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In re

der 35 (ante, & 9614). In re Loughney sought to review a final order or decree (D. C. 1914) 218 Fed. 980.

on writ of error or appeal, held to A clerk of a federal district and cir- apply to a petition to revise in bankcuit court is entitled to his statu- ruptcy proceedings. In re Burr Mfg. tory per diem compensation for days Co. (C. C. A. 1914) 215 Fed. 898. on which he refers to the referee in 2. Accounts and claims of marshals.bankruptcy voluntary petitions in bank- Marshals must present vouchers for the ruptcy filed during the absence of the items charged in their accounts, or projudge from the district, though with- duce satisfactory reasons for the about written orders to open the court sence of such vouchers. In re Comfor that or any other purpose. U. S. stock (D. C. 1874) 9 N. B. R. 88, Fed. v. Marvin (1909) 29 Sup. Ct. 297, Cas. No. 3,075. The claim of the 298, 212 U. S. 275, 53 L. Ed. 510. marshal for expenditures must be sup

If a per diem can be allowed a clerk ported by his own oath as to their in equity and admiralty cases when a amount and the necessity for them. judge is not present, it should like- In re Hellmar (D. C. 1877) Fed. Cas. wise be allowed in a bankruptcy court. No. 6,342. Such affidavit is not conOwen v. U. S. (1906) 41 Ct. Cl. 69. clusive so as to preclude any further in

Section 1657, ante, which abolishes quiry into the items charged. the clerk's supervision fee where it is Pace (D. C. 1878) Fed. Cas. No. 10,640. § 9637. (Act July 1, 1898, c. 541, § 53.) Duties of Attorney-Gen

eral. Duties of Attorney-General.—a The Attorney-General shall annually lay before Congress statistical tables showing for the whole country, and by States, the number of cases during the year of voluntary and involuntary bankruptcy; the amount of the property of the estates; the dividends paid and the expenses of administering such estates; and such other like information as he may deem important. (30 Stat. 559.) § 9638. (Act July 1, 1898, c. 541, § 54.) Statistics of bankruptcy

proceedings. Statistics of Bankruptcy Proceedings.-a Officers shall furnish in writing and transmit by mail such information as is within their knowledge, and as may be shown by the records and papers in their possession, to the Attorney-General, for statistical purposes, within ten days after being requested by him to do so. (30 Stat. 559.)

CHAPTER SIX

Creditors

Sec.
9639. Meetings of creditors.
9640. Voters at meetings of creditors.
9641. Proof and allowance of claims.
9642. Notices to creditors.

Sec.
9643. Who may file and dismiss peti-

tions.
9644. Preferred creditors.

$ 9639. (Act July 1, 1898, c. 541, § 55.) Meetings of creditors.

Meetings of Creditors.--a The court shall cause the first meeting of the creditors of a bankrupt to be held, not less than ten nor more than thirty days after the adjudication, at the county seat of the county in which the bankrupt has had his principal place of business, resided, or had his domicile; or if that place would be manifestly inconvenient as a place of meeting for the parties in interest, or if the bankrupt is one who does not do business, reside, or have his domicile within the United States, the court shall fix a place for the meeting which is the most convenient for parties in interest. If such meeting should by any mischance not be held within such time, the court shall fix the date, as soon as may be thereafter, when it shall be held.

b At the first meeting of creditors the judge or referee shall preside, and, before proceeding with the other business, may allow or disallow the claims of creditors there presented, and may publicly examine the bankrupt or cause him to be examined at the instance of any creditor.

c The creditors shall at each meeting take such steps as may be pertinent and necessary for the promotion of the best interests of the estate and the enforcement of this Act.

d A meeting of creditors, subsequent to the first one, may be held at any time and place when all of the creditors who have secured the allowance of their claims sign a written consent to hold a meeting at such time and place.

e The court shall call a meeting of creditors whenever one-fourth or more in number of those who have proven their claims shall file a written request to that effect; if such request is signed by a majority of such creditors, which number represents a majority in amount of such claims, and contains a request for such meeting to be held at a designated place, the court shall call such meeting at such place within thirty days after the date of the filing of the request.

f Whenever the affairs of the estate are ready to be closed a final meeting of creditors shall be ordered. (30 Stat. 559, 560.)

