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eBook details

• Title: In Re Miller
• Author : United States Court of Appeals for the Second Circuit
• Release Date : January 10, 1939
• Genre: Law,Books,Professional & Technical,
• Pages : * pages
• Size : 49 KB

Description

In 1935, Henry Miller borrowed $2,000 of the National City Bank of New York under the Modernization Credit Plan of the National Housing Administration and gave his promissory note to the bank to secure this loan. The bank in 1934 had been insured against losses on such notes by the Federal Housing Administrator to the extent provided by the National Housing Act, § 2 (Act of June 27, 1934, c. 847, 48 Stat. 1246, 12 U.S.C.A. § 1703). Under this statute, a bank approved by the Administrator as eligible for credit insurance may be insured against losses sustained as a result of loans and advances of credit, for the purpose of financing alterations, repairs, and improvements upon real property, but not to exceed 20 per cent of the total amount of such loans and advances of credit made by the bank. Miller became bankrupt in 1936, and was then indebted to the bank in the amount of $1,477 as the unpaid balance on his note. The bank filed a proof of claim for this sum. Later the Administrator reimbursed the bank, in accordance with its contract of insurance, and, on October 14, 1936, took an assignment of the note to "the Federal Housing Administration acting on behalf of the United States of America." On February 20, 1937, the Administrator filed a proof of claim against the bankrupts estate purporting to act in behalf of the United States and claiming priority over claims of general creditors. Later he notified the trustee that the banks claim was withdrawn. The trustee made objection to the asserted priority, but the referee held that the claim was so entitled. The referees order was, however, reversed by the District Court, which held that at the time of the bankruptcy the claim in question was a simple debt owed by the bankrupt to the bank, and not entitled to priority. The court declined to pass upon the question whether a debt owed to the Federal Housing Administrator prior to the bankruptcy of the debtor was a debt owing to the United States. If, as the claimant asserts, the claim is based upon a debt owed by the bankrupt to the United States, it is entitled to priority. Rev. Stat. § 3466, 31 U.S.C.A. § 191; Bankruptcy Act, § 64b (7), 11 U.S.C.A. § 104 (b) (7); United States v. Kaplan, 2 Cir., 74 F.2d 664. Whether or not a claim under the Federal Housing Act is a claim owed to the United States has been a matter of diverse opinion in the federal courts, at least until the adverse decision of the Supreme Court of the United States in United States v. Marxen, 59 S. Ct. 811, 83 L. Ed., which, however, did not put the matter at rest according to the claimants view. Here the Court held that a claim against a bankrupt on a note under this act assigned by the bank to the United States after the bankruptcy was not entitled to priority. This decision was made in answer to a request for instructions from the Circuit Court of Appeals for the Ninth Circuit, which had previously decided against priority in the case of Federal Housing Administrator v. Moore, 9 Cir., 90 F.2d 32. In its certificate the circuit court suggested that the decision of the Circuit Court of Appeals for the Eighth Circuit in Wagner v. McDonald, 8 Cir., 96 F.2d 273, was to the contrary, although in the Wagner case the notes had been assigned to the Administrator prior to the makers bankruptcy.

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