proved and allowed, it could well be argued that a distributing agent should not be required to have remonstrated with the referee or to bear the burden of the referee’s unauthorized act, for the distributing agent’s “control and possession” are limited to the deposit.
We need not pursue this phase of the matter further, however, since other facts justify holding the distributing agent accountable in this particular case. As the Court points out, the agent was an officer of the debtor, was undoubtedly familiar with its affairs and took no exception to the attorney’s statement that there would be ample funds to pay the government claim. This petitioner was not an uninformed distributing agent doing only what he was told to do but was both a distributing agent and an officer of the debtor, with ample notice of the Government’s claim and of the referee’s expéctation that when proved and allowed it would be paid. In paying out the deposit without provision for the claim of the United States he acted at his own risk and became personally liable under § 192 when the Government’s claim became liquidated.

 Even if a distributing agent does learn of the government claims it may be that he should not be held liable under § 192, if such knowledge is not obtained until after confirmation. As the claim was neither scheduled nor filed prior to confirmation the Government would not be entitled to share in the deposit and a disbursement from the deposit to.the United States would probably subject the distributing agent to liability to creditors entitled to share in the composition. In re J. B. Poliak Co., 86 F. 2d 99. Only if the confirmation were set ¿side prior to distribution of the deposit, which normally occurs immediately, could provision be made to pay the government claim. In this respect it should be noted that the Court’s observation that *341even if King .had waited to object “to paying out the deposited funds to nonpriority creditors before the Government’s claim was surely provided for” until after confirmation “it is most unlikely that such an objection would have been ignored,” ante, pp. 338, 339, while perhaps true on the particular facts of this case, is greatly oversimplified if meant to apply to the distributing agent’s position generally.