Notes of Decisions 1. Meetings of creditors.-A credi- Phelps (D. C. 1868) 1 N. B. R. 525, tors' meeting should not be held on a Fed. Cas. No. 11,071. If one of the public holiday, but the fact that it was joint proxies is disqualified, because he so held will not be cause for setting is the bankrupt's attorney, neither of aside the proceedings taken at that them can vote under the power of atmeeting where it appears that no one torney at a creditors' meeting. In re was injured thereby. In re McGlynn Columbia Iron Works (D, C. 1904) 142 (D, C. 1872) Fed. Cas. No. 8,804.

Fed. 234, 14 Am. Bankr. Rep. 526. In the absence of any specific pro- A letter of attorney merely empowvisions of law, the conduct of a cred- ering the agent to attend and vote at itors' meeting is properly guided by the meetings of creditors will not authorrules and usages of parliamentary bod- ize him to file opposition to the bankies. In re Merchants' Ins, Co. (D. C. rupt's application for discharge. Cred1874) Fed. Cas. No. 9,442.

itors v. Williams (C. C. 1870) 4 N. B. Where objections to a claim are filed R. 579, Fed. Cas. No. 3,379. on the ground that the claimant has Where an attorney sought to reprereceived a preference, he should not be sent certain creditors upon an appointpermitted to take any part in the cred- ment by their general attorney, who itors' meeting until the matter has was himself constituted and approved been heard and determined. In prior to the passage of the bankruptcy Columbia Iron Works (D. C. 1904) 142 law, by a power of attorney authorizFed. 234, 14 Am. Bankr. Rep. 526. ing him to sign the creditors' names

If there were irregularities in the to any paper writing, proper or necescalling of the first meeting or in the sary to collect or receive debts due, notices to creditors, or if, for any other with power of substitution, held, that cause affecting the common interest of the authority of the special attorney all in the estate, it seems to the ref- was sufficient. In re Knoepfel (D. C. eree proper to adjourn the meeting to 1867) Fed. Cas. No. 7,892. a future fixed day, he has power to do An attorney at law, who is a mem

In re Cheney (D. C. 1879) 19 ber of the bar of the particular court, N. B, R. 16, Fed. Cas. No. 2,637; In re need not produce a written and acDevlin (D. C. 1867) Fed. Cas. No.

knowledged authority in order to repre3,841. But in order to take this ac- sent his client at creditors' meetings in tion, the referee must himself be pres- bankruptcy, in respect to such acts as ent at the meeting. If he is prevent- fall within the ordinary scope of an ated from attending, he cannot adjourn torney's duties and employment. In re the meeting by letter. In that case, the Scott (D, C. 1876) 15 N. B. R. 73, Fed. meeting wholly fails and a new meet- Cas. No. 12,519; In re Hill (D. C. ing must be called. In re Dickinson

1867) Fed. Cas. No. 6.481. (D. C. 1878) 18 N. B. R. 514, Fed. Cas.

3. Participation of creditors in proNo. 3,895.

ceedings. The rights of creditors, as 2. Representation by attorney parties to the proceeding in bankruptcy, proxy.-Where a letter of attorney, to arise and accrue only 'upon proof of represent and act for the principal at their claims. In re Jones (D. C. 1868) a creditors' meeting in bankruptcy, is 2 N. B. R. 59, Fed. Cas. No. 7,447; In given to two or more persons jointly, re Brisco (D. C. 1869) 2 N. B. R. 226, its authority cannot be exercised by Fed. Cas. No. 1,886. one of the attorneys alone.

In re

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self to the jurisdiction of the court by proving his debt, and is thereafter bound to obey all the orders of the court touching his claim, and the court can, in case he disobeys its orders, deprive him of all the benefit of the act, and can reject and expunge his claim. In re Kyler (D. C. 1868) Fed. Cas. No. 7,956.

If no trustee has yet been appointed, any creditor may petition the court to enjoin another creditor from proceeding with a pending suit, or enforcing a voidable lien or attachment against the bankrupt, and injunction may issue on such petition. In re Carrier (D. C. 1892) 51 Fed. 900.

Any creditor may object to the allowance of another creditor's claim, and if it is allowed, the objecting creditor may move the court to direct the trustee to appeal, or to allow him to appeal in the name of the trustee. Chatfield v. O'Dwyer (C. C. A. 1900) 101 Fed. 797, 4 Am. Bankr. Rep. 313.

If the trustee sells property of the bankrupt for grossly inadequate price, himself discouraging competition, and refuses to have the sale set aside, a dissatisfied creditor may take action in that behalf. In re Groves (1900) 2 Nat. Bankr. News, 466.

