UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
decided: January 23, 1978.
HOOS & CO., CLAIMANT-APPELLANT,
DYNAMICS CORPORATION OF AMERICA, DEBTOR-APPELLEE
Friendly, Mansfield and Oakes, Circuit Judges.
OAKES, Circuit Judge:
This is an appeal of Hoos & Co. (claimant or Hoos) from a decision and order of the United States District Court for the Southern District of New York, Charles E. Stewart, Jr., Judge. That decision and order dismissed an appeal from an order of Bankruptcy Judge Edward J. Ryan which disallowed Hoos' $200,000 claim against Dynamic Corporation of America (debtor or Dynamics), a Chapter XI debtor. We affirm.
In September, 1968, Marine Midland Bank-New York (Marine-New York) acquired in a private placement $500,000 of debtor's negotiable notes. Of these, $200,000 principal amount was held by Marine-New York and Marine Midland Bank-Central (Marine-Central) as cotrustees for the benefit of the Carrier Corporation Retirement Trust (Carrier Trust). The remaining $300,000 was held by Marine-New York in other accounts, registered in the names of Hoos and Jaquith & Co. (Jaquith), nominees of Marine-New York; the $200,000 of notes in issue (Carrier notes) were registered in the name of Hoos alone.
In January, 1972, Marine-New York ceased acting as cotrustee of the Carrier Trust, and Marine-Central became the sole trustee. In the earlier months of 1972, at the direction of Theodore Lipp, a pension trust officer of Marine-New York, the assets of the trust were physically delivered to Marine-Central. Most of the securities in the trust were thereafter reregistered in the name of Marine-Central's nominee, Carsec & Co. (Carsec). However, the Carrier notes were not actually reregistered, although the officers of Marine-New York and Marine-Central believed that the reregistration had occurred.
On August 2, 1972, the debtor filed its petition for an arrangement under Chapter XI of the Bankruptcy Act, 11 U.S.C. §§ 701-99 (1970 & Supp. V 1975). At this time Marine-New York held $300,000 of the debtor's notes, and the Carrier notes were held by Marine-Central, still registered in the name of Hoos. Six days later, on August 8, Mr. Lipp attended a meeting of creditors. Lipp subsequently received a letter dated August 23, 1972, from Stanley Tulchin, secretary of the then unofficial creditors' committee, confirming that the August 8 meeting had been held and that a creditors' committee had been elected. Tulchin enclosed a proof of claim, and requested its prompt execution and return so that it would be available at the next creditors' meeting before the referee in bankruptcy scheduled for September 11, 1972. Tulchin advised that the claim would be filed with the referee and would be used to select a trustee and to make the committee official.
On September 8, 1972, Mr. Lipp returned a proof of claim for $300,000,*fn1 with a covering letter advising that he was returning
our Bank's Proof of Claim with regard to our holding . . . of which $200,000 is held in our nominee name of Hoos & Co. while an additional $100,000 is held in our nominee name of Jaquith & Co.
These notes are held in our capacity as Trustee or Custodian for various Pension funds.
Joint Appendix at A2. The critical part of the letter for purposes of this appeal stated:
However, earlier this year we had held an additional $200,000 which was transferred to a successor trustee, namely, Marine Midland Bank-Central, and are presently in their nominee of Carsec & Co. I am not a partner of Carsec & Co. but would appreciate your including this claim with ours, since the timing of your meeting Monday does not make it possible to get you their Proof of Claim.
Id. Unless the letter of Mr. Lipp to the unofficial creditors' committee secretary constituted a proof of claim, as claimant urges, no written proof of claim for the Carrier notes was ever subsequently sent to the court, the debtor or the creditors' committee.*fn2
The schedules of creditors filed by the debtor on October 5, 1972, indicated that $500,000 of the debtor's notes were registered to Marine-New York or its nominees. This debt included the $300,000 of notes as specified in the formal proof of claim accompanying Mr. Lipp's letter to Mr. Tulchin, as well as the Carrier notes.*fn3
As of September 30, 1973, Bankers Trust replaced Marine-Central as trustee of the Carrier Trust, see note 2 supra, and the assets of the trust including the notes of the debtor, which unbeknownst to either Marine-New York or Marine-Central remained registered in the name of Hoos, were transferred to Bankers Trust. Bankers Trust apparently unsuccessfully attempted to have registration of the notes transferred to its nominee, but it did not file a proof of claim for the notes in question.
On November 27, 1974, an order of confirmation was entered by the bankruptcy court. At that time the $500,000 registered in nominees of Marine-New York and of Marine-Central still appeared on the debtor's original schedules. Since a proof of claim had been filed only for $300,000, distribution was made only with respect to that proof of claim. No distribution was ever made with respect to the additional $200,000 of Carrier notes.
