Rudnick v. Fishbeck

FRANK, Circuit Judge.

The record is largely unintelligible, and we shall therefore not attempt to go into the facts in detail. As neither the Referee nor the judge dealt with the merits of Natural’s claim against the bankrupt, we shall not consider them.

The assignment needed no consideration; see New York Personal Property Law, § 33, subdivision 4.³ The more troublesome question is whether there was compliance with G.O. 21(3). Rodman’s affidavit of October 2, 1945 stated his reasons for refusing to execute the affidavit which had been requested by appellants in order to comply with the. Order. Rodman’s affidavit fulfills the requirements of the Order in so far as they relate to consideration; for, where an assignment requires no consideration, a statement that none existed is enough. Rodman’s affidavit does not detail the amount of the claims, whether or not they are secured, and whether or not any payments have been made. However, it is apparent that the claimant-appellants could not, by the exercise of due diligence, have procured an affidavit which complied with G.O. 21(3) in these respects. The failure to aslc Stettner for one was reasonable in the light of Rodman’s testimony; Stettner was probably not an officer at the time of the assignment; and even if he had been, his affidavit would have served no useful purpose since he knew nothing of the assignment, and the reason for requiring such a sworn statement from the assignor is that presumably he is better acquainted with the pertinent facts than the assignee. The proof of claim filed November 10, 1943, contained all the information required under the General Order, and there is no suggestion that the debtor and its creditors have been prejudiced by the absence of any data in Rodman’s affidavit.

Aware that, literally, the language of the Order is mandatory, we are not prepared to say what our decision would be if the claimants had been unable to obtain any affidavit whatever from the assignor. For here they did obtain one, and it contains the most important element, i.e., the necessary information about the consideration. In the circumstances, on familar equitable grounds, full literal compliance with the General Order must be excused.

As there was an absence of corporate action by Natural authorizing the assignment, appellee asserts that it was invalid. Rodman, however, testified before the judge that, when he executed it, he was Natural’s sole stockholder. He had previously testified before the referee that (at some time which he did not indicate precisely) there had been another stockholder. The judge made no finding on that issue of fact. It is suggested that, even if he had found it in favor of appellants, they could not win because (1) their pleadings were not based on a disregard of the corporate fiction, and (2) in any event, they had the burden of proof. But a proof of claim is hardly a pleading, and in any event the formal proof of claim seems adequate as a statement of ultimate facts. And the testimony as to Rodman’s sole ownership of all the stock when the assignment was made might well have justified a conclusion in favor of its validity. The course of the proceeding below was such, however, as to obscure this issue so that it was not only not adjudicated, but apparently not thoroughly canvassed. We think that in the interests of justice the case should be remanded for a complete trial of this issue, with the parties at liberty to present additional evidence if they see fit.⁴ This will enable the referee below to make adequate findings of fact, as well as the appropriate final adjudication.

Appellee asserts that the assignment was invalid under New York Penal Law, § 274 because one of the assignees was a lawyer. While we incline to believe that, on the facts now before us, this statute is here inapplicable, this issue, which was not considered below, should also be considered, after a further hearing, on the remand.

Should the right to file the claim be decided in favor of appellants, of course all defenses, of every kind, on the merits will be open.

Reversed and remanded.

3 This statute, as it stood in 1943, read as follows: “An assignment hereafter made shall not be denied the effect of irrevocably transferring the assignor’s rights because of the absence of consideration, if such assignment is in writing and signed by the assignor.”

4 Ford Motor Co. v. National Labor Relations Board, 305 U.S. 364, 373, 59 S.Ct. 301, 83 L.Ed. 221.