While the trustee is the one in whom the title to the bankrupt's property is vested, and therefore the proper person to bring all necessary actions for its recovery, yet the creditors are interested in having the assets brought in and realized upon, and the trustee cannot complain of the institution by creditors of suits to recover assets which

he, the trustee, might intentionally or unintentionally permit to escape. Davis v. W. F. Vandiver & Co. (1905) 143 Ala. 202, 38 South. 850.

4. Furnishing indemnity for expens. es.-Where creditors of an estate desire the trustee to bring suit to set aside alleged preferences or fraudulent conveyances, or otherwise to recover property alleged to belong to the bankrupt, they may be required to guaranty to the trustee all the probable costs and expenses likely to be incurred in the prosecution of such suit, if there are no funds of the estate to pay such expenses, or if the money in hand is not more than enough for the creditors having priority, or if the wish of those creditors is opposed by the trustee himself or by a considerable body of other creditors. In re Barrett (D. C. 1904) 132 Fed. 362, 12 Am. Bankr. Rep. 626; In re Barnes (D. C. 1883) 18 Fed. 158; In re Griffith, 1 Nat. Bankr. News, 546; In re Hughes (D. C. 1868) 1 N. B. R. 226, Fed. Cas. No. 6,841; In re Sawyer (D. C. 1877) 16 N. B. R. 460, Fed. Cas. No. 12,396; In re McNamara (1900) 2 Nat. Bankr. News, 341. But though a trustee in bankruptcy is not required to litigate every question called to his notice by creditors, however frivolous or apparently lacking in support, yet he cannot, by requiring indemnity in every instance against costs and expenses, cast the risk of a controversy respecting alleged preferences, etc., on the particular creditor requesting him to undertake it. In re Baird (D. C. 1902) 112 Fed. 960, 7 Am. Bankr. Rep. 448.

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$ 9640. (Act July 1, 1898, c. 541, § 56.) Voters at meetings of

creditors. Voters at Meetings of Creditors.—a Creditors shall pass upon matters submitted to them at their meetings by a majority vote in number and amount of claims of all creditors whose claims have been allowed and are present, except as herein otherwise provided.

b Creditors holding claims which are secured or have priority shall not, in respect to such claims, be entitled to vote at creditors' meetings, nor shall such claims be counted in computing either the number of creditors or the amount of their claims, unless the amounts of such claims exceed the values of such securities or priorities, and then only for such excess. (30 Stat. 560.)

Notes of Decisions
I. General Creditors

I. GENERAL CREDITORS 1. Right to vote in general.

1. Right to vote in general.-A cred2. Representation by attorney.

itor who holds a voidable preference 3. Controlling actions of trustee.

bas a provable claim, in the sense that

formal written proof of it may be made II. Secured Creditors

and filed, but it is a claim on which 4. Who are secured creditors.

he cannot be allowed to vote until he 5. Mortgagees.

has surrendered his preference. Ste6. Judgment creditors.

vens v. Nave-McCord Mercantile Co. 7. Pledgees, assignees, and holders of col

(C. C. A. 1906) 150 Fed. 71, 17 Am. lateral. 8. Holders of notes.

Bankr. Rep. 609. 9. Effect of additional security or claim

Where, after a decision by the referee against third person.

between two parties as to the right to.. 10. Voting at creditors' meetings.

vote upon a claim, the person aggrieved

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allows the vote to be taken without further objection, he cannot again reopen the question. In re Spencer (C. C. 1878) 18 N. B. R. 199, Fed. Cas. No. 13,229.

Claims which have been proved, and then sold and assigned before the election of a trustee, must be voted upon in such election by the actual owner at the time and not by the original creditor. In re Frank (D. C. 1871) Fed. Cas. No. 5,050.

2. Representation by attorney.--An attorney at law, retained generally to represent a creditor in bankruptcy proceedings, cannot cast the vote of such creditor in the election of a trustee at a creditors' meeting, without showing an express authorization thereto as attorney in fact. In re Blankfein (D. C. 1899) 97 Fed. 191, 3 Am. Bankr. Rep. 165; In re Christley (D. C. 1874) Fed. Cas. No. 2,702.

3. Controlling actions of trustee.The provision of this section that "creditors shall pass upon matters submitted to them at meetings by a majority vote" does not vest such majority at a special meeting with authority to direct the trustee to compromise and discontinue a pending suit. In re Meadows, Williams & Co. (D. C. 1910) 181 Fed. 911, 25 Am. Bankr. Rep. 100.

