LERNER v. FIRST WISCONSIN NAT. BANK OF MILWAUKEE, WIS.(1935)
Messrs. Howard Myers and Saul S. Myers, both of New York City, for petitioner in No. 496 and respondent in No. 292.
Mr. Emil Hersh, of Milwaukee, Wis., for petitioner in No. 292.
Mr. Meyer Marlow, of New York City, for respondents in No. 496. [294 U.S. 116, 117]
Mr. Justice McREYNOLDS delivered the opinion of the Court.
These causes require consideration of General Order in Bankruptcy No. 32, as amended, effective April 24, 1933 (11 USCA 53). This order, as it stood before that day, and the amendments then adopted, follow. Deleted words are within the brackets; words added are italicized.
Whether, under the amended order, bankruptcy courts may permit a creditor opposing an application for discharge to file written specifications showing the grounds of his opposition after 'the day when creditors are required to show cause,' is the question for determination.
In No. 292 the Circuit Court of Appeals, Seventh Circuit (70 F.(2d) 938), held that when good cause is shown, such an extension may be granted. In No. 496 the Circuit Court of Appeals, Second Circuit (73 F.(2d) 56), ruled to the contrary. The latter court, we think reached the proper conclusion. Reversal of the challenged judgment must follow in No. 292; affirmance in No. 496.
The purpose of the 1933 amendments to Order No. 32 was to prevent continuation of abuses then apparent.
The so-called 'Donovan Report,' March 22, 1930, on 'Administration of Bankrupt Estates,' printed (1931) [294 U.S. 116, 118] for the House Judiciary Committee, 71st Congress, 3d Session, p. 116, stated: 'An unscrupulous creditor who desires to get something more than the others may be tempted to file a notice of appearance (a simply 4-line document) at the time of the hearing on confirmation, knowing that this will hold up the entire proceeding for at least another ten days even if he does not follow up the notice of appearance with detailed specifications of objection. During this 10-day period he may hope to get paid off by the bankrupt. If the bankrupt refuses or is unable to strike a bargain, the creditor may then file his specifications of objection, so that the bankrupt will face another three weeks' delay, during the process of which he may be finally induced to come to terms.'
Reporting on 'Bankruptcy Law and Practice' (December 8, 1931), Senate Document No. 65, 72d Congress, 1st Session (p. 16), the Attorney General asserted:
Having considered the facts, thus brought to our attention, and those otherwise known, it seemed proper to adopt the suggested amendment to Order 32.
The language of the amended order is mandatory; it is controlling in circumstances like those here presented; strict compliance should be accorded. Under Order 37 (11 USCA 53), and permissive provisions of the Bankruptcy Act, we think the courts may exercise discretion sufficient for the successful conduct of proceedings in varying circumstances. Thus, while an objecting creditor must file specifications showing the grounds of his opposition on the day when creditors are required to show cause, that day may be fixed or postponed by the court in view of the existing situation.
No. 292 reversed.