Order and Notice.

[Ch. VI. cases, be able to pass upon all claims which have been or may be presented at the meeting. Bankr. Act, sec. 55c. Having thus passed upon the claims presented, a creditor to participate in and vote at such meeting must own an unsecured claim, provable in bankruptcy, and must not only have proved such claim, but had it allowed. Id. secs. 56a, 56b, in re Hill, Fed. Cas. 6,481, I N. B. R. 16; in re Altenheim, Fed. Cas. 268, 1 N. B. R. 85. Secured creditors cannot vote at such meetings, unless their claims exceed the amount of the security held by them, and then only for such excess as shall be allowed by the court. Bankr. Act, sec. 56b. An attorney, agent or proxy can represent and vote for such creditors, but, before being permitted to do so, should be required to produce and file written authority from the creditor, which should be filed by the referee as a part of his record. In re Sugenheimer (D. C.) (1 Am. B. R. 425), 91 Fed. 744. Creditors holding claims which are secured or have priority are not, in respect to such claims, entitled to vote. To do so, such security or priority must be surrendered. In re Saunders. Fed. Cas. No. 12,371, 13 N. B. R. 164; Bankr. Act, sec. 57 g; in re Conhaim (D. C.) (3 Am. B. R. 249), 97 Fed. 924. This provision illustrates the homely maxim of Heywood, hoary with the age of over four centuries, that one cannot eat his cake and have his cake too. The creditor must decide. He can make a surrender, thus becoming an unsecured creditor, and participate with other creditors in the management of the estate, or he can stand on his security or priority. He cannot do both. He cannot run with the hare and hold with the hounds, as boys who run rabbits would express it, quoting a sixteenth century authority.

Assisted as indicated by the schedules, the bankrupt, and others interested, creditors present, it would seem the court could pass on all or most of the claims without difficulty or delay. If a particular claim is objected to, the question should be heard as soon as feasible, and, if the court (judge or referee) is not satisfied with the weight of evidence, the hearing may be postponed and heard at some subsequent time. The Act of 1867 provided expressly for such postponement, and the Act of 1898 does not prohibit, but, by lodging a large discretion in the court, warrants and contemplates it. On a decision, the allowance or rejection of a claim of $500 or over, both may be reviewed by the Court of Appeals. Bankr. Act, sec. 25, subd. 3. The effect of allowing or postponing the hearing on a particular claim affects only the creditor's right to vote at the first meeting of creditors. If made to appear the result would be changed by such vote or votes, the judge or referee may set aside the result, and order a new vote to be taken. When it appears the right to vote would not affect the business of the estate, the proceedings would not be disturbed to allow a creditor to exercise the right to vote when it would be barren of results. A creditor who has received a preference must surrender such preference before he can participate in a meeting of creditors. By the adjudication, the estate of the bankrupt is in the custody of the court. If the preference is by the assignment of securities, the creditor cannot realize on such securities, or release the debtor of the bankrupt, except through the Bankrupt Court. See In re Cobb (D. C.) (3 Am. B. R. 129), 96 Fed. 821, and authorities cited. Such creditor should prove and file his claim, and his

$56.]

Meetings of Creditors, Voters at

preference, if valid, will be protected by the court, but he cannot participate in meetings as an unsecured creditor. In a proceeding like the one at bar, the creditors of the partnership elect the trustee, but an individual creditor of one of the partners cannot vote for a trustee of the partnership. Bankr. Act, sec. 5b."

The foregoing extract gives a very excellent resumé of the practice. It should be kept in mind that the creditors select the trustee. (Section 44.) See for further discussion of this subject section 57 on proof of claims.

Subsequent special meetings of creditors for any cause whatever are expressly provided for in G. O. 25, which is as follows:

XXV. SPECIAL MEETING OF CREDITORS.

Whenever, by reason of a vacancy in the office of trustee, or for any other cause, it becomes necessary to call a special meeting of the creditors in order to carry out the purposes of the act, the court may call such a meeting, specifying in the notice the purpose for which it is called.

And G. O. 4 is as follows:

IV. CONDUCT OF PROCEEDINGS.

Proceedings in bankruptcy may be conducted by the bankrupt person in his own behalf, or by a petitioning or opposing creditor; but a creditor will only be allowed to manage before the court his individual interest. Every party may appear and conduct the proceedings by attorney, who shall be an attorney or counsellor authorized to practice in the circuit or district court. The name of the attorney or counsellor, with his place of business, shall be entered upon the docket, with the date of the entry. All papers or proceedings offered by an attorney to be filed shall be indorsed as above required, and orders granted on motion shall contain the name of the party or attorney making the motion. Notices and orders which are not, by the act or by these general orders, required to be served on the party personally may be served upon his attorney.

SEC. 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'

Voters at Meetings of Creditors - Vote Required.

[Ch. VI. 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.

Analogous Provisions of Former Acts.

As to voters in general: R. S. section 5034; act of 1867, section 13. As to preferred creditors being deprived of a vote under the act of 1867: R. S. section 5035; act of 1867, section 18.

See quotations from the case of Eagles and Crisp under the preceding section as to the method of voting.

Vote Required.-Only persons whose claims have been allowed and who are present may vote; mere proof of claims is not sufficient, as under the former act. The vote required under this act is the majority in number and amount of all whose claims have been allowed and who are present. Under the former act a majority of all who had proved their claims, whether present or not, was required. Secured creditors may now vote even at the first meeting; in this respect also, the present law differs from the former law. As to the manner of determining the excess of their claims over the value of their securities, compare section. 57 (e).

By section 1, subdivision 9, it is declared that the term “creditor" shall include not only the owner of the demand himself, but his duly authorized agent, attorney or proxy." Any person, therefore, who assumes to represent a creditor in the functions referred to in section 56a must be a "duly authorized agent, attorney or proxy" of the creditor.

By General Order 21, subdivision 5, it is provided what such due authorization shall consist of, as follows:

"The execution of any letter of attorney to represent a creditor may be proved or acknowledged before a referee or a United States commissioner or a notary public. When executed on behalf of a partnership or of a corporation the person executing the instrument shall make oath that he is a member of the partnership, or a duly authorized officer of the corporation on whose behalf he acts, etc."

§ 57.]

Proof and Allowance of Claims.

A letter of attorney executed on behalf of a partnership must contain the oath of the partner executing it that he is a member of the partnership even though on the same day he has made such oath in a deposition to prove the partnership claim against the bankrupt's estate. (In re Finlay, 3 Am. B. R. 738.)

SEC. 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 courts seem 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 estates and the claimant will permit.

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

erences.

Proof and Allowance of Claims.

[Ch. VI.

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.

I 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.