Year: 1874

In the United States Circuit Court satur.
day-Chief-Justice Waite and Judge FL. L.
Bond presiding-the important bankruptcy
case Of John f. Taliaferro was decided.


In this case the petitioners had filed their
bill in Orange Circuit Court TO subject the
lands of John F. Taliaierro to the payment
Of their judgments that were liens there
The suit had proceeded so fur that an &C.
count Of liens had been taken and confirmed,
and an order entered for the sale of Talia-
ferro's land. Before the order could be exc.
cuted, Taiaferro became bankrupt on his
own petition. His assignee, J.. l.. Lewis,
filed his petition asking the District Court
to decree sale Of the bankrupt's lands free
Of liens, transferring the liens to the fund in
court, if it should turn out that there were
any liens. The usual order was made di-
recting the creditors to be convened at the
Office Of the register on certain day to
show cause against the sale. Notice was
given by publication in newspaper and by
summons sent through the mail.


The register on the 10th of February, 1874,
reported 10 the District Court that, in his
opinion, no sufficient cause had been shown
why the assignee should not sell the land.
Thercupon the District Court entered an or
der directing the assignee to sell the lands
free of liens. Certain lien-creditors. some of
whom had proved their debts in bankruptcy,
aud one Of whom had not proved, iilcd their
petition invoking the supervisory Jurisdiction
of the Circuit Court TO set aside the order of
sale made February 10Th, 1874. The petit
TONERS alleged that they aud other lieu-cre-
dtors had on the day appointed appeared ut
the registers office and filed written ohjec-
tions to the proposed sale. They asked that
the order of the District Court be reversed
on the ground that that court had no author
ity TO make such an order on the Informal and
summary proceedings that had been had in
the case that there would be no surplus TO
come into the hands Of the assignee for the
benefit of the general creditors; and that even
if there should be any afterplying liens there
was no difficulty in the assignee's asserting
his rights IN the suit in the State court.


The assignee answered the petition, stat.
ing.that it was true that some objections had
been made to the sale, but that as he was in
formed NO written objections had been filed
at the meeting Of creditors at the registers
office he had just sold the land for over
$1,000, which he considered fair price, and
he thought the interest of the creditors
would be promoted by retaining the fund
in the bankrupt court.


Chief-Justice Waite rendered the decision
Of the court. Commenting on the facts Of
the case he said that the judgmen.-creditors
could not be made parties and have their
rights adjudicated upon the Informal and
summary proceedings had in this case; that
the District Court should have made no
order without having the information requi-
site to satisfy the court of the propriety of
a sale; that when the order Of sale
was made it was evident that the
District Court had no accurate information
about the condition Of the property or the
amount of liens upon it; that it was the
duty of the assignee 10 have Informed the
court; that if the proceedings in the bank
rupt court did not furnish the necessary in
formation he should have extended his in
yestigations to the State court; that so far
from putting the court IN possession of the
proper information, the assignee seemed
rather to have avoided giving the informa-
ton. and had been swift to get decree to
sell the land without putting the court in
possession of the requisite facts; that the
court, without knowing OF the situation of
the property or the amount Of liens Oh it,
ought not to have made an order Of sale.


The Court further held that the assignee
must have some regard for the rights OF lien
creditors, and that it must see that their
rights were not sacrificed; that any lien
creditor, whether be has proved bis claim or
not, or any party specially interested, may
invoke the supervisory jurisdiction of the
Circuit Court that the assignee is peculiar.
ly the representative of the general credit
ors, and that it rather appears in this case
that there can be no surplus to which he
would be entitled for their benefit; but
that if there should be any surplus there is
no difficulty in his asserting his rights in
the Circuit Court of Orange.


The decree of the District Court was re-
versed.


The case was argued on Thursday by
John Hunter, Jr., for the petitioners, and
L. l.. Lewis and Judge Alfred Morton for
the assignee and general creditors.