While it is not necessarily the duty of a trustee in bankruptcy to follow the wishes of a majority in number and amount of the creditors in prosecuting or defending suits, yet when his judgment concurs with that of a great majority of the creditors who speak, all having the opportunity to speak, that it would be inadvisable to defend a pending suit against the bankrupt, and not for the best interest of the estate, he is justified in refusing to defend, and it is not error for the referee, on application of the minority, to refuse to direct him to do so, unless such creditors will assume responsibility for the expense. In re Kearney (D. C. 1910) 184 Fed. 190, 25 Am. Bankr. Rep. 757.

the bankrupt's property. In re Lloyd (D. C. 1877) 15 N. B. R. 257, Fed. Cas. No. 8,429.

To constitute a lien or security within the meaning of the act, there must be a security additional to the personal obligation of the debtor. Shoemaker v. National Mechanics' Bank (C. C. 1869) Fed. Cas. No. 12,801.

A banker has no lien upon the mon. eys of a depositor for any separate debt which the depositor may owe to him, and the mere fact that he holds such moneys on deposit at the time of the bankruptcy does not make him a secured creditor. In re Warner (D. C. 1871) 5 N. B. R. 414, Fed. Cas. No. 17,177; In re Weeks (D. C. 1875) Fed. Cas. No. 17,349.

Where a firm is dissolved and one of the partners assumes payment of all the debts, this makes him a principal debtor and the other partner a surety, but it does not follow that a creditor of the partnership becomes a secured creditor. Schmitt v. Greenberg (1908) 58 Misc. Rep. 570, 109 N. Y. Supp. 881.

Where the bankrupt had bought goods on credit, and payment was guaranteed to the seller by a third person, the creditor is not "secured," unless the guarantor has taken security from the bankrupt. In re Anderson (D. C. 1876) Fed. Cas. No. 350.

A mere promise by a subsequent purchaser of property subject to a mechanic's lien, in consideration of forbearance, to pay the demand secured by the lien, is not "collateral security" and does not discharge the lien. Mervin v. Sherman (1859) 9 Iowa, 331.

It necessary that the security should attach to the bankrupt's "property" or "assets"; that is, there must be a lien upon property which would otherwise go into the general fund or be available for the claims of general creditors. In re Spades (D. C. 1875) Fed. Cas. No. 13,196. And a creditor holding security on property which never belonged to the bankrupt may prove his whole debt without first disposing of the security. In re Dunkerson (D. C. 1868) 12 N. B. R. 413, Fed. Cas. No. 4,157. A bank holding the note of a third person, secured by a pledge of stock which does not belong to the bankrupt, the latter being liable thereon as an indorser, may prove its claim against the bankrupt's estate without surrendering the stock. In re Thompson (D. C. 1913) 208 Fed. 207.

The term "security," as used in the bankruptcy act, will include every interest or right attached to or which is a charge upon specific property, or which entitles the owner thereof to be paid out of specific property, whether legal or equitable, absolute or contingent. Storm v. Waddell (N. Y. 1849) 2 Sandf. Ch. 494. Where the by-laws

II. SECURED CREDITORS 4. Who are secured creditors.-Under § 9585, cl. 23, ante, defining a secured creditor as one "who has security for his debt upon the property of the bankrupt of a nature to be assignable under this act, or who owns such a debt for which some indorser, surety, or other person secondarily liable for the bankrupt has such security upon the bankrupt's assets," the creditor must either hold security against the property of the bankrupt himself, or be secured by the individual obligation of another who holds such security. Gorman v. Wright (1905) 136 Fed. 164, 69 C. C. A. 76, 14 Am. Bankr. Rep. 135. Under the former bankruptcy law it was held that a creditor was not to be treated as "se·cured" because a surety or guarantor of the debt was protected by a lien on

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note of a husband and wife secured by a deed of trust on the wife's property should be allowed as a secured claim against the estate of the husband in bankruptcy, although the wife may have died leaving heirs. In re Hartel (D. C. 1873) 7 N. B. R. 559, Fed. Cas. No. 6,157.

A creditor holding a mortgage exempt property of the bankrupt is not entitled to receive a dividend on his entire claim, and resort to the security only to satisfy an unpaid balance. In re Lantzenheimer (D. C. 1903) 124 Fed. 716, 10 Am. Bankr. Rep. 720. One holding a mortgage on the exempt homestead of the bankrupt is a secured creditor. Fenley v. Poor (1903) 121 Fed. 739, 58 C. C. A. 21, 10 Am. Bankr. Rep. 377. CONTRA, In re Bailey (D. C. 1910) 176 Fed. 990, 24 Am. Bankr. Rep. 201.

