PRENTICE H. MARSHALL, District Judge.
Evanston Motor Co., Inc., doing business as Evanston Toyota and Evanston Dodge, filed a voluntary petition for relief under chapter 11 of the Bankruptcy Reform Act of 1978, 11 U.S.C. §§ 1101-74 (Supp. V
On July 16, 1980, appellant Maurice Levine was appointed trustee of the debtor's estate. On July 24, the trustee wrote FNBL, stating that his "examination of the books and records of the debtor reveals that the First National Bank of Lincolnwood may be a secured creditor" of the debtor. The letter concluded,
On August 18, 1980, an attorney representing FNBL wrote to the trustee.
The documents enclosed with the FNBL's letter revealed that its security was not an asset of the estate, but rather a beneficial interest in a land trust owned by a third party, which fully secured the outstanding balance on the note.
On November 6, 1980, an order was entered by the bankruptcy court converting the chapter 11 proceeding into a liquidation proceeding under chapter 7, 11 U.S.C. §§ 701-66 (Supp. V 1981). On December 2, the clerk of the bankruptcy court sent notice of the conversion to all creditors, including FNBL. The notice advised creditors that they had until June 16, 1981 to file their claims against the estate.
On December 30, 1980, the trustee filed an adversary complaint against FNBL alleging that it had received preferential transfers of property. The action sought recovery of the preferences under 11 U.S.C. § 547 (Supp. V 1981). The pleadings filed in that action indicate that the estate was indebted to FNBL as a result of the note referred to in FNBL's letter to the trustee of August 18, 1980. The preference action has been stayed pending the instant appeal.
On October 9, 1981, FNBL filed a motion for allowance of its claim against the estate. In its motion, FNBL argued that the August 18, 1980 letter constituted an informal proof of claim that had been timely filed. On June 3, 1982, the bankruptcy court ruled that the letter was a timely filed informal proof of claim, and permitted FNBL to amend it so as to comply with the technical requirements for an allowable proof of claim. In re Evanston Motor Co., 20 B.R. 550 (Bkrtcy.N.D.Ill.1982). Thus, the court allowed FNBL to prove its unsecured claim against the estate.
Bankr.R. 302(a) provides,
With exceptions not applicable here, rule 302(e) provides that "[a] claim must be filed
The parties agree that the August 18 letter does not satisfy the technical requirements for a formal proof of claim. That does not necessarily defeat FNBL, however. What Judge Mack wrote 50 years ago remains a correct statement of the law: "It is well settled that a claim informally made within the statutory period, may be perfected thereafter by amendment." Lacoe v. DeLong, 65 F.2d 82, 83 (2d Cir.1933) (In re Hotel St. James Co.).
The bankruptcy court held that a claim need be no more than some evidence of a debt owed to a creditor of the estate. "The essence of a proof of claim is merely evidence of the existence, nature and amount of debt due and owing to a creditor." 20 Bankr. at 552. However, the authorities indicate that this definition of a claim is incorrect. Courts have universally held, until the ruling of the bankruptcy court in this case, that mere evidence of the existence of a claim in the hands of the trustee or the bankruptcy court is insufficient, there must also be some evidence of the creditor's intent to assert its claim against the estate. See Fyne v. Atlas Supply Co., 245 F.2d 107, 108 (4th Cir.1957); Tarbell v. Crex Carpet Co., 90 F.2d 683 (8th Cir.1937); Lacoe v. DeLong, 65 F.2d 82, 84 (2d Cir.1933) (In re Hotel St. James Co.); In re Vega Baja Lumber Yard, Inc., 285 F.Supp. 143, 147 (D.P.R.1968); In re Moro Supply Co., 229 F.Supp. 129, 130 (E.D.Ark.1963); In re Aero Bulk Manufacturing Co., 221 F.Supp. 627 (W.D.Mo.1963). Similarly, it has been held that the listing of a debt in the debtor's schedules is not a sufficient "claim" to permit later amendment, even though the listing demonstrates that the trustee and the court had knowledge of the estate's debt owed the creditor. See Hoos & Co. v. Dynamics Corp., 570 F.2d 433, 437-38 (2d Cir. 1978); Perry v. Certificate Holders of Thrift Savings, 320 F.2d 584, 589 (9th Cir. 1963); Fyne v. Atlas Supply Co., 245 F.2d 107, 108 (4th Cir.1957); National City Bank v. Brislin, 68 F.2d 718, 719 (2d Cir.1934) (In re Killanna Realty & Construction Co.); In re Moro Supply Co., 229 F.Supp. 129, 130 (E.D.Ark.1963); In re Stylerite, Inc., 120 F.Supp. 485, 488 (D.N.H.1954). In another case demonstrating the insufficiency of mere evidence that a debt exists, it was held that the testimony of the claimant that the bankrupt was indebted to him for past salary was insufficient to constitute a "claim," since the claimant did not go on to state his intention to hold the estate liable. See Avidon v. Halpert, 145 F.2d 884 (2d Cir.1944) (Swan, J.).