It was not until April, 1975, over four months after confirmation of the plan of arrangement, that Bankers Trust asked Marine-New York to file an application for allowance of the claim emanating from the Carrier notes through its nominee, Hoos.*fn4 Finally, on June 16, 1975, over six months after notice of the confirmation was mailed, Hoos moved for allowance of the claim, relying on the September 8, 1972, letter of Mr. Lipp to Mr. Tulchin and the accompanying proof of claim for $300,000 as together constituting a timely filed, valid proof of claim for the Carrier notes.
II. Prior Disposition
The bankruptcy judge denied the application on two grounds. First he held that the September 8, 1972, letter did not set forth an explicit demand against the estate of the debtor. Thus it did not constitute an effective proof of claim,*fn5 since it failed to comply with the requirement of Rule 301 of the Rules of Bankruptcy Procedure,*fn6 made applicable to Chapter XI proceedings by Rule 11-33(a) of the Rules of Bankruptcy Procedure.*fn7 The bankruptcy court also concluded that even if the letter did constitute a proper proof of claim, the secretary of the creditors' committee was not the agent of the court or the agent of the debtor; accordingly, delivery of the letter to Mr. Tulchin was not a valid filing under Rule 509(c) of the Rules of Bankruptcy Procedure.*fn8
The district court held that while it might have been "inclined to hold" that the letter of September 8 constituted a proper proof of claim, In re Dynamics Corp. of America, No. 72B750, at 2 (S.D.N.Y. May 17, 1977) (oral opinion), filing with the secretary of the creditors' committee was not a proper filing within Rule 509(c). Judge Stewart first noted that "Tulchin, as secretary of the Creditors' Committee, [did] not come within the language of [Rule 509(c)] as one of the named individuals to whom delivery of a proof of claim may be deemed a valid filing."*fn9 In re Dynamics Corp. of America, supra, No. 72B750, at 3. The court refused to extend the rationale behind Rule 509(c) to encompass a creditors' committee secretary, agreeing with the bankruptcy judge that such a person is an agent of the creditors, not of either the court or the debtor, and as such has no duty to forward a claim to the bankruptcy court.*fn10
We agree with the bankruptcy court that the letter of September 8, 1972, from Mr. Lipp of Marine-New York to Mr. Tulchin was not a valid and effective proof of claim for the $200,000 principal amount of the debtor's notes under Rule 301(a).*fn11 Rule 301(a) requires that the creditor or his authorized agent execute a writing setting forth the creditor's claim. Mr. Lipp's letter cannot by any stretch of the imagination be interpreted as asserting Hoos' claim. It unambiguously indicates that Lipp thought that he had no authority to file a claim for this debt. Since he erroneously believed that the negotiable notes had been reregistered in the name of Carsec, of which he was not a partner, and since he knew that Marine-Central, as sole trustee, possessed the Carrier notes, he hardly could have intended to "set forth" a claim as "authorized agent" of anyone,*fn12 and the letter so states. Thus the fact that he actually may have had authority to file a claim to the Carrier notes because they were in fact registered to Hoos, a nominee of Marine-New York, makes no difference in this regard. The letter simply was not a proof of claim.*fn13
From an equitable standpoint it could be argued that when registered notes are in issue the filing of valid proofs of claim serves no useful purpose, especially where, as here, the debtor is entirely aware that the notes are outstanding and even includes the debt in its schedules. Be that as it may, Congress chose to require the filing of proofs of claim for such notes.*fn14 And it was not unaware that failure to comply with this rule could confer a substantial windfall on the debtor.*fn15 Moreover, it is apparent from repealed provisions of the Bankruptcy Act and a current Bankruptcy Rule that Congress was well aware of the lesser need for a filing requirement when scheduled claims are involved, and provided all the additional protection for creditors in this situation that it thought appropriate.*fn16
This clear Congressional intent to require filing of valid proofs of claim within the time limits that it has set is sufficient to preclude us from finding exceptions to these rules in the supposed interest of equity. Beyond this, it cannot be said that when a claim has been scheduled by a debtor, the filing requirement imposing time limitations is a purposeless formality. For one thing, it insures that creditors know what they will receive under a plan within a reasonable time after they vote to confirm it. It also helps to avoid fraudulent inflation of amounts due creditors, by a debtor, for his benefit. In the instant case the amount owed to Hoos is beyond dispute. But there must come a time when an arrangement becomes final, so to speak. Not only are the creditors who vote for the plan entitled to this. The debtor itself must be able to function, and new creditors might not extend credit, absent such finality. It would be inequitable as to all three - old creditors, debtor, and new creditors - not to have a cut-off date beyond which even claims on a scheduled indebtedness may not be filed. Thus, however much we would like to permit the bankruptcy court to consider in a particular case, including this one, whether it would be "equitable" to permit late filing of a scheduled claim, to do so would put the bankruptcy courts in the unenviable position of indefinitely having to consider claims whenever some sort of excuse is asserted. Such a procedure would destroy the objective of finality which Congress obviously intended to promote.