An equitable lien on land, in the nature of a mortgage, is a security within the meaning of the act. In re Peasley (D. C. 1905) 137 Fed. 190, 14 Am. .Bankr. Rep. 496. Where money is loaned or advanced under an agreement that it is to be used to discharge

incumbrance the borrower's property, and the lender is to have a first lien to secure its repayment, and the money is so used, the lender may be subrogated to the rights of the incumbrancer whose debt was paid, against the borrower's trustee in bankruptcy. In re Lee (C. C. A. 1910) 182 Fed. 579, 25 Am. Bankr. Rep. 436; Dewey v. Kelton (D. C. 1878) 18 N. B. R. 217, Fed. Cas. No. 3,850.

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of a corporation provide that it shall have a lien on the stock of any shareholder for his indebtedness to the corporation, and an indebted stockholder becomes bankrupt, the corporation is a secured creditor. In re Morrison (D. C. 1873) 10 N. B. R. 105, Fed. Cas. No. 9,839. Taxes, particularly those assessed by municipalities, may or may not attach to real property as liens, according to the local law, and upon this will depend the position of the state or municipality as a secured or unsecured creditor.

In re Harvey (D. C. 1903) 122 Fed. 745, 10 Am. Bankr. Rep. 567.

When property or securities are delivered to a creditor, it may be the intention and understanding of the parties that a payment and discharge of the debt shall be effected, rather than the creation of a lien, and in the former case, the creditor cannot present himself in the guise of a secured creditor, though he may have been disappointed in the value of the property turned over to him. In re Black Diamond Copper Min. Co. (1908) 11 Ariz. 415, 95 Pac. 117.

It is not permissible for the bankrupt himself, after receiving his discharge, to purchase and take an assignment to himself of debts against his own estate in bankruptcy secured by liens, and collect the same for his own use out of assets in the hands of his trustee, to the exclusion of subsequent lien holders. His purchase of his own debt operates to extinguish the debt, and this rule is not affected by the fact of his having been discharged, because the discharge does not destroy or extinguish the debt, though it bars the remedy for its recovery. In re Burton (D. C. 1886) 29 Fed. 637.

5. Mortgagees.-The holder of mortgage on real or personal property of a bankrupt is a secured creditor within the meaning of this section. Krugmeier v. Hackett (1907) 134 Wis. 57, 113 N. W. 1103. Bondholders of a bankrupt corporation are not precluded from proving their debts as secured because of their omission to record the deed of trust securing the bonds. In re Charles Town Light & Power Co. (D. C. 1912) 199 Fed. 846, 29 Am. Bankr. Rep. 721. The holder of a mortgage on the bankrupt's property is a secured creditor although the mortgage was not made by the bankrupt himself, but by his predecessor in the title. McKay v. Hamill (C. C. A. 1911) 185 Fed. 11, 26 Am. Bankr. Rep. 164. See In re Altenheim (D. C. 1867) 1 N. B. R. 85, Fed. Cas. No. 268. It is immaterial that the mortgage covers after-acquired property as well as that in possession at the time. Barnard v. Norwich & W. R. Co. (C. C. 1876) 14 N. B. R. 469, Fed. Cas. No. 1,007. See In re Baker (D. C. 1875) Fed. Cas. No. 762. The joint

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6. Judgment creditors.-Ownership of a judgment against the bankrupt will constitute the creditor a "secured creditor," within the meaning of the act, provided there is property of the bankrupt upon which the judgment may attach, or has attached, as a lien. In re Cale (D. C. 1910) 182 Fed. 439, 25 Am. Bankr. Rep. 367; Guardians of Poor v. Ovens, L. R. 8 Ex. 37. See American Woolen Co. v. Maaget (1912) 86 Conn. 234, 85 Atl. 583. But not so if the law of the state confines the lien of judgments to real property and the estate of the particular bankrupt consists wholly of personalty. In re Erwin (D. C. 1870) 3 N. B. R. 580, Fed. Cas. No. 4,524.

Where the creditor claims the rights of a secured creditor by virtue of an alleged judgment lien on the property of the estate, the burden is on him to show that he has done everything required by statute to make his judgment attach as a lien. In re Wood (D. C. 1899) 95 Fed. 946, 2 Am. Bankr. Rep. 695. Where, by the local law, a lien is acquired on property only by the levy of an execution upon it, the fact that a creditor has procured and docketed a judgment against the bank. rupt, or has caused a writ to be issued, thereon, will not make him a secured

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