TITLE X.

DUTIES, PROTECTION AND DISCHARGE OF

BANKRUPTS.

ACT OF 1898, CH. 3, § 7. Duties of Bankrupts.— (a) The bankrupt shall (1) attend the first meeting of his creditors, if directed by the court or a judge thereof to do so, and the hearing upon his application for a discharge, if filed; (2) comply with all lawful orders of the court; (3) examine the correctness of all proofs of claims filed against his estate; (4) execute and deliver such papers as shall be ordered by the court; (5) execute to his trustee transfers of all his property in foreign countries; (6) immediately inform his trustee of any attempt, by his creditors or other persons, to evade the provisions of this Act, coming to his knowledge; (7) in case of any person having to his knowledge proved a false claim against his estate, disclose that fact immediately to his trustee; (8) prepare, make oath to, and file in court within ten days, unless further time is granted, after the adjudication, if an involuntary bankrupt, and with the petition if a voluntary bankrupt, a schedule of his property, showing the amount and kind of property, the location thereof, its money value in detail, and a list of his creditors, showing their residences, if known, if unknown, that fact to be stated, the amounts due each of them, the consideration thereof, the security held by them, if any, and a claim for such exemptions as he may be entitled to, all in triplicate, one copy of each for the clerk, one for the referee, and one for the trustee.

ACT OF 1867, § 5104. The bankrupt shall at all times, until his discharge, be subject to the order of the court, and shall, at the expense of the estate, execute all proper writings and instruments, and do all acts required by the court touching the assigned property or estate, and to enable the assignee to demand, recover, and receive all the property and estate assigned, wherever situated. For neglect or refusal to obey any order of the court, the bankrupt may be committed and punished as for a contempt of court. If the bankrupt is without the district, and unable to return and personally

attend at any of the times or do any of the acts which may be required pursuant to this section, and if it appears that such absence was not caused by willful default, and if, as soon as may be after the removal of such impediment, he offers to attend and submit to the order of the court in all respects, he shall be permitted so to do, with like effect as if he had not been in default.

Statute revised

March 2, 1867, ch. 176, § 26, 14 Stat. 529. Prior Statute April 4, 1800, ch. 19, §§ 21, 33, 2 Stat. 27, 30.

Bankruptcy court has power to order a bankrupt to pay over to the assignee sums which apparently are in his hands. In re How, 18 B. R. 565.

Under law of 1867, bankruptcy court had no jurisdiction over property of bankrupt in foreign countries, and could not compel assignment thereof by him. Phelps v. McDonald, 16 B. R. 217.

Bankrupt must give satisfactory explanations of deficits which are shown in the assets of his estate, or pay over the amount thereof to the assignee. In re Peltasohn, 16 B. R. 265.

Under laws of Alabama, if bankrupt fails to claim his homestead exemption in his schedules he must be deemed to have waived it. Steele v. Moody, 16 B. R. 558.

Debtors should, in preparing their schedules, set down in schedule of liabilities all the paper that they may be liable on, with proper explanations in regard to them. In re Henry, Curran & Co., 17 B. R. 463.

If the bankrupt on examination admits the possession of property, he must clearly account for the same to the satisfaction of the court, otherwise he will be held to still have it in his possession and to be able to hand it over to his assignee, and on failing or refusing to account in a reasonable manner for the disposition of the assets which are traced to him, he may be committed for contempt. In re Salkey & Gerson, 11 B. R. 423, 516; s. c. 6 Biss. 269, 280.

The subjection of the bankrupt and of his property to the court is not for the purpose of punishment in any sense, but to enable the court to enforce a distribution of the bankrupt's estate according to the provisions of the act, and, as a matter of necessity, the law makes the bankrupt, from and after the first preliminary and ex parte adjudication upon the petition, subject to any and all orders that may be deemed necessary under the act to secure such distribution to the creditors. In re Bromley & Co., 3 B. R. 686.

