The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1872-03-29
B A N X r U PTcY.
Important Question ffecting the Ceiling or Dis
posing Of Creditors Claims.

Yesterday, In the matter of Theodore H. vetter-
lein and Bernhard I. vetterlen, Judge Blatchford,
In the United States District Court, rendered an
important decision. In which ne holds that II is
contrary to the Bankruptcy law for creditors to sell
their claims to trustee and receive compensation
for voting In favor OF resolution appointing The
trustee. AS the point Is one that has not specially
heretofore engaged the attention OF the Court buG
Is OF considerable interest to the mercantile com.
munity, we give In full Judge Batcnford's
DECISION.
The forty third section Of the Bankruptcy act, IN
providing that the Court snail confirm q resolution
passed under that section, II 1t shall appear to 1t
interests OF the creditors viii be promoted thereby
refers to the Interest OF all the creditors and It's
to 70 Ss OF s
do not vote in favor OF the resolu.
,Sn the VIII Of e. In value Of
to control 10 respect to the claims OF those who do
not vote IN favor or the resolution unless the Court
that the interests oil the latter Will be promote
by carrying the resolution INTO effect. The twenty.
second section OF the act provides tnat creditor to
have nus demand allowed must make deposition
setting fortn among other things that no agreement
has been made by MIN 10
SELL OR DISPOSE OF HIS CLAIM,
or to receive any consideration whereby any acrion
on his part in tine Proceedings under the act snail DE
that no claim shall be allowed uness all the state
mens set forth In the deposition snail appear TO be
true. The twenty ninth section Of the act provides
granted, be valid, II the bankrupt, or any
person In his behalf. has influenced The
ings by any pecunlary consideration or obligation.
In the present case 1t appears that ever one OF the
csed.0rs VINO mas s'sneu VIZ aes oS aPpong
ment TO sell his claim 10 the trustee and to receive
consideration Tor voting III favor VI the resolution
Eacn has already received from the assignee a dlvl-
dend OF sixteen per cent. By an agreement signed
by each the person named as trustee Is, as soon
three -iourths IN value the creatOrs snail have
signed the agreement, to deposit In the hands OF
the trustee enough money TO pay To each
sgner nineteen per cent more and aMor,
OF such sleners for such person as trus-
tee; and when such person Is appointed
trustee and the assignee has conveyed all the es-
to the trustee and been discharged the assignee
is TO pay to the signers Inc nineteen per cent out
OF the deposit; and such PAYNE nt II TO operate as
an assignment OF the CLAIMS OF the signers to such
person as the trustee shall name. BY a cOnlem-
bankrupts certain real estate conveyed by the
OF the bankrupts and the vile or one OF them 10 u
person named by Inc trustee Is TO be sold and us
proceeds and other moneys In the hands OF such
person to be paid to the trustee; and the claims
OF the said sgners are to remain as security to the
trustee tor said moneys advanced ny INN until the
same and the sum OF
TWELVE THOUSAND FIVE HUNDRED DOLLARS AS A
COMPENSATION
for his services trustee shall be reimbursed TO
him. and after the bankruptcy proceedings are
superseded and tue trustee Is paid such advances
and compensation ne Is to convey to the bankrupis
all that remains of the estate Certainly this Court
can give no sanction to sucn an arrangement AS
THE BANKRUPrs THEMSELVES
be appointed trustees. person VINO Is to hold
the estate under sucn private trust Is not proper
person to be appointed trustee The forty third
section provides That the trustee shall proceed
and inspection OF the committee OF the creditors
for the equal benefit OF all the creditors This rus
lee has obligated himself by private agreement.
10 wind up the estate for his own benefit and
that the SHINING creditors to the exclusion Of the
non.signing creditors. Moreover, Dut single per-
son Is named as committee, and he Is one who
sIVnau the agreement referred to. and Will
thereby TO be creditor tue moment the trus-
paid. A trustee who, after MS appointment, should
enter into such obligations and arrangements as
those shown 10 have been entered into In advance
COURT OF EQUITY.
The interests OF the n0n-slgning creditors are
deliberately sacrificed BY the arrangements
entered into. Under them the trustee has obligated
himself to use the estate 70 reimburse
to himself his advances and to pay ms
conversation OF $l2 500, aud to turn over
the rest to the bankrupts The money put INTO the
hands OF the assignee 1t Is expressly agreed shall he
used TO pay the creditors who sign. No others can
receive the nineteen per cent Those who nave not
signed appeal to the Court not 70 sanction sucn q
proceeding. The proposed trustee resides In Pha-
delphia and II the estate should pass INTO his hands
ne would hold IL without having given security and
free from the control OF any committee or or this
Court. The application to confirm the resolution Is
Denied with costs TO the opposing creditors, TO be
paid by the assignee out OF tie estate.