CHAPTER VI.

CREDITORS.

§ 518. Act of 1898.-SEC. 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.

The trustee is to be chosen at the first meeting and the amount of his bond decided (§ 44 and § 50 c).

Under the rules of the Supreme Court the referee is to perform everything under the act after the case has been referred to him, except what must be done by the judge. Therefore it

will be the referee who will preside at meetings. The form of notice of the first meeting is laid down by the Supreme Court.2

Under Rule VI. established by the Supreme Court by the authority of the Act of 1867, power was given the register to arrange for adjournments of meetings. This will undoubtedly be the law under the present act, though there is no similar provision in the Rules.

Paragraph e requires that one-fourth in number of all creditors who have proven their claims must assent in writing to the calling of a meeting. This would include creditors who had filed their claims whether they had been passed on by the

1 Rule XII. 1.

2 Form 18.

court or not, and even if the court had rejected them. Would the creditors who had made the necessary statement under oath but had not filed their claims be included? Such creditors have proven their claims (§ 57 a), but inasmuch as the oath need not be taken before an officer of the court (§ 20), there would be no way of discovering how many creditors had done so. The most reasonable construction of this section would exclude the creditors who had not filed their claims.

The referee has power under the rules to call a meeting whenever it is necessary, and must do so if the trustee is removed and a new one is to be chosen.2 If a debtor desires to offer a composition to his creditors, he may have a meeting called on filing a petition asking for it.3

Under the provisions of paragraph ƒ the creditors will undoubtedly have the power to pass on the final accounts of trustees. The terms of Form 51 do not seem to intend that the creditors should have the power, but the Form itself is not inconsistent with such a construction of the present paragraph, and it is a more natural interpretation of it. There would be no reason for calling a final meeting of creditors if they could do nothing when they met. The true intention of the act is that the creditors should have power over the settlement of the estate and the final account. Then the Form provides that the allowance of the account by the referee shall discharge the trustee. The final report and account must be filed by the trustee fifteen days before the last meeting, and the trustee must lay before the meeting detailed statements of the administration of the estate. These provisions show that the creditors have control of the closing of the estate.

Besides the powers of creditors at meetings, each creditor has certain rights under the act after the proceedings have been begun. Thus any creditor may join in a petition after it is filed or object to an adjudication. He may ask for the removal of a trustee. He may petition for the sale of perishable

1 Rule XXV.

2 Form 55.

8 Form 60.

4 Form 51.

5 Act of 1898, § 47 (8).

6 Ib. § 47 (7).

7 Ib. § 59 f.

8 Ib. § 2 (17), Form 52. See § 509.

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property.1 He may object to the sale of property 2 or the redemption of property from a lien; or if he has proved his debt he may ask for redemption of property from liens or for the compounding of a claim. Any creditor may oppose the dismissal of the proceedings 5 or the compromise of any controversy. He may examine the accounts of trustees and ask for an examination of the bankrupt.8 He may petition the court for an examination of the payment by a debtor of attorneys' fees. He may except to the report of the trustee on the bankrupt's exemptions 10 or ask for the re-examination of a claim. The proof of other creditors may be objected to,12 and a review of any ruling of the referee may be requested. 13 A creditor may also oppose the confirmation of a composition or the granting of a discharge, and may apply for the revoking of a discharge or the setting aside of a composition.15

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§ 519. Act of 1898.- 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' 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.

The choice of assignee was prescribed by section 5034 of the Revised Statutes,1 and decisions under that section will be instructive. It was held that a creditor could not take part in the meeting until he had proved his debt.2 Under the terms of paragraph a it would seem, in accordance with the decisions just cited, that no creditor could take part whose claim had not been allowed. The election of assignee was formerly by a majority of all creditors who had proved their debts, so that the rule in this regard is changed.

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The referee may continue the consideration of a claim if it is objected to or on his own motion (§ 57 d). It was held under the last act that the assignee should be appointed without waiting for the determination of this question, though a creditor thereby lost his vote, as it was the intention of Congress to appoint an assignee as speedily as possible, and this decision I would be followed under this act.

In proceedings on the bankruptcy of a partnership the trustee is to be chosen by the firm creditors (§ 5 b). If one partner is bankrupt, the joint creditors may vote for the assignee.5

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Secured creditors were not allowed to vote for assignee unless they waived their security. Secured creditors and those having priority are allowed to prove provisionally for the excess of the claim in order to take part in creditors' meetings (§ 57 e).

§ 520. Act of 1898. 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,

522.

1 Act of 1867, § 13, 14 Stats. tusch, 9 N. B. R. 478, Fed. Cas. No. 1086.

2 Re Hill, 1 N. B. R. 16, Fed. Cas. No. 6481; Re Phelps, 1 N. B. R. 525, Fed. Cas. No. 11,071.

8 Re Purvis, 1 N. B. R. 163, Fed. Cas. No. 11,476.

Re Lake Superior Iron Co., 7 N. B. R. 376, Fed. Cas. No. 7997; Re Bar

5 Wilkins v. Davis, 15 N. B. R. 60, Fed. Cas. No. 17,664; Re Webb, 16 N. B. R. 258, Fed. Cas. No. 17,317.

6 Re High, 3 N. B. R. 191, Fed. Cas. No. 6473. The law of California agrees with the provision of the present act. Widber v. Superior Court, 94 Cal. 430.