Before a bankrupt can be committed for failing to account for property received by him, it must appear that a reasonable man would not be able to give credit to his evidence, but would be satisfied of its substantial untruth. In re Joseph Mooney, 15 B. R. 456.

An uncontested order of the register is an order of the court, and a violation of such order may be punished by commitment for contempt. In re Horatio N. Allen, 13 Blatch. 271.

When the contempt is not committed in the presence of the court, the bankrupt may be committed until the further order of the court. Ibid.

If the bankrupt is arrested under a warrant of commitment out of the district, he is entitled to be discharged. Ibid.

An application for an order to direct the bankrupt to execute certain deeds must be made to the court. The register has no power to pass such an order. In re Anon., 3 B. R. (quarto) 58.

Under the provisions of this clause the court may direct the bankrupt to execute and deliver to the assignee the proper papers to enable him to be admitted to prosecute, in his own name, an action pending in a State court to which the bankrupt is a party, in the same manner and with the like effect as it might have been prosecuted by the bankrupt, and may order the bankrupt to refrain from prosecuting said action, or from applying for any order or decree therein. In re Clark et al., 3 B. R. 491; s. c. 4 Ben. 88. Where the bankrupt has used due diligence to comply with the orders of the court, he is not guilty of contempt. In re Carpenter, 1 B. R. 299.

ACT OF 1898, CH. 3, § 11. Suits by and against Bankrupts.(a) A suit which is founded upon a claim from which a discharge would be a release, and which is pending against a person at the time of the filing of a petition against him, shall be stayed until after an adjudication or the dismissal of the petition; if such person is adjudged a bankrupt, such action may be further stayed until twelve months after the date of such adjudication, or, if within that time such person applies for a discharge then until the question of such discharge is determined.

(b) The court may order the trustee to enter his appearance and defend any pending suit against the bankrupt.

(c) A trustee may, with the approval of the court, be permitted to prosecute as trustee any suit commenced by the bankrupt prior to the adjudication, with like force and effect as though it had been commenced by him.

(d) Suits shall not be brought by or against a trustee of a bankrupt estate subsequent to two years after the estate has been closed. ACT OF 1867, § 5105. No creditor proving his debt or claim shall be allowed to maintain any suit at law or in equity therefor against the bankrupt, but shall be deemed to have waived all right of action. against him, and all proceedings already commenced or unsatisfied judgments already obtained thereon against the bankrupt shall be deemed to be discharged and surrendered thereby. But a creditor proving his debt or claim shall not be held to have waived his right

1 So amended by act of June 22, 1874, ch. 390, § 7, 18 Stat. 179.

of action or suit against the bankrupt where a discharge has been refused or the proceedings have been determined without a discharge.

Statute revised March 2, 1867, ch. 176, § 21, 14 Stat. 526. Prior Statute - Aug. 19, 1841, ch. 9, § 5, 5 Stat. 444.

This provision does not interfere with the right of any creditor to proceed against the assignee under the bankruptcy to have the benefit of any mortgage, pledge, or other security pro tanto, if he elects to do so, or with the right of the assignee to redeem the same. In re William Christy, 3 How. 292.

This clause meets and provides for two distinct cases. 1st, For that where the creditor has proved his debt before a suit is commenced. The proving the debt alone is a bar to any suit at law or in equity for the recovery of the debt so proved. 2d. Where the suit has been commenced before the proof of the debt in bankruptcy. In this case the proving of the debt operates as a surrender ipso jure, of the action, and is a bar to any further proceedings in the suit. Everett v. Derby, 5 Law Rep. 225. Where defendants in action brought by creditors to set aside fraudulent conveyance of the bankrupt desire to avail themselves of fact that such property had become vested by assignment in an assignee in bankruptcy, the fact of appointment of such assignee must be pleaded as a defense; a plea of discharge is not sufficient to raise the question. Dewey v. Moyer, 18 B. R. 114.

Under law of 1867, Held, that jurisdiction of State courts over pending actions is not affected by the adjudication or discharge of a defendant, unless such adjudication or discharge is pleaded. Serra é Hijo v. Hoffman, 17 B. R. 124.