Of course, there are a variety of ways in which a creditor may manifest the necessary demand and intent to hold the estate liable. See, e.g., County of Napa v. Franciscan Vineyards, Inc., 597 F.2d 181 (9th Cir.1979) (per curiam) (In re Franciscan Vineyards, Inc.) (claimant sent tax bills to the trustee and requested he pay them), cert. denied, 445 U.S. 915, 100 S.Ct. 1274, 63 L.Ed.2d 598 (1980); Sun Basin Lumber Co. v. United States, 432 F.2d 48 (9th Cir.1970) (per curiam) (claimant filed objections to trustee's petition to sell property containing evidence of claimant's security interest in the property to be sold); Walsh v. Lockhard Associates, 339 F.2d 417 (5th Cir.1964) (trustee and referee knew claimant was a creditor, trustee sued claimant to cancel note, claimant sued debtor to collect on the note), cert. denied, 380 U.S. 953, 85 S.Ct. 1085, 13 L.Ed.2d 970 (1965); Perry v. Certificate Holders of Thrift Savings, 320 F.2d 584 (9th Cir.1963) (claimants filed their passbooks with bankruptcy court to prove they were bank's creditors); Fyne v. Atlas Supply Co., 245 F.2d 107 (4th Cir.1957) (claimant participated in creditors' meetings and wrote and spoke with trustee about his desire to be paid by estate, and claimant's attempts to levy on debtor were alleged in petition in bankruptcy); In re Lipman, 65 F.2d 366 (2d Cir.1933) (claimant filed objections to trustee's petition describing itself as a creditor); Scottsville Nat. Bank v. Gilmer, 37 F.2d 227 (4th Cir.1930) (claimant and trustee exchanged letters and had talks in which trustee treated claimant as seeking payment from estate); Carstens v. McLean, 293 F. 190 (9th Cir.1923) (In re Patterson-McDonald Shipbuilding Co.) (claimant sent letter seeking lessee-debtor's payment of delinquent taxes); In re Kessler, 184 F. 51 (2d Cir.1910) (claimant sent bill for payment by assignee for benefit of creditors); In re Faulkner, 161 F. 900 (8th Cir.1908) (claimant filed document containing all elements of a proof of claim as an application for permission to sell collateral); In re Roeber, 127 F. 122 (2d Cir.1903) (claimant filed lien on estate with bankruptcy court); In re Weco Equipment, Inc., 55 F.Supp. 532 (E.D.N.Y.) (Claimant sent letter to referee stating that as soon as amount of claim was determined claimant would file proof of claim), aff'd sub nom. Public Operating Corp. v. Schneider, 145 F.2d 830 (2d Cir. 1944) (per curiam); In re Quality Publications, Inc., 12 F.Supp. 651 (S.D.N.Y.1935) (officer of creditor testified as to existence of claim); In re Fant, 21 F.2d 182 (W.D.S.C. 1927) (claim was alleged in petition for bankruptcy and claimant sued to set aside conveyance made by the bankrupt); In re Dialysis Service Co., 19 B.R. 940 (Bkrtcy.D. Colo.1982) (claimant sent letter expressing
In each of these cases, the logical explanation for the creditor's actions is that it intended to pursue its claim against the estate. However, in no case has a "claim" been found where there was nothing more than evidence of a debt, without a showing of a demand and an intention to hold the estate liable.
Here, there is nothing more than a request by the trustee that FNBL describe its collateral, followed by a letter containing a description of the collateral.
First Nat. Bank v. West, 227 F. 981, 983 (3d Cir.1915) (In re Thompson).
In sum, the sequence of events goes like this. The trustee observes FNBL's listing on the schedule as a secured creditor, and asks it to document its security. FNBL responds that it is fully secured by third party guarantors' property, and then takes no further steps to make a claim against the estate. Under the circumstances, the trustee is entitled to assume that FNBL will rely on its security, rather than taking the perilous and usually unrewarding route of filing an unsecured claim against the bankrupt's estate. FNBL's August 18, 1980 letter simply does not manifest a demand against the estate, or an intent to hold the estate liable. As a result, it is not sufficient to constitute a timely "claim" which may be later amended.
