CHAPTER V.

CREDITORS MEETINGS.

§ 55. 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.

It was held, under the Act of 1867 that the first meeting of creditors should be kept open for at least one hour. This was decided in the case where the hour was 10 o'clock, and the register closed the polls at

half-past 10. It was held that other creditors who appeared and voted before 11 should be counted. In re Gilley, 2 Low. 250; 10 Fed. Cas. 390. It was held, under the Act of 1867 that a register could not adjourn a meeting of creditors by letter, or otherwise than by personal attendance at the time and place fixed for the meeting. In re Dickinson, 18 N. B. R. 514; 7 Fed. Cas. 675.

In a case where all the creditors of the bankrupt resided in Germany the petitioner requested the register to fix the first meeting of creditors at twenty days from the date of the warrant. The register decided that sixty days was the shortest time that could reasonably be made, and his action was approved by Judge Blatchford. In re Heys, 1 Ben. 333; 12 Fed. Cas. 91.

VOTERS.

§ 56. 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.

An attorney in fact of the creditors, who proved their claim in bankruptcy, employed an attorney-at-law to act for the firm at a creditors' meeting. It was held that the authority of the latter was not sufficient. In re Knoepfel, 1 Ben. 330; 14 Fed. Cas. 782.

It was held, under the Act of 1867 and general order 34, that letters of attorney to represent crediors may be acknowledged before a notary public. In re Butterfield, 14 N. B. R. 195; 4 Fed. Cas. 919.

A bankrupt firm was indebted to the wards of one of the partners on notes running to him as guardian, but not indorsed by him to the wards. The wards, upon coming of age, were held to be competent to vote as creditors. In re Bailey et al., 2 Woods, 222; 2 Fed. Cas. 362.

Where creditors, after proving their claims, sell them, they can take no further part in the proceedings, and the transferee can cast but one vote on such claims. In re Foye, 2 Low. 399; 9 Fed. Cas. 649.

It was held, under the Act of 1867, that a creditor having security could prove his claim, but could not vote for assignee. In re Davis et al., 1 N. B. R. 120; 7 Fed. Cas. 49.

A wife, who was a creditor in her own right, voted in favor of a composition. Afterward her husband filed an affidavit that he had given

her authority to vote. This was held to validate the wife's act. In re Bailey et al., 2 Woods, 222; 2 Fed. Cas. 362.

A secured creditor may vote for assignee on the unsecured portion of his demand. In re Parker, 10 N. B. R. 82; 18 Fed. Cas. 1184 (1874).

Until a creditor has proved his claim, he should not be heard as a creditor, and has no right to be heard in any other character. In re Brisco, 2 N. B. R. 226; 4 Fed. Cas. 152.

After a creditor has proved his claim, and until the court has expunged the proofs, the register cannot refuse to receive the vote of the claimant or exclude him from a dividend. In re Jaycox et al., 7 N. B. R. 303; 13 Fed. Cas. 399.

Chief Justice Chase expressed doubt whether one member of a bankrupt firm should be allowed to represent a claim against the estate as trustee or agent. In re Mitteldorfer et al., Chase, 276; 17 Fed. Cas. 534. When an indorser of a note pays it to the indorsee, who has proved it In bankruptcy, the latter can take no further part in the proceedings, and the indorser becomes subrogated to his rights. In re Broich et al., 7 Biss. 303; 4 Fed. Cas. 205.

A power of attorney to authorize the person named to represent a creditor in bankruptcy was held not to be invalid for the want of proper revenue stamps. In re Myrick, 3 N. B. R. 156; 17 Fed. Cas. 1131.

At a creditors' meeting for composition, a creditor voted on unsecured debts, but certain secured debts were not considered. Subsequently, he sold the securities, which failed to satisfy the debt for which they were pledged. It was held that not having had the securities valued, the deficiency must be treated as an unsecured debt. Flower v. Greenbaum, 50 Fed. Rep. 190.

Where there were two persons claiming a right to vote on a claim, the register made a decision in favor of one of them, and the other allowed the vote to be taken without further objection. It was held that he could not reopen the question. In re Spencer, 18 N. B. R. 199; 22 Fed. Cas. 914.

In order to entitle a creditor to vote at the first meeting, he should be required to release or surrender any security he may have for the debt voted on. In re Saunders, 13 N. B. R. 164; 21 Fed. Cas. 524 (1875).

FILING, ETC., OF CLAIMS.