The provisions of the bankruptcy law relating to stay of proceedings do not apply to proceedings in appellate courts. Ibid.

Under law of 1867, it was held that to entitle the bankrupt to a stay of suit, pending a determination of his discharge, the proceedings in bankruptcy must be pleaded or brought to the knowledge of the court in a proper manner. Holden v. Sherwood, 18 B. R. 111.

Also that the mere filing of a petition in bankruptcy was no bar to the prosecution of a suit against him in a statement. Murphy v. Young, 18 B. R. 505.

Prior to commencement of the bankruptcy proceedings, a surrogate's decree was docketed against the bankrupt for the payment of moneys misappropriated by him as administrator, and an appeal taken from a decision of the surrogate refusing an application for a commitment of the bankrupt for failure to pay. Upon such appeal, pending the bankruptcy proceedings, decision of surrogate was reversed and the proceedings remitted to him to enforce the proper remedy against the person of the bankrupt. Held, that the proceedings could not be stayed so as to prevent an application to surrogate for a commitment, the debt being one from which a discharge would not relieve the bankrupt, and the remedy of arrest being reserved to creditor. In re Whitney, 18 B. R. 563.

Where assignee intervenes at proper time to defend a suit against bankrupt, he has no right to demand a stay of proceedings, nor can he plead a final discharge in bar. The bankruptcy act of 1867 gives these privileges to the bankrupt alone. Serra é Hijo v. Hoffman, 17 B. R. 124. Assignee holds the assets as an officer of the court which appointed him, and his possession and management thereof can not be interfered with by the State courts. Southern et al. v. Fisher, 16 B. R. 414.

Where a cause of action pending at time of adjudication is one which passes to assignee, he should be notified, and in case of his refusal the action must be dismissed. Towle v. Davenport, 16 B. R. 478.

Assignee of a corporation represents both corporation and its creditors, and defense of irregular organization can not be urged against him. Chubb v. Upton, 16 B. R. 537.

Although the assignee may prosecute or defend the suit pending at the time of adjudication, he is not compelled to resort to the State court before which it is pending, but may apply directly to the Federal courts. (Law of 1867.) Southern et al. v. Fisher, 16 B. R. 414.

If assignee does not choose to become a party voluntarily to a suit pending in the name of bankrupt, the court in which such suit is pending has no power or authority to make him a party or compel him to submit to its jurisdiction and control. Serra é Hijo v. Hoffman, 17 B. R. 124.

Cross-bill setting up defendant's discharge in bankruptcy is not defective in not making the assignee a party, nearly four years having elapsed since appointment of assignee and he has made a final settlement and been discharged. Phelps v. Curts, 16 B. R. 85.

Limitation in bankruptcy act in relation to suits by and against assignees (trustees) applies to a suit in equity brought by assignee of bankrupt corporation to charge the shareholders for the unpaid amount of their shares. Foreman v. Bigelow, 18 B. R. 457.

Under law of 1867, a suit to recover debts due the estate was barred by limitation where the summons was not issued within two years from the time when the cause of action accrued, although the petition in such suit was filed within such time. Walker, Assignee, v. Towner, 16 B. R. 285.

Where a sale by the assignee took place more than two years after the assignment to him, the limitation of suits by and against assignees prescribed by the bankruptcy act of 1867 can not be set up as a defense to a collateral action brought against the bankrupt by one claiming title under a sale by the assignee. The bankrupt should avail himself of it on application to vacate the sale. Steele v. Moody, 16 B. R. 558.

The limitation prescribed by the bankruptcy law (1867) applies only to cases where the right of action accrued after the bankruptcy, and where an adverse interest in or touching any property or right of property is claimed by either of the parties. Latting v. Fassman et al., 17 B. R. 183. In composition proceedings, when objections are interposed by the minority, whose claims will be discharged against their will, it is the duty of the court to examine those objections fully and carefully. In re Keiler, 18 B. R. 36.