In re McFerren

• Decision Date: 29 August 1933
• Docket Number: No. 2219.,2219.
• Citation: 5 F. Supp. 180
• Parties: In re McFERREN et al.
• Court: U.S. District Court — Eastern District of Illinois

5 F. Supp. 180

In re McFERREN et al.

No. 2219.

District Court, E. D. Illinois.

August 29, 1933.

Dyer & Dyer and Robert Rodman, all of Hoopeston, Ill., for petitioners.

Gunn, Penwell & Lindley, of Danville, Ill., for William McFerren and others.

LINDLEY, District Judge.

This proceeding was instituted by the debtors for administration of their estates under the recent amendments to the Bankruptcy Act (see 11 USCA § 201 et seq.), by virtue of which without adjudication they entrust the administration of their estates to the court in accordance with the terms of the act.

Upon motion of present petitioners, a custodian was appointed, who has duly qualified. The petitioners now present to the court their petition asking that Referee Walter J. Grant be disqualified and a special referee appointed.

This petition is verified by creditors of the debtors. It states that they have given the matter due consideration, and that they have, after considering the same, arrived at the conclusion that it is their honest belief that they cannot have a fair and impartial trial of the matters and things involved in this proceeding before the said referee. No facts upon which said conclusion is based are presented.

Under the Bankruptcy Law, section 39 (b), 11 USCA § 67 (b), referees may not act in cases in which they are directly or indirectly interested. They may not hold any office of profit or emolument under the laws of the United States or of any state, with certain exceptions not here material. They must not be related by consanguinity or affinity within the third decree, as determined by the common law, to any district judge or circuit judge of the jurisdiction in which they live. They may not practice in bankruptcy nor purchase bankrupt assets. They should not be related by blood or affinity to any of the parties involved in the controversy.

The statute as interpreted by the courts has not put further inhibition upon the action of the referee, nor has it further specifically defined any cause for disqualification. Obviously what should amount to disqualification depends upon the particular facts of each case, and presents a question for the exercise of judicial discretion by the court or the referee.

Perhaps the best guide to what should be good cause for disqualification of referees is to be found in the federal statute providing for disqualification of judges and the judicial interpretation thereof by the courts. The statute mentioned, 28 USCA § 25, provides that whenever a party to any action or procedure shall make and file an affidavit that the judge before whom the action is to be tried has a personal bias or prejudice either against him or in favor of any opposite party to the suit, the judge shall proceed no further therein. This affidavit, however, shall state the facts and the reasons for the belief that such bias or prejudice exists, and no party shall file more than one such affidavit. The affidavit shall not be filed unless accompanied by a certificate of counsel of record that such affidavit and application are made in good faith. Under this statute Mr. Justice Lurton, in Ex Parte American Steel Barrel Co., 230 U. S. 35, 33 S. Ct. 1007, 1010, 57 L. Ed. 1379, said:

"The basis of the disqualification is that `personal bias or prejudice' exists, by reason of which the judge is unable to impartially exercise his functions in the particular case. It is a provision obviously not applicable save in those rare instances in which the affiant is able to state facts...