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Hoos & Co. v. Dynamics Corp.

decided: January 23, 1978.

HOOS & CO., CLAIMANT-APPELLANT,
v.
DYNAMICS CORPORATION OF AMERICA, DEBTOR-APPELLEE



Friendly, Mansfield and Oakes, Circuit Judges.

Author: Oakes

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.

I. Facts

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. ยงยง 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 ...


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