Lake Shore Athletic Club Members' Committee v. Keig (107 F.2d 865, 1939)

MAJOR, Circuit Judge.

Appellant, a committee known as the Lake Shore Athletic Club Members’ Committee, filed a claim against appellee, trustee of the Lake Shore Athletic Club, debt- or, in a proceeding for its reorganization, under Section 77 of the Bankruptcy Act, 11 U.S.C.A. § 205. The amount of the claim was $8,798.61, of which $5,049.66 was designated as the amount of principal due on loans, and $3,748.95 as interest due on such loans to January 31, 1938. The claim and objections of the trustee thereto were heard by a Special Master, who filed a report recommending that $4,122.02 of the principal amount of the claim be allowed as a claim in Class 1, to be paid in cash, but recommended the disallowance of all interest. The District Court, by order of May 24, 1939, confirmed and approved the Master’s report, and from that order comes the instant appeal.

The only part of the Master’s report here involved, however, is that denying interest.

In 1931, the debtor was in financial difficulties, and its members undertook to develop a plan of reorganization. Certain members of the debtor subscribed and contributed to a fund for that purpose, which was placed in the hands