Pioneer-Cafeteria Feeds, Ltd. v. Mack

PRETTYMAN, Senior Circuit Judge

(concurring).

This is an appeal from an order of the United States District Court for Northern Ohio confirming orders of the referee in a bankruptcy matter. The bankrupt was one Orval Wyse, who, with a partner, had been engaged in raising turkey poults. The business grew, and the partners formed a corporation, North-land Turkey Farms, Ltd. The operation was conducted in Canada and the United States.

*726Northland bought eggs from Wyse on open account. It bought feed from Pioneer-Cafeteria Feeds, Ltd., upon an account guaranteed by Wyse. On September 30, 1959, Wyse went into bankruptcy in Ohio, and about a month later, on November 2, 1959, Northland went into bankruptcy in Canada.

In the Canadian bankruptcy of North-land, Pioneer filed a claim,1 which was allowed in part.2 And Pioneer received from the Northland bankruptcy estate $27,602.06 Canadian 3 as a secured claimant and $11,923.00 Canadian as an unsecured claimant.

Before it would extend credit to North-land, Pioneer had required Wyse to guarantee the account and also to subordinate to Pioneer his own receivables from Northland. In the Northland bankruptcy Wyse (through his trustee in bankruptcy) filed a claim for $239,899.98 Canadian. The claim was allowed, and a dividend of $24,901.00 Canadian was declared on it. However, the Canadian court ordered this dividend to be paid to Pioneer under the subordination clause in the contract between Wyse and Pioneer.

In the Wyse bankruptcy in Ohio, Pioneer filed a claim under its contract with Wyse whereby he had guaranteed North-land’s account. Pioneer stated its claim in the amount shown by its account with Northland on the day (September 30, 1959) Wyse filed in bankruptcy. But the referee held that on that date the account was contingent, except for a small amount. He therefore liquidated' the claim on an estimation 4 and allowed', it as thus estimated.5

The amount thus allowed, as footnote 4 hereto shows, was $94,224.00 Canadian.. The referee then applied the rate of exchange on the date of the judgment of allowance (October 19, 1962).6

*727The referee noted that Pioneer had received from the Northland bankruptcy estate $24,901.00 Canadian. This payment had been a dividend on Wyse's claim and was paid Northland by reason of Wyse’s subordination agreement, pursuant to the order of the Canadian court. This amount is 26.43 per cent of Pioneer’s allowed claim in the Wyse bankruptcy. The referee ruled that Pioneer could be paid no dividends from the Wyse bankruptcy until other unsecured creditors of Wyse had received 26.43 per cent of their allowed claims.

Pioneer says the decision of the Canadian court respecting the subordination of Wyse’s claim against Northland was res judicata, by comity and that therefore the referee in the Wyse proceeding could not treat the dividend of $24,901.00 as being received by Pioneer from Wyse. But the issues in the two courts were not the same, since the rights of Wyse’s other creditors were involved in the American proceeding but not in the Canadian one. Pioneer further says the guaranty agreement covers the entire account of North-land, whether matured or not, absolute or contingent, and required no notice to be effective. But, although in a sense the guaranty by Wyse covered all the North-land account, no liability accrued under it until Northland filed in bankruptcy. Pioneer further says the amounts received by it from Northland (i. e., from that bankrupt estate) should not be applied to reduce Pioneer’s claim against Wyse. But Pioneer’s claim against Wyse arose from the guaranty and so was contingent until the day Northland filed in bankruptcy. As a contingent claim it •could be allowed only by liquidating it on .an estimated basis. Any “estimation” must relate to the final net, and so all payments on the original gross must be ■deducted. Pioneer also says the exchange rate on the date of the filing of Wyse in bankruptcy (September 30, 1959) should be applied. But, as we have pointed out, Pioneer’s claim, being •contingent and unliquidated on September 30, 1959, was not allowable on that ■day. Under the established authorities the rate of exchange should be applied as of the date the claim became allowable.

The court holds against Pioneer on all the foregoing points. I concur in those holdings and in the affirmance of the order of the District Court.

. Pioneer’s original claim against North-land, filed on November 9, 1959, was for $135,203.11 Canadian and was partly secured. In this claim Pioneer valued its security at $100,000.00 Canadian. On February 18, 1960, Pioneer filed an amended claim for $142,482.73 Canadian. In the amended claim Pioneer valued its security at $64,854.44 Canadian.

. Pioneer's claim was allowed for $142,-482.73 Canadian; however, Pioneer consented to an adjudication which compromised its claim to security.

. The referee in the Wyse proceeding recites this figure of $27,602.06 (our J.A. 29(a)), but in his finding of fact No. 15 (our J.A. 34(a)-35(a)) he shows two figures — $26,413.08 and $1,188.00— which total $27,601.08.

. In the accounts of Pioneer the purchase price of feed sold to Northland was entered as of the date of sale, but these amounts were not payable until later dates fixed by descriptive clauses in the contract (such e. g., as the seventh month after delivery, or one week after the marketing of flocks of turkeys, or at the option of Pioneer upon declaration that the whole of the moneys payable by Northland were due and payable). On September 30, 1959, the date Wyse went into bankruptcy, Northland’s account on Pioneer’s books showed a debit balance of $257,239.86 Canadian. On November 2, 1959, the date North-land went into bankruptcy, this account had been reduced to $122,795.08 Canadian. To this amount the referee added; $3,000.00 Canadian as rent due Pioneer and $7,953.00 Canadian as “Growers’ fees” due Pioneer, giving a total of $133,-748.08 Canadian as Northland’s debit account with Pioneer. From this amount the referee in the Wyse bankruptcy subtracted the amounts which Pioneer had received as dividends on its claim' against the Northland Bankruptcy estate, which dividends were $27,601.08 Canadian, as a secured claimant, plus $11,923.00' Canadian as an unsecured claimant, or a total of $39,524.08 Canadian. The unpaid balance of $94,224.00 Canadian was. the amount which the referee in theWyse bankruptcy allowed to Pioneer by-reason of the guarantee.

. 30 STAT. 560 (1898), amended, 52 STAT. 866 (1938), 11 U.S.C. § 93, sub. d.

. The referee’s amended order allowing the claim was dated October 19, 1962, but in his finding of fact No. 15 (our-J.A. 34(a)-35(a)) he recites that the exchange rate on October 9, 1962, was-applied.