In voluntary cases adjudication will follow as a matter of course provided the petition and schedules are correct in form and substance.

In involuntary cases adjudication will follow if there is no contest. But the bankrupt may contest the fact that he has committed an act of bankruptcy or is insolvent.72 He is entitled to make the contest and to have a jury trial. If no contest is made, adjudication will follow after formal entry of his default. If he does contest, the adjudication of course awaits the outcome.

CREDITORS AND

Sec. 51. FIRST MEETING OF ELECTION OF TRUSTEE. After adjudication, the referee sets a date for the first meeting of creditors, to whom notice is then sent by mail, publication of the notice also being required. At this first meeting a trustee is elected and the bankrupt may be examined.

After the adjudication the referee sets a date usually about two or three weeks ahead, for the first meeting of creditors. To each of these creditors a notice of the meeting is sent at least ten days before the meeting. The notice must also be published once in a newspaper designated by the court.

At the first meeting the trustee is elected. The Act provides for his election as follows:

"The creditors of a bankrupt estate shall, at their first meeting after adjudication or after a vacancy has occurred in the office of trustee or after an estate has been re-opened, or after a composition has been set aside or a discharge revoked, or if there is a vacancy in the

72. See Official Form, No. 6.

office of trustee, appoint one trustee or three trustees of such estate. If the creditors do not appoint a trustee or trustees as herein provided, the court shall do so."

The trustee is elected by the creditors by a majority vote in number and amount of claims. If he cannot be or is not so elected, the referee appoints him.

The creditors must have filed their claims and had them allowed.

The creditors holding security cannot vote except as the amount of their claim may exceed their security. Creditors who have been preferred cannot vote without first surrendering their preference.

Creditors having priority claims cannot usually vote. Creditors need not vote in person. They may vote by attorney in fact, the power of attorney being filed with the claim in the case.

The trustee is required to give bond in an amount to be fixed by the creditors or if not by them then by the Court. There must be two sureties, unless a bonding company is surety.

The law provides a scale of charges for the trustee's compensation.78

Where the trustee under orders of the Court conducts the business of the bankrupt he may be allowed further compensation.

The amounts named in the law are the maximum amounts which the Court may allow. What it actually allows in any case depends upon the circumstances of the case.

Trustees may be (1) individuals who are respectively competent to perform the duties of that office, and

73. Bankr. Act, 1898, Sec. 48d.

reside or have an office in the judicial district within which they are appointed, or (2) corporations authorized by their charters or by-law to act in such capacity and having an office in the judicial district within which they are appointed.

The bankrupt must appear at this first meeting and submit to examination. This matter is discussed in another section.

Sec. 52.

CHAPTER 6.

TITLE OF TRUSTEE.

AS OF WHAT DATE IN RESPECT TO OWNERSHIP BY BANKRUPT. The trustee takes title to property owned by the bankrupt at the time the petition in bankruptcy is filed.

The trustee in bankruptcy takes title to all the property of the bankrupt which might have been seized by his creditors for the payment of his debts, and which was owned by him when the petition in bankruptcy was filed. The line of cleavage in respect to the property which is subject to division among the bankrupt's creditors, passes through the day the petition is filed.74 It is on that day, so to speak, that the bankrupt begins a new life. The property he has theretofore owned goes to his trustee for division among creditors; the property he thereafter acquires becomes his own.

Even if he acquires property prior to the adjudication but after the petition is filed, it belongs to him, and does not pass to the trustee. Creditors can get no advantage of it.75

Title to the property which the bankrupt does take vests as of the time the adjudication takes place.

74. Jones v. Springer, 226 U. S. 148.

75. Sibley v Nason, 196 Mass. 125.

Sec. 53. AS TO NATURE OF PROPERTY. The trustee gets all of the property of the bankrupt, except his exemptions, which has any value as an asset for the payment of his debts.

The law enumerates certain property which shall pass to the trustee in bankruptcy,76 and then states in a general way "property which prior to the filing of the petition he could by any means have transferred or which might have been levied upon and sold under judicial process against him." We may say, then, in a general way, that a trustee takes title to all the property of a bankrupt, except his exemptions, which he could have transferred or which his creditors could have seized.

The trustee gets title not only to the property which the bankrupt has in his possession but all property in the hands of others; and he is clothed by the law with the right to sue as the representative of the bankrupt to enforce the bankrupt's rights, the enforcement of which results in assets for the creditors.

The trustee in some respects gets rights to property which the bankrupt himself does not have, for the reason that the trustee not only represents the bankrupt but also creditors of the bankrupt. Thus, a person has no right for his own benefit to set aside a sale of property which he has fraudulently transferred. But if he becomes a bankrupt his trustee can set it aside. We may now consider in detail some of the property to which the trustee takes title.

76. Bankr. Act, 1898, Sec. 70.