57. Proof and Allowance of Claims.- (a.) Proof of claims shall consist of a statement under oath, in writing, signed by a creditor setting forth the claim, the consideration therefor, and whether any, and, if so what, securities are held therefor, and whether any, and, if so what, payments have been made thereon, and that the sum claimed is justly owing from the bankrupt to the creditor.

(b.) Whenever a claim is founded upon an instrument of writing, such instrument, unless lost or destroyed, shall be filed with the

proof of claim. If such instrument is lost or destroyed, a statement of such fact and of the circumstances of such loss or destruction shall be filed under oath with the claim. After the claim is allowed or disallowed, such instrument may be withdrawn by permission of the court, upon leaving a copy thereof on file with the claim.

(c.) Claims after being proved may, for the purpose of allowance, be filed by the claimants in the court where the proceedings are pending or before the referee if the case has been referred.

(d.) Claims which have been duly proved shall be allowed, upon receipt by or upon presentation to the court, unless objection to their allowance shall be made by parties in interest, or their consideration be continued for cause by the court upon its own motion.

(e.) Claims of secured creditors and those who have priority may be allowed to enable such creditors to participate in the proceedings at creditors' meetings held prior to the determination of the value of their securities or priorities, but shall be allowed for such sums only as to the court seems to be owing over and above the value of their securities or priorities.

(f.) Objections to claims shall be heard and determined as soon as the convenience of the court and the best interests of the estate and the claimants will permit.

(g.) The claims of creditors who have received preferences shall not be allowed unless such creditors shall surrender their preferences.

(h.) The value of securities held by secured creditors shall be determined by converting the same into money according to the terms of the agreement pursuant to which such securities were delivered to such creditors or by such creditors and the trustee, by agreement, arbitration, compromise, or litigation, as the court may direct, and the amount of such value shall be credited upon such claims, and a dividend shall be paid only on the unpaid balance.

(i.) Whenever a creditor, whose claim against a bankrupt estate is secured by the individual undertaking of any person, fails to prove such claim, such person may do so in the creditor's name, and if he discharge such undertaking in whole or in part he shall be subrogated to that extent to the rights of the creditor.

(j.) Debts owing to the United States, a State, a county, a district, or a municipality as a penalty or forfeiture shall not be allowed, except for the amount of the pecuniary loss sustained by the act, transaction, or proceeding out of which the penalty or forfeiture arose, with reasonable and actual costs occasioned thereby and such interest as may have accrued thereon according to law.

(k.) Claims which have been allowed may be reconsidered for cause and reallowed or rejected in whole or in part, according to the equities of the case, before but not after the estate has been closed.

(1.) Whenever a claim shall have been reconsidered and rejected, in whole or in part, upon which a dividend has been paid, the trustee may recover from the creditor the amount of the dividend received upon the claim if rejected in whole, or the proportional part thereof if rejected only in part.

(m.) The claim of any estate which is being administered in bankruptcy against any like estate may be proved by the trustee and allowed by the court in the same manner and upon like terms as the claims of other creditors.

(n.) Claims shall not be proved against a bankrupt estate subsequent to one year after the adjudication; or if they are liquidated by litigation and the final judgment therein is rendered within thirty days before or after the expiration of such time, then within sixty days after the rendition of such judgment: Provided, That the right of infants and insane persons without guardians, without notice of the proceedings, may continue six months longer.

How and by Whom Proved.

Under the Act of 1867 it was not necessary that a power of attorney to prove a claim should be acknowledged. In re Barnes, 1 Low. 560; 2 Fed. Cas. 854.

An account against a bankrupt that has been assigned may be proved by the deposition of the assignee without that of the assignor; but the proof should give the name of the original creditor. Ex parte Davenport, 1 Low. 384; 7 Fed. Cas. 6.

Under the Act of 1867 the oath of an agent in proof of a claim that he is better acquainted with the facts than the principal would not make such proof admissible. In re Whyte, 9 N. B. R. 267; 29 Fed. Cas. 1129. Held, that the proof of a claim might be made by an agent who has personal knowledge of all the facts required to be proved. In re Watrous et al., 14 N. B. R. 258; 29 Fed. Cas. 419.

A receiver appointed by a court to take charge of the property of a creditor was held to be an assignee of the debt, and competent to prove it in bankruptcy proceedings. In re Mills, 17 N. B. R. 472; 17 Fed. Cas. 397.

Under the laws of Pennsylvania (April 15, 1869), a bankrupt can be a witness in support of a claim by his wife. In re Bean, 14 N. B. R. 182; 2 Fed. Cas. 1120.

The capital stock of a corporation organized under the laws of New York had not been paid within the time provided by the Act authorizing