Flavor Dry, Inc. v. Lines (In re James E. O'Connell Co.)

ORDER AFFIRMING ORDER OF BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA AND DISMISSING APPEAL

Plaintiff Flavor Dry, Inc.’s appeal from the order of the United States Bankruptcy Court, the Honorable Conley S. Brown, presiding, of February 25, 1987, denying Flavor Dry’s motion for payment on the trustee bond, came before this Court on October 1, 1987. The matter was submitted on the pleadings. The Court has reviewed the briefs, transcripts, and other documentation submitted in support of and in opposition to this appeal and makes the following findings and conclusions.

BACKGROUND

In January, 1982, the James E. O’Connell Company, Inc., an apple dehydration operation, filed for reorganization under Chapter 11 of the Bankruptcy Code. The proceed *119 ing was converted to one under Chapter 7 in January, 1983, and Kal W. Lines was appointed trustee for the bankruptcy estate. On May 2, 1983, St. Paul Fire and Marine Insurance Company (“St. Paul”) issued a bankruptcy bond in the amount of $60,000.00, naming Kal W. Lines as principal and naming St. Paul as surety. The bond stated in pertinent part:

On January 17, 1984, the bond amount was increased to $90,000; on August 27,…