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July 6, 1933


The opinion of the court was delivered by: KIRKPATRICK

On Petition for Rehearing.

A final order of this court directing the allowance of the claim of A. Lincoln Rauch, a creditor, was entered February 21. The petitioner, another creditor, having allowed the statutory period for appeal to elapse without taking any appeal, attempted to remedy the situation by an appeal nunc pro tunc, which this court allowed on April 5, but which the Circuit Court of Appeals dismissed on May 2. Thereafter, this petition was presented asking for a rehearing.

 In cases of this kind, two distinct questions arise which are often confused. First, has this court the power to grant a rehearing? That is all that is before me. Second, if so, will it be effective to revive the petitioner's lost right of appeal?With that I have nothing to do.

 1. There is no doubt that I have the general power to grant a rehearing and upon such rehearing vacate, modify, or reaffirm the decree heretofore entered. "The District Court, for all the purposes of its bankruptcy jurisdiction, is always open. It has no separate terms." Sandusky v. First National Bank, 23 Wall. (90 U.S.) 289, 292, 293, 23 L. Ed. 155. That was under the act of 1867 (14 Stat. 517).

 This jurisdiction may have been somewhat restricted by section 57k of the Bankruptcy Act of 1898, 11 U.S.C.A. § 93(k) which provides that "Claims which have been allowed may be reconsidered for Cause," etc. (See In re Stearns & White Co [C.C.A.] 295 F. 833, 836), but I do not interpret section 57k as limiting the jurisdiction to cases in which the District Court proposes to rehear the case on the merits, although this was the view of the Circuit Court of Appeals for the Seventh Circuit in Re Stearns & White Co. In view of the almost uniform holdings of the federal courts to the effect that a rehearing may be granted in order to revive a right of appeal [ In re Wright (D.C.Mass.) 96 F. 820; In re Hudson Clothing Co. (D.C.) 140 F. 49; West v. W.A. McLaughlin & Co.'s Trustee (C.C.A.6th) 162 F. 124; Bonner v. Potterf (C.C.A.10th) 47 F.2d 852], I think that a discretion properly exercised for that purpose is a reconsideration "for cause" within the meaning of section 57k.

 Some of the cases cited above (In re Hudson Clothing Co.; West v. W.A. McLaughlin & Co.'s Trustee) hold that discretion to grant a rehearing for the purpose of reinstating a lapsed right of appeal may be abused, but none of them except In re Stearns & White Co. deny the jurisdiction.

 Concluding that I have jurisdiction, the petition for a rehearing is granted.

 2. It is granted solely for the purpose of allowing the petitioner to present his appeal to the Circuit Court of Appeals.

 I have stated the purpose of this order and will state the reasons which prompt it, because the Circuit Court of Appeals may desire to inquire whether there has been an abuse of discretion. The reasons why I believe that my discretion should be exercised in favor of the petitioner are as follows:

 (a) My order allowing the claim was entered upon the sole ground of laches barring the defense offered, and therefore did not feel called upon to pass upon the fact questions raised by the defense. I think that in any case in which the court feels that the situation precludes a consideration of any phase of what may be called the merits, a review is desirable.

 (b) The petitioner has some excuse for failing to appeal within the statutory period. He is not the trustee. The trustee originally presented, as attorney for the claimant, the claim which is now being resisted and represented the claimant over a long period of time. Whether he still continues to do so has not been made entirely clear to me, but at any rate it is easy to see that the trustee's double position has been a source of embarrassment to the petitioner and other creditors throughout the whole proceeding.

 (c) The claim is a sizeable one, and a very able referee, after an exhaustive investigation, came to the conclusion that it was entirely without substance.

 The foregoing is not to be taken as anything more than a statement of the grounds upon which I think that this case is proper for review on appeal. I express no opinion as to whether the petitioner's appeal can legally be prosecuted, or whether his right is gone beyond recall. That question I conceive to be for the appellate court. Furthermore, I entertain very little doubt as to the correctness of my ruling as to laches. Lastly, I believe that I have already considered every question which has been urged upon me at the presentation of ...

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