Opinion
No. 177.
December 7, 1931.
Appeal from the District Court of the United States for the Southern District of New York.
In the matter of the bankruptcy of Klein's Rapid Shoe Repair Company, Incorporated. From an order of the District Court modifying and confirming an order of a referee accepting a bid for the bankrupt's assets, Kent Stores, Inc., an unsuccessful bidder, appeals.
Affirmed.
Klein's Rapid Shoe Repair Company, Inc., was adjudicated a bankrupt in the District Court for the Southern District of New York on August 17, 1931, and the next day a receiver was appointed. On August 24, 1931, an offer to purchase the assets of the bankrupt for $25,000 was made by B.W. Klein's, Inc. An order to show cause having been made returnable before the referee, at the hearing this offer was made known to those present and additional bids were called for and made. This bidder increased its bid finally to $30,000. The appellant, Kent Stores, Inc., bid $31,500. A creditor's committee then requested and obtained a short recess during which it voted to recommend the acceptance of the bid of $30,000, and the referee then accepted that bid notwithstanding the fact that a higher hid had been made and was urged upon him for acceptance. The highest bidder, the present appellant, thereupon obtained from a District Judge an order to show cause. The judge refused to confirm the order of the referee accepting the lower bid and opened the bidding for a new sale which he conducted himself. This procedure was acquiesced in by all parties in interest, and the appellant stipulated expressly for it upon conditions which are not necessary to be given now. At the sale held by the District Court, a bid of $33,000 made by B.W. Klein's, Inc., was the highest, and the property was sold to that bidder. The appellant obtained leave to appeal.
Before L. HAND, SWAN, and CHASE, Circuit Judges.
Krause Hirsch, of New York City, for respondent.
Miller, Fieldman Paul, of New York City (Louis Fieldman, of New York City, of counsel), for appellant, Kent Stores, Inc.
This appellant was not a creditor and has only whatever standing an unsuccessful highest bidder at a receiver's sale may have. It relies primarily upon the case of In re Williams (C.C.A.) 197 F. 1. In that case the highest bidder at a trustee's sale was held to be entitled to have his bid reported to the referee, and, in the absence of special circumstances, like an unfair price, fraud, or inability to perform, to have the bid accepted and reported to the judge for confirmation. In re Wolke Lead Batteries Co. (C.C.A.) 294 F. 509, treats the Williams Case as holding no more, and perhaps it may properly be so considered, although it apparently goes far enough to support the claim of the appellant to an enforceable interest in the property for which it made the highest bid at the sale. However, that may be, we decline to follow the Williams Case in so far as that decision is contrary, if at all, to the conclusion we have reached in this case.
The appellant at one time offered to pay more than any one else then offered for the property, but this offer was never accepted, and, at a later sale to the holding of which it expressly agreed and was given an opportunity to bid, its unaccepted bid did not remain the highest. Section 70 of the Bankruptcy Act (11 USCA § 110) gives to the District Court the power to confirm or set aside, in its discretion, a sale of the bankrupt's property. Such sales are judicial sales which are not complete until confirmed. Until confirmation, even an accepted bid makes the bidder no more than the one whose proposal has been recommended. In re Burr Mfg. Supply Co. (C.C.A.) 217 F. 16, 19. Such a bidder before confirmation is not even vested with an equitable title to the property, and he cannot restrict the power of the court under section 70 of the statute. In re Wolke Lead Batteries Co., supra; Bryant v. Stockhausen Co., Inc., et al. (C.C.A.) 271 F. 921. See, also, The East Hampton (C.C.A.) 48 F.2d 542.
When the court refused to confirm the accepted bid, the appellant could not force the confirmation of its own bid, for the discretion of the court was not limited to the confirmation of some bid already made. It was well within its power to order a resale at which all prospective bidders were given a fair opportunity to purchase the property. That the District Court exercised its discretion wisely in so doing admits of no doubt in view of the fact that more was obtained for the property than the appellant was ever willing to bid.
Order affirmed.