Ross v. Saunders

• Decision Date: 10 January 1901
• Docket Number: 345.
• Citation: 105 F. 915
• Parties: ROSS v. SAUNDERS.
• Court: U.S. Court of Appeals — First Circuit

105 F. 915

ROSS v. SAUNDERS.

No. 345.

United States Court of Appeals, First Circuit.

January 10, 1901

Wm Henri Irish, for appellant.

Calvin P. Sampson (Charles W. Bartlett and Eldridge R. Anderson, on the brief), for appellee.

Before COLT and PUTNAM, Circuit Judges, and WEBB, District Judge.

PUTNAM Circuit Judge.

The appellant in this case was duly adjudicated a bankrupt in accordance with the act approved on July 1, 1898. After adjudication, and after a discharge had been granted him pursuant to section 14, pars. 'a,' 'b,' he offered a composition, having in all respects complied with the terms of the act. Thereupon the bankrupt applied to the court to confirm the composition.

We do not in this case consider the effect of the fact that a discharge had been granted before the proceedings in composition were commenced. The court refused to confirm the composition. There is enough in the record from which we may infer that it was not satisfied that the composition was for the best interests of the creditors. No creditor appeared formally in opposition. The trustee, as trustee, appeared and opposed the confirmation, and was permitted to do so although he was not made a party to the record. He offered in evidence an informal paper, signed by certain creditors who had assented to the composition, withdrawing their assent and this paper was taken under consideration by the court. The court refused to confirm the composition, notwithstanding no creditor appeared in opposition thereto. All these matters are laid by the appellant as irregularities; and he also asks us to consider the case on its merits, although it is evident that we have before us only a very small portion of the facts which were within the control of the district court.

We are met at the threshold, however, with a difficulty arising in respect to the parties to this appeal. The appeal was taken against the trustee, and the citation issued to him, and to no other person. There is no law authorizing any person to become a party to this proceeding, except the bankrupt and his creditors. The statute directs notice to the latter, and to no other person; and general order 32 (32 C.C.A. xxxi., 89 F. xiii.) provides for their appearance, and for no other. There is nothing in the statute or in the general orders which authorized the trustee, as trustee, to interfere in this proceeding, beyond furnishing such information concerning the estate under his charge, and the administration thereof, as might be requested, which duty is expressly imposed on him by law. Neither is there anything which justifies the trustee in defending this appeal at the expense of the estate, or in his capacity as trustee. The English statutes in bankruptcy provide expressly that a trustee may appeal from an order of confirmation. Under those statutes the official receiver becomes the ad interim trustee, and stands quasi trustee until the trustee proper is appointed. Therefore he has the same relation to a question of composition which the trustee has, but he is not expressly authorized by the statutes to appeal. Consequently, in Ex parte Reed, 17 Q.B.Div. 244, 258, an official receiver was somewhat sharply told that he ought not to appear on the hearing of an appeal of this character unless the court required him to do so. In that particular case it was held that he ought not to have appeared, and his costs were refused, although the composition was set aside. This is in accordance with the ordinary rule that a stakeholder stands equal between the parties concerned, and should not interfere in litigation unless required to do so by the court which has jurisdiction over him.

These matters, of course, ought not, of themselves, to bar the appellant if the trustee had been, in substance, made a party to the record; but they lead up to the proposition that in a matter of an application for a composition the bankrupt has no right of appeal. Whether or not the composition shall be confirmed depends not merely on the question whether the bankrupt has conformed to the statute in all respects, or on whether creditors have appeared in opposition, but also on whether the judge in bankruptcy, acting in his capacity as general administrator or general trustee, is satisfied that it is for the best interests of the creditors that it should be. On this particular matter there may be no opportunity for an issue, or for parties to an issue, because the judge in bankruptcy may be required, as general administrator or general trustee, to protect the interests of all concerned, including not only those creditors who may not be represented, but even those who are.

Although the English statutes confer broader powers on the court with reference to confirming compositions than our statute, and authorize it to look further than to the mere questions whether the bankrupt has complied with the terms of the statute, and whether the composition is for the best interests of the creditors, yet the expressions of the judges administering those statutes throw light on the nature of this system, which was adopted by the United States from England, and therefore presumably adopted with the same spirit as it possessed in its place of origin, except so far as our statute has otherwise expressly provided. In Re Burr (1892) 2...