The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1904-02-07
REFEREE FERGUSON
MAKES A DECREE
It VIII Have important Bearing
on Bankruptcy Petitions
ANSWER TO THE RULE NlSI
In Case of Lee coItan the Answer Was
lnrufflolent-ar swer of Resrond-
emit Also rfficlent-AlIas':i
Bankruptcy Nuisance.
ANSWER TO THE RULE NlSI

In the bankruptcy. case OF Lee Cotton.
Gen. F. s. Ferguson, referee, has rem
dered decidedly interesting decree which
will have an important bearing on the
filing of bankruptcy petitions for small
amounts of money. There have been many
protests against this practice, and efforts
have been made to have the law amended
so as to rid it of this alleged nuisance.
The decree which fully explains itself. is
as follows:
In the district court of the United States
for the northern district of Alabama,
southern dlvision.-In bankruptcy at
Birmingham.-In the matter of b. q.
Morris, bankrupt. Ferguson, referee:
This matter came on to be heard on the
| petition of the bankrupt for a rule nisi
directed to one Lee Cotton to show cause
why he should not withdraw an alleged
| assignment of wages executed by the
| bankrupt in his favor and filed by him
| with the A. G. S. r. r. company, the
employer of the bankrupt. and the order
| thereon; and the answer of the respond
| emit and the replication of the bankrupt;
| and a motion of Cotton to dismiss the
| bankrupts petition on the ground of
| failure to pay the filing fees in two former
petitions and ON demurrer of the bank
rupt to said motion; and motion of re-
| respondent to dismiss the rule on the
| ground that the court was without juris-
| diction to decide the controversy between
the bankrupt and inovant and because the
| bankrupt, not having filed his claim the
| same being argued and understood by
| the court, 1t is considered by the COURT
| Ana,uer 10 Ine,Iffieiant
| /. That the answer to the rule nisi, al
| leging that the bankrupt had no such
special interest in the money mentioned
| that allowed him to maintain his petition
| for rule, he having failed to claim the
| money scheduled as exempt, is insuffi-
i cient. While 1t is true that the title to
| the property vests I'm the trustee his
| election and the bankrupt after his adj
| judcaton, has no title. yet he has a
| special interest in the property that gives
| him a standing in court
| The bankrupt law strictly enjoins on
| the bankrupt the duty to conserve the
bankrupt estate and make that estate go
as far as possible to discharge its debts.
The legal obligation on the part of the
| bankrupt to pay his debts is discharged
| by his adjudication. yet there Is a moral
obligation on his part to see that no I'M
| just debts are paid, that all his assets
| are marshalled and that the creditors
receive as large a proportion of their
| claims as is possible.
Wages an Asset.
The wages held by the respondents
assignment is an asset of the bankrupt
estate and II respondent is of the opinion
that the same will be drawn and squan-
dered by the bankrupt before the APP
p At,atv,, of tr.t ufa lie nrfN vi
to apply for the appointment of a re-
ceiver. II the bankrupt in this case did
| not have the right to enioin the respond
ent from the collection of these wages,
| then a merchant. who had filed volun-
| tary petition in bankruptcy would not
| have the right to prevent creditor from
| procuring over other creditors a prefer
| ence before the election of a trustee.
| and in the event no receiver was appoint
ed before the date of the first meeting of
| creditors the bankrupt would be power
| less to protect his estate from any raid
| made on its creditors.
Second. 1t is further considered by the
court that the answer of the respond
| emit setting up and relying on an alleged
assignment. executed by the bankrupt
| Is likewise insufficient. This assignment
| shows on Its face that it passes title to
| only portion of the wages of the bank
rupt This is against the policy Of the
| law both state and national. prohibiting
the splitting the causes of action
Kansas City Memphis and Birmingham
railroad VS. Robertson, 10. So. Rep. 4S2.
No More Than an Order.
| This purported assignment Is in legal
| effect. no more than an order or check
against the fund of the bankrupt In the
hands of the railroad company, and was
revocable at will by the bankrupt before
acceptance by the drawee The adjudica-
| ton In bankruptcy was revocation IN
| law, and the money being In the hands
| of the railroad company at such time
| should therefore be paid into the registry
| of the court
| The alleged assignment was void on Its
! face because 1t failed to comply with
| the state statute, regulating the business
| of money lending in Jefferson county. In
| that the paper, evidencing the loan. fall-
ed to state the rate of interest charged;
| and that the same was recorded In the
probate office within five days of its
execution For the reason the case at
bar comes fully within the influence of
| the doctrine of in re, Beach, recently de-
| cded by the district court for the North
ern district of Alabama.
Authority Not Expressly Given.
Third 1t is considered by the court
motion to dismiss the original petition on
| the ground that the filing fees In two
| prior cases had not been paid. be and
| the same Is hereby over-ruled. While
| the authority to dismiss petition for
| failure on the part of the bankrupt to
pay filing fees in former petitions is not
! expressly given in the act. yet the court
| has the inherent power to prevent par
ties from trifling with its process. and
| If the bankrupt was. what may be termed
! a chronic bankrupt. who at short inter-
| wales filed voluntary petitions simply for
the purpose of Kidding himself of press
ing claims, and never prosecuting such
petitions to final discharge, or paying
the fees of officers. then in such event,
the court should put stop to such ac-
| lions.
| The court officers when they accept
| their positions, take them cum onere. and
when a bankrupt is in truth and fact
| pauper he should not be denied his
| final discahrge because he cannot pay
| for the same; but such bankrupt shou
| not be allowed to file pauper petition
| whenever his creditors insist upon pay
ment and such practice will not be toler-
| ated In this court.
/ 4. 1t is further considered by the court
that the answer of the banrupt to the
motion to dismiss the pending petition on
the ground that two former petitions had
not been paid for, be and the same is
hereby over-ruled. 1t appears that the