Court Opinion

ID: 8761853
Source: CourtListenerOpinion
Date Created: 2022-11-26 12:09:55.233984+00
Date Added: 2024-06-11T17:01:37.362354
License: Public Domain

QUARRFS, District Judge.
It appeared in evidence that it has been customary for bankrupts to furnish lists of creditors to some certain lawyer before the schedules are filed-. The referee, in his opinion, denounces this practice as reprehensible. I fully concur in that opinion. By applying to the bankruptcy court, the bankrupt voluntarily surrenders all control over his estate, and the same passes to the officers of the law, under the act. Any effort on his part to control the selection of a trustee, or to shape any of the proceedings of the court, must be resented and rebuked. It is a pernicious inter-meddling which cannot be too strongly condemned. Referees should be vigilant to detect, and take all lawful means to prevent, any such interference by the bankrupt in court proceedings. No attorney should be permitted to vote any claim that has come to him through the instrumentality of the bankrupt. The following cases have dealt with this question: In re McGill, 5 Am. Bankr. Rep. 155, 106 Fed. 57, 45 C. C. A. 218; In re Henschel, 5 Am. Bankr. Rep. 25; In re Wooten (D. C.) 118 Fed. 610; In re Lewensohn (D. C.) 98 Fed. 576. It is not professional, but is not unlawful, for lawyers to solicit claims. The ethics and best thought of the profession are opposed to any solicitation of business. But there is uo doubt that the practice is common, and perhaps more prevalent in bankruptcy than in other departments. The habit is not to be commended, but matters of taste or etiquette must be left largely to the good sense of the individual attorney. In re Raw, 13 Am. Bankr. Rep. 650.
If it appears that any disclosure of the contents of the schedules has been made before the same are filed, the presumption arises that the bankrupt is seeking thereby to accomplish some ulterior purpose, and any claims secured through such illicit practice should not he allowed any part in the selection of a trustee. It must be remembered, however, that, by the terms of the act, the creditors are empowered to select a trustee. It is a serious matter to disfranchise creditors and deprive them of rights expressly conferred by the bankruptcy act. I do not think the referee had power to disqualify the 13 creditors who appear to have employed Bouck & Hilton in the regular way, and who had no concern with the bankrupts in the matter, simply because Bouck & Hilton had received certain other claims through *94the instrumentality of the bankrupt. This would in effect be to punish creditors who were innocent in the premises. In re Blue Ridge Packing Co., 11 Am. Bankr. Rep. 36, 125 Fed. 619.
I think the referee could not have done more or less than he did. It appears that the gentleman who was selected as trustee is entirely competent and a man of integrity, and the referee certifies that no injury will accrue to the creditors by reason of his selection. If, in the administration of his office, it should' appear that he was guilty of undue partiality to the bankrupts, he may be removed from office upon a proper showing.
Ror these reasons the ruling of the referee is affirmed.