Court Opinion

ID: 8775015
Source: CourtListenerOpinion
Date Created: 2022-11-26 12:58:04.445916+00
Date Added: 2024-06-11T17:02:29.125532
License: Public Domain

SPEER, District Judge
(orally, after stating the facts as above). Our valuable referee has, I fear, gradually gotten away from the correct practice in cases of composition, and the court has been in some sense particeps criminis in that respect. I have all along had some doubts as to the extent to which the referee has gone; hut this is the first time that objection has been made to the referee doing everything in the case, except merely to hand up the record for the judge’s approval. Now there is a great deal which may not be done, save by the judge, in cases of composition. The referee may generally be regarded as the bankruptcy court, but not to the full extent in cases of composition. The act (Act July 1, 1898, c. 541, § 18, 30 Slat. 5-19 [U. S. Comp. St. 1901, p. Sláíij), it is true, declares that:
“A bankrupt may offer terms of composition to his creditors after, hut not before, he has been examined in open court or at a meeting of ids creditors, and filed in court the schedule of his property and list of his creditors, required to be filed by bankrupts.”
I consider that this “hearing” may be had before the referee, and that the term “in open court” refers to the proceeding before the referee. This is determinable from the association of the legislative purpose there, “noscitur a sociis.” Pie must be “examined in ojien court or at a meeting of his creditors.” Generally a meeting of creditors is held before the referee. Therefore that examination should be had before the referee, and he must have “filed in court the sched*374ule of his property and list .of his creditors, required to be filed by bankrupts.” These schedules the referee ordinarily handles, and up to this point the composition may proceed properly before the referee. The next clause, however, indicates a change of authority:
“An application for the confirmation of a composition may he filed in the court of bankruptcy after, but not before, it has been accepted in writing by a majority in number of all creditors whose claims have been allowed, which number must represent a majority in amount of such claims, and the consideration to be paid by the bankrupt to his creditors, and the money necessary to pay all debts which have priority and the cost of the proceedings, have been deposited in such place as shall be designated by and subject to the order of the judge.”
Now, wherever in the bankruptcy act the term “judge” is used, it means the judge of the District Court, and not the referee in bankruptcy. It follows, therefore, that these requisites, essential to composition made by the act, must be presented to the judge, and the cost of the proceeding and the deposit must be designated by the judge, and subject to the order of the judge. The referee, as I understand, has to a liberal extent taken charge of these matters, and has relieved the judge of a great deal of labor; but certain action of his in this respect has apparently exceeded the limits of his powers fixed by the act. The act further provides:
“The judge shall confirm a composition if satisfied that (1) it is for the best interest of the creditors; (2) that bankrupt has not been guilty of any of the acts or failed to perform any of the duties which would be a bar to his discharge; and (3) the offer and its acceptance are in good faith and have not been made or procured except as herein provided, or by any means, promises or acts herein forbidden.”
And when we turn to the forms we -will also perceive that it is the judge who must act. The judge must fix a date for the hearing, and that is a hearing before him. The judge must require the money to be deposited, and designate what sum shall be deposited, and it must be deposited subject to his orders.
I do not think, therefore, that in this case the applicants for the confirmation have done any more than they ought to have done before the referee. They must now make a deposit in accordance with the order of the judge, and they must ask a date for a hearing, and I think the rules require 10 days’ notice must be given to creditors before they are called upon to object.