In Re Frederick Gessin, Bankrupt. Security National Bank v. Frederick Gessin

Appellant Gessin and Travel Associates, Inc., of which appellant was the president and major stockholder, each declared voluntary bankruptcy in 1974. Appellee Security National Bank was a creditor of both. Against Travel Associates a claim of $82,-947.17 was allowed, while against appellant there was allowed a claim of $42,129.06. The entire amount of this latter sum was part of the claim of the Bank against Travel Associates and arose because of appellant’s guarantee of this amount of the debt which Travel Associates owed to the Bank. A claim against appellant in the amount of $19,871.64 was held nondischargeable.

The Bank received in dividends from the estates of the two bankrupts slightly in excess of $35,000.00, of which $32,775.00 came from the estate of Travel Associates. Appellant sought to have the judgment of nondischargeability credited with the sum of $8,443.92 which, according to appellant’s theory, represents that portion of the total dividend received by the Bank properly allo-cable to the total amount of the nondis-chargeable debt. Appellant’s theory of allocation was based on the reasoning that, inasmuch as the amount of the nondis-chargeable debt ($19,871.54) was…