In the Matter of Norton's Cape Cod House, Inc., Bankrupt.excelsior Creamery Company, Ltd., Appellant, v. Gerald Macdonald, Receiver, Appellee, 437 F.2d 89 (9th Cir. 1971)

Annotate this Case
US Court of Appeals for the Ninth Circuit - 437 F.2d 89 (9th Cir. 1971) January 15, 1971

Schlegel, Friedemann, Inadomi & Menke, Santa Ana, Cal., for appellant.

Craig, Weller & Laugharn, Los Angeles, Cal., for appellee.

Before CHAMBERS, TUTTLE and ELY, Circuit Judges.


Excelsior Creamery, a longtime supplier of Norton's Cape Cod House, Inc., continued while the latter was under Chapter XI bankruptcy proceedings to furnish its products to the receiver for the debtor.

The receiver lost money while the business was in his charge. Excelsior applied before the referee for an order requiring the receiver to personally pay the losses of his operation. The referee ruled against Excelsior. On review, the district court affirmed. This court does likewise.

Excelsior's theory was that MacDonald was negligent. The referee found that the acts of MacDonald were not the proximate cause of Excelsior's loss. Also, he concluded that Excelsior had assumed the risk of the receiver losing money.

Of course, Excelsior was a very large creditor before the bankruptcy proceedings started. It was anxious to keep the debtor open in the hope of getting good sales of the restaurants which did not materialize.

We find the record justifies the referee's findings and the trial court's order sustaining the referee's decision.