In re Phelps
In re Phelps
Opinion of the Court
The register certifies for decision by the district judge, the following questions, as having arisen in the course of the proceedings before him, to wit:
First. “Have creditors who have proved debts against one of the bankrupt partners, a right to participate in the electing the as-
I do not agree with the register. The only provision to be found in the whole bankrupt act [of 1SC7 (14 Stat 517)] which relates directly to the question propounded is to be found in the 36th section. It is as follows: “That where two or more persons who are partners in trade shall be adjudged bankrupt * * * the joint stock and property of the copartnership and also the separate estate of each of the partners shall be taken * * *; and all the creditors of the company and the separate creditors of each partner shall be allowed to prove their respective debts; and the assignee shall be chosen by the creditors of the company.” Whilst the statute is explicit that the separate estate of each bankrupt partner shall pass to the assignee in bankruptcy, it is equally explicit, that it is the creditors of the company only, who shall participate in choosing him. It can hardly be necessary to consider the reason on which a provision so express is founded; but it may not be inappropriate to say that every creditor of a firm is also a creditor of each partner, but that a creditor of one member of a firm is not a creditor of the firm, nor has he any interest in the property of a bankrupt partnership. His interest generally in property which his debtor owns in common with partners, is in the share or part that may be left to his debtor after paying all partnership debts and all claims due the copart-ners. Of course, when the partnership is insolvent, this share will be nothing. It follows that if a separate creditor of a partner were allowed to participate in choosing an assignee who should have the management of partnership property, he would have a voice in the management of property in which he has no interest whatever; but if the election of the assignee who takes both the firm and separate property of each member, be confined to the firm creditors, no one has a voice who has not an interest in the whole property which passes, though some may be excluded who may have an interest in part.
Second. “When a letter of attorney is given to several persons jointly, can the powers therein given be exercised by one of the attorneys alone?” The register thinks not, and I agree with him. But the register should understand that a letter of attorney in the form prescribed by general orders, form No. 14, or form No. 26 is not a joint authority, and that a power conferred by such a letter may be exercised by any one of the persons to whom it is addressed.
Third. “How long should a meeting advertised for a certain hour, be considered as open for transacting the business for which such meeting is held?” The meeting here referred to, as the context shows, is the meeting contemplated by the 12th and 13th sections of the bankrupt act, and by the warrant, form No. 6, called to choose an as-signee. The register thinks that “this meeting should be considered open during the business hours of the day on which the meeting is advertised to be held.”
I do not agree with the register. I think the meeting should be organized at the hour designated in the notice, or as soon thereafter as practicable, and should be “kept open” until a choice be made, or it is ascertained that no choice can be made. The terms of the warrant, form No. 6, require that the creditors shall “meet” to choose one or more assignees, not merely on a given day, but at a given hour. Section 12 of the act provides that at this “meeting” “one of the registers of the court shall preside.” Section 13 provides “that the creditors shall at the first meeting, held after due notice from the messenger, in presence of a register designated by the court, choose one or more assignees of the estate of the debtor; the choice to be made by the greater part in value and number of the creditors who have proved their debts.” Taking the two sections together, it seems to me that the manner of choosing or electing an assignee by the creditors of a bankrupt is not, as the register seems to suppose, similar to that observed in electing civil officers at our state elections. The creditors do not go to the place designated, and at or after the hour fixed in the warrant, separately deposit their ballots or votes in presence of the register;, but they actually “meet” and so far organize themselves into a meeting as to have a presiding officer, to wit: the register designated, and when this meeting is organized, at, or after, the hour named in the notice (it cannot be organized before), the creditors in the meeting, if they be the greater part in value and number, proceed to choose an assignee. The manner of proceeding is not prescribed by the statute, and may therefore be determined by the creditors themselves. It should, however, conform to the general practice of meetings; and form No. 15, prescribed by general order’s, seems to contemplate that each creditor shall vote, and that his name, residence, and amount of debt shall be recorded. If, on the first vote, no choice be made, by reason of a greater part in number and value failing to concur, a second, third, or any number of ballots, may be had until the required concurrence be obtained. If no such concurrence be had and the meeting adjourn sine die, the contingency happens which authorizes the judge, or, if there be no opposing interest, the register, to appoint one or more assignees.
Whether this meeting, after organizing and failing to make choice of an assignee, can adjourn to another day and then pro-
It may be that, under the bankrupt law, creditors may prove their debts before the first meeting, and elsewhere than at a meeting; still they are not required to do so, and certainly they should be allowed to do at the meeting what both the statute and warrant, form 6, authorize them to do there, that is, “prove their debts.” The necessity for allowing an adjournment of the first meeting, to give opportunity to creditors present to prove their debts under the bankruptcy law, is almost as great as if it required proof of all debts to be made at a meeting. What can or should be done if the creditors persist in adjourning from day to day without choosing an assignee, I need not now say, since it is hardly a practical question. The interest of creditors so obviously requires the prompt choosing of an assignee, that it is not to be supposed the choice will be unreasonably delayed. Should such a contingency arise and be properly made known to the court, some appropriate remedy may doubtless be found.
I am not sure that more has not been said than is necessary to answer the questions propounded by the register, and I am not certain that what I have said in respect to the right of the first meeting “to adjourn.” conforms to the interpretation of the statute. My apology for what I have written is that the interrogatory of the register is very comprehensive and seems to refer to the whole manner of conducting the first meeting, and that the conclusion which I have announced seems consonant to reason and to conform to the interpretation put by the supreme court of Massachusetts on a provision in their insolvency law quite similar to that in the bankrupt law which we have been considering. Rice v. Wallace, 7 Metc. [Mass.] 431-434.
I have had little or no opportunity to ascertain what is the actual practice elsewhere in respect to this matter of adjourning the first meeting. If the practice has not yet been established in any of the district courts, it has no doubt been settled both in England and in Massachusetts, and, as our
The clerk will send a copy of this opinion to the register, John H. Ward, Esq.
Reference
- Full Case Name
- In re PHELPS
- Status
- Published