Falter v. Reinhard

106 F. 57, 11 Ohio F. Dec. 487, 1901 U.S. App. LEXIS 3949
CourtCourt of Appeals for the Sixth Circuit
DecidedJanuary 8, 1901
DocketNo. 911
StatusPublished
Cited by35 cases

This text of 106 F. 57 (Falter v. Reinhard) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Falter v. Reinhard, 106 F. 57, 11 Ohio F. Dec. 487, 1901 U.S. App. LEXIS 3949 (6th Cir. 1901).

Opinion

DAY, Circuit Judge

(after stating the facts as above). Section 44 of the bankruptcy act provides that the creditors shall appoint one or more trustees at their first meeting after the adjudication. The act further provides (section 55, subd. “b”) that at the first meet ing of creditors the judge or referee shall preside, and before pro ceeding with the other business may allow or disallow the claims of creditors there present, and may publicly examine the bankrupi, or cause him to be examined, at the instance of any creditor. The allowance of claims determines which creditors may participate in the proceedings of the first meeting, including the choice of a trustee. Bankr. Act, § 1, cl. 9, provides “creditor” shall include any one who owns a demand or claim provable in bankruptcy, and may include his duly-authorized agent or proxy. Other duties than those specified intended to be devolved upon the judge or referee at the meeting are not defined in the statute, and we are left to ascertain the extent and scope of his duties in view of the express provisions of the act and the manifest purpose in clothing the judge or referee with the powers named. Clause 15, § 2, c. 2, Banla*. Act, provides that the court can make such orders, issue such process, and enter such judgments, in addition to those specifically provided for, as may be necessary for the enforcement of the provisions of the act. The case under consideration had been referred to the referee to take such further proceedings as are required by law. Rule 12 of the general orders -in bankruptcy (32 C. C. A. xvi., 89 Fed. vii.) requires that all such proceedings, except such as are required to be had before the judge, shall be had before the referee. Section 38 of the act provides that referees are invested, subject always to review by the judge, with jurisdiction to perform such part of4 Uie duties, except as to questions arising out of the applications of bankrupts for compositions or discharges, as are by the act conferred on courts of bankruptcy of their respective districts, except as in the act otherwise provided. Section 2 of the a,ct confers powers on courts of bankruptcy, pursuant to which powers the said courts perform the duties invested in them with jurisdiction to make such orders, issue such process, and enter such judgments, in addition to those specifically provided for. as may be necessary for the enforcement of the provisions of the act. In General Orders, rule 13 (32 C. C. A. xvii., 89 Fed. vii.), it is provided that the appoint[62]*62ment of a trustee by the creditors shall be subject to approval or disapproval by the referee or judge. It is to be observed that either the judge or the referee is to preside'at the first meeting of creditors. It is to be presumed that, when the referee acts instead of the judge, his duties are judicial in their nature, and he is to pass upon such questions of that character as may arise in carrying forward the objects and purposes of the meeting. Loveland, Bankr. § 106; Coll. Bankr. p. 268. The exact question made in this review is, may the referee, in the exercise of the power given by the statute, determine the qualification and right to vote of one holding the proxy of creditors to the extent of inquiring as to whether such proxy is the duly-authorized power of the creditor? The authorities, both under the present act and the act of 1867, are united in maintaining the proposition that the bankrupt has no right to a voice in the choice of an assignee or trustee. Such officer is the representative of the creditors. He is often required to act in opposition to the bankrupt. He must investigate conveyances alleged to have been made in violation of the bankrupt law. He must see to it that the estate is administered to the end that creditors may be benefited, and as large a sum as practicable realized for the payment of their claims. Interference by the bankrupt — the voting of claims in his interest or at his direction — has always been discountenanced by the courts, and held to invalidate a choice of trustee thus secured. In re Wetmore, Fed. Cas. No. 17;466, and In re Bliss, Fed. Cas. No. 1,543, cases decided under the act of 1867; In re Lewensohn (D. C.) 98 Fed. 576, decided under the present act. In the last case, Judge Brown, speaking upon this subject, says: “The beneficiaries are not the bankrupt, but the creditors. For that reason the law gives to them alone the choice of trustee. The bankrupt has no part in it, because presumably he has no interest in it.”

It may be taken, then, as an established proposition, upon reason and authority, that interference by the bankrupt, certainly when such as to control the election, - will avoid the choice thereby attained, as it is the policy of the law to secure a trustee wrho is the selection of the creditors, and not the bankrupt. Under the facts found by the referee, there can be no question that the proxies held by Neydon were procured by the bankrupt to be voted for a trustee of the bankrupt’s choice. The findings disclose that the creditors were solicited to come to the banking house of the bankrupt, where the attorney and the agent of the bankrupt were present assisting in fhe preparation of proofs of debt and proxies, with the declared purpose of voting for and electing the choice of the bankrupt for trustee. To permit such an election to stand would be in fact, as was said by Judge Blatchford in Re Bliss, supra, “to permit the bankrupt to 'elect the assignee, which is against the policy o’f the law.” Such selection, in the exercise of the power conferred by rule 13 (32 C. C. A. xvii., 89 Fed. vii.), the referee could not approve. In view of his powen of revision, must the referee act upon it alone, or may he hear and determine an objection when the power of attorney thus obtained is sought to be used as the authority for voting for a trustee? It is urged upon the one hand that such is [63]*63llie sole authority of the referee over the election, and that creditors whose claims are duly proven may vote for whomsoever they please, subject to the final approval or disapproval of the referee or court'. Under the act; of 1807 the holdings do not seem to have been uniform, bat it is to be remembered that, under the present act, subject to review by the court, the referee ⅛ given broader powers than were conferred upon the register under the act of 1867. Under the latter act: the register could make no decision, but must certify disputed questions to the court for determination. Under that act authority is not wanting to support the proposition that the register should not receive votes under proxies obtained by the bankrupt with a view to the selection of an assignee; of his choice. In lie Wetmore, above cited, Judge Brown, now Mr. Justice Brown of the supreme court, held, when there was good reason to suspect I hat the assignee liad been chosen in the interest of I he bankrupt, confirmation should be refused, and in directing a new election, after setting aside such a" selection, instructed the register to receive no votes at such election cast by the bankrupt or his solicitor under powers of attorney from other creditors. In the case of In re Noble, Fed. Cas. No. 10.282, Mr. Justice Blatchford, then district judge, held that the register had no power, without a special order of the court, to inquire into the right of creditors to vote, where it had been charged that the votes had been influenced by the bankrupt. The same judge, however, in the case of In re Holmes, Fed. Cas. No. 6,632, held, speaking of the powers of the register presiding at a meeting to consider a proposition for a composition made by the bankrupt:

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Bluebook (online)
106 F. 57, 11 Ohio F. Dec. 487, 1901 U.S. App. LEXIS 3949, Counsel Stack Legal Research, https://law.counselstack.com/opinion/falter-v-reinhard-ca6-1901.