in aid of the petitioner. The court made this limitation upon its resort to general equity powers: "The bankrupt is entitled to the benefits of the Bankruptcy Act [ 11 U.S.C.A. § 1 et seq.] in the absence of fraud or intentional laches." 40 F.2d 946, 948. (Italics supplied.)
In that case it is clear that there was no intentional laches on the part of the petitioner because the existence of a deficiency judgment was not discovered until garnishee proceedings. In the instant case the petitioner has known of his mistake at least from the time he was sued by the plaintiffs in the state court of New Jersey on March 29, 1936. He waited, however, to make this motion until August 9, 1937.This, then, would put him beyond the limitations expressed in Re Ingrao, supra.
In Re Magwood, D.C., 13 F.Supp. 661, 662, the bankrupt was indebted on a promissory note payable to Alice Silverberg and Celia Siverberg. The payees were sisters and lived together at the same address. In his schedule the bankrupt listed only Celia Silverberg as creditor. She appeared before the referee in bankruptcy and filed her claim through her attorney. Alice Silverberg sued on the note and recovered judgment by default. She was represented by the same attorney who represented her sister before the referee in bankruptcy. The bankrupt then moved to amend his schedule in order to include Alice Silverberg, and his motion was granted. The relief afforded the bankrupt in that case can have no effect upon the disposition of the instant case as the two cases may be easily differentiated. In Re Magwood, supra, the court stated: "It would be impossible for any one to believe that Alice Silverberg did not know of the bankruptcy proceedings, notwithstanding that no notices were sent to her, under the circumstances above mentioned and in view of the fact that she was represented in the action to collect on the very claim by the same attorney in the Supreme Court action as the one who appeared in the bankruptcy proceeding and filed the claim."
In the case at bar the issue of notice was decided in the proceeding before the state tribunal and resolved against the defendant.
Some attempt has been made herein to distinguish the cases argued by the petitioner from the one at bar. However, there is little uniformity in the decisions. It is, as said by Judge Patterson in the case of In re Carobine, D.C., 8 F.Supp. 605: "So far as the provisions of the Bankruptcy Act go, the court is empowered to disturb a discharge on one ground only, and that is the power to revoke it for fraud in the procurement of it. Bankr. Act § 15, 11 U.S.C.A. § 33. Here no fraud is charged. It has been held or intimated in a number of cases that, in addition to the express power given by the act to revoke discharges for fraud, the court has an inherent power to vacate and set aside discharges in the general interests of justice, for mistake, excusable neglect, or other equitable grounds. In re Louisville National Banking Co., 158 F. 403 (C.C.A.6); In re Applegate, 235 F. 271 (D.C.N.Y.); In re Goldenberg & Halbert, 286 F. 292 (D.C.Pa.); Rash v. Metzger, 31 F.2d 424 (C.C.A.3); In re Martin, 38 F.2d 629 (C.C.A.); In re Ingrao, 40 F.2d 946 (D.C.N.Y.). See, also, In re Bimberg, 121 F. 942 (D.C.N.Y.); In re Cuthbertson, 202 F. 266 (D.C.S.D.); Remington on Bankruptcy, § 3615. On the other side, there is an able opinion by Judge Amidon, in which the existence of any such inherent power is denied. In re Aasand, 7 F.2d 135 (D.C.N.D.). And the Circuit Court of Appeals of this circuit has held that in the analogous case of composition there is no general or inherent power to set aside orders of confirmation; the only power to vacate compositions being that derived from section 13 of the act [ 11 U.S.C.A. § 31]. In re Isidor Klein, Inc., 22 F.2d 906 (C.C.A.2). The extent of the power over discharges, however, was expressly left open in the Klein Case. The authorities are thus in an unsatisfactory condition, at least in this district."
While it is reasonable and settled law that the Bankruptcy Act should be construed liberally in favor of the bankrupt, I am not persuaded that exemption from plain statutory requirements, concerning timeliness of action and notice, may be granted lightly, if the bankruptcy law is to effectively serve its dual purpose of protecting both debtor and creditors. It seems that the bankrupt here had his full opportunity to achieve all of the privileges provided for him under the act. If he is placed in a position now to his disadvantage, it is due only to his own omission and not to any active motion of his creditors. They must not be penalized to his advantage now.Hence, his petition must be dismissed.
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