Hoos & Co. v. Dynamics Corp., 570 F.2d 433, 437-39 (2d Cir.1978) (footnotes omitted).
Even if the August 18, 1980 letter constituted a "claim," there remains the question of whether it was timely filed. For in addition to making a "claim," rule 302(e) requires that the "claim must be filed within 6 months of the first date set for the first meeting of creditors. . . ." Rule 302 also states that "[a] proof of claim shall be filed in the place prescribed by Rule 509." Bankr.R. 302(b). Rule 509 provides,
In general, for a claim to be properly "filed," it must appear in the files of the bankruptcy court. See In re Mellen Manufacturing Co., 287 F.2d 37 (3d Cir.), cert. denied, 366 U.S. 962, 81 S.Ct. 1922, 6 L.Ed.2d 1254 (1961); In re Lathrop, Haskins & Co., 197 F. 164 (2d Cir.1912); In re Paul R. Dean Co., 460 F.Supp. 447 (W.D.N.Y. 1978); In re Vega Baja Lumber Yard, Inc., 285 F.Supp. 143 (D.P.R.1968); In re Scotchel, 177 F.Supp. 312 (N.D.W.Va.1959); In re Beattie, 102 F.Supp. 107, 111-12 (W.D. Mich.1951); In re Dorb the Chemist Pharmacies, Inc., 29 F.Supp. 832 (S.D.N.Y.1939); In re Brill, 52 F.2d 636 (S.D.N.Y.), aff'd, 52 F.2d 639 (2d Cir.1931).
FNBL concedes that its August 18, 1980 letter was not filed with the bankruptcy court within the six month period, but relies on a line of cases holding that delivery of a "claim"
All of these cases were decided by reference to the now-defunct General Order 21 in bankruptcy and the Supreme Court's construction of it in J.B. Orcutt Co. v. Green, 204 U.S. 96, 27 S.Ct. 195, 51 L.Ed. 390 (1907). General Order 21, the predecessor of bankruptcy rules 302 and 509, stated, "Proofs of debt received by the trustee shall be delivered to the referee to whom the case is referred." 204 U.S. at 100, 27 S.Ct. at 196-97. The Bankruptcy Act then stated that claims could be filed with the district court or the referee. Id. at 102, 27 S.Ct. at 197. The Supreme Court held that delivery of a claim to the trustee was a sufficient filing, since the general "order is equivalent to saying that proofs of debt (or claim) may be received by the trustee." Id. Since the order placed the trustee under a duty to file the claim with the referee, the Court concluded that filing with the trustee was equivalent to filing with the referee, which the statute permitted.
The conclusion we reach is that the rationale of Orcutt no longer applies, since it is based on the trustee's duty to file claims which has been in large part abrogated by the current bankruptcy rules. All the cases cited above were decided under General Order 21, except for Franciscan Vineyards and Dialysis Service. However, neither of those cases considered the differences between General Order 21 and the current rules. As a result, we find Franciscan Vineyards and Dialysis Service unpersuasive. Rather, we agree with the decision in In re American Beef Packers, Inc., 429 F.Supp. 887, 889 (D.Neb.1977), where the court held that Orcutt is no longer good law and that delivery to the trustee is not a sufficient "filing" except in the case of erroneous delivery under rule 509(c).
Because the August 18, 1980 letter was not timely filed, FNBL did not comply with Bankr.R. 302(a) and its claim should not have been allowed by the bankruptcy court.
Trustees, creditors, debtors, and even bankruptcy judges are entitled to some measure of finality in bankruptcy proceedings. If a proper "claim" is not timely "filed" by a creditor, that claim should not be allowed. Since no "claim" was "filed" within the applicable six month period in this case, the judgment of the bankruptcy court should be and hereby is reversed, and the case is remanded to the bankruptcy court with instructions to disallow the unsecured claim of appellee First National Bank of Lincolnwood.
The trustee makes much of the fact that the bankruptcy court observed that FNBL's claim was more than 50 percent of the total scheduled unsecured debt and that had it known the claim would not have been allowed it might not have converted the case to a liquidation proceeding. 20 B.R. at 551. The trustee suggests that this demonstrates that the bankruptcy court employed "inappropriate" considerations in reaching its decision. As we understand the bankruptcy court's decision, however, this observation is meant to support the court's conclusion that equitable considerations support a liberal construction of FNBL's August 18 letter. However, we reject the court's reliance on "equitable considerations" for the reasons stated above. The trustee is correct in pointing out that the court's observation is premised on a misapprehension, however. FNBL was scheduled as a secured, not an unsecured creditor.