106

b. Practice. The difference between an account and a report should be noted; an account should deal only in dollars and cents;105 a report should be a running summary of the details of administration. The trustee's report that there are no assets seems also to be called a "return." The word "statement" is also used of a report where there are no assets. Whatever these papers be called, they should conform as far as possible to the official forms, should always be verified by the trustee, and, if reciting disbursements, usually be accompanied by vouchers. They should be filed with the referee, if the case has been referred. They should also be audited by the referee.107 This seems, however, a precautionary provision, rather than a requirement. Accounts are usually submitted to creditors at meetings called for that purpose,1 ,108 and, if passed by them, are approved.

c. Supplemental report. Though not required, safety seems to suggest that the trustee file a supplemental report after the distribution is complete. This should show every allowance or expense paid and every individual disbursement; and vouchers, signed by the creditors and others and numbered, if possible, to correspond to the check numbers, or attached to the returned checks, should be filed at the same time. Not until such report is filed should the trustee be discharged.100

IV. DISTRIBUTION

a. In general.- Disbursements must be made by check or draft as directed in subdivision 4. Dividends are to be paid within ten days after they are declared as directed in subdivision 9. Some authority, must be shown for all disbursemnets, whether in dividends or otherwise.110

105. Forms Nos. 49 and 50.

106. Form No. 48.

107. General Order XVII; In re Baginsky (Ref., La.), 2 Am. B. R. 243.

108. See Bankr. Act, § 58-a (6). 109. Compare, however, to the contrary, Form No. 51.

110. See under section 62 of this work.

In Supplementary Forms," post, will be found a final order of distribution, including a dividend sheet, the use of which, instead of Form No. 51, is suggested. See Vol. III post. In re Rude (D. C., Ky.), 4 Am. B. R.

319, 101 Fed. 805; In re Hoyt & Mitchell (D. C., N. Car.), 11 Am. B. R. 784, 127 Fed. 968.

The district court for the Eastern District of North Carolina has adopted and distributed Rule 10 as follows: "All funds belonging to bankrupt estates must be deposited in the designated depository (section 47, cl. 3, Bankr. Act), and disbursed only by check or draft drawn on such depository in accordance with dividend sheet prepared by referee and approved by the judge (section 47, cl. 4). Such checks or drafts must be countersigned

b. Expenses of administration.-What a trustee may be allowed for expenses of administration is considered elsewhere.111

c. Payment of priorities. So also of his duty as to those persons entitled by the law to priority of payment.

112

d. Dividends. Likewise of dividends to creditors who have proved their claims.113 The only provision here is that dividends must be paid within ten days after they are declared. After ten days have elapsed from the time a dividend is declared by the referee, and no party has attempted to have the order for the payment of the dividend set aside, the trustee may be directed to proceed regardless of the correctness of the dividend sheet.114

,, 117

e. Method of payment.- Subdivision 4 and General Order XXIX should be read together. No moneys can be properly disbursed by a trustee save "by check or draft on the depository." The provisions of the statute and General Order should be strictly followed,115 and where payments have been made without compliance therewith they have been disallowed.116 Thus, if deposited in the district court, money can be withdrawn only by a check or warrant, signed by the clerk and countersigned by the judge, or by "a referee designated for that purpose. The quoted words are usually availed of in composition cases.118 While, if the money is deposited by the trustee, the referee must countersign each check. Payments should not be made upon orders drawn by the referee.119 The requirements of the General Order as to stub' entries, numbering and the like, should be observed. Checks should always run to and be by the trustee mailed or delivered to the creditors, unless the power of attorney specifically authorizes the attorneys to receive and receipt therefor." In disbursing dividends, a combination check and receipt, the latter as provided by general order 29 of the Supreme Court. Depositories and trustees not observing this rule make themselves liable on their bond and to attachment for contempt."

111. See under section 62 of this work.

112. See under section 64 of this work.

113. See under section 65 of this work.

114. Matter of Stringer (D. C., N. Y.), 40 Am. B. R. 474, 244 Fed. 629.

115. In re Cobb (D. C., N. Car.), 7 Am. B. R. 202, 112 Fed. 655..

116. In re Hoyt & Mitchell (D. C., N. Car.), 11 Am. B. R. 784, 127 Fed.

120

968. And see In re Hoyt (D. C., N. Car.), 9 Am. B. R. 574, 119 Fed. 987. 117. General Order XXIX.

118. Compare under section 12 of this work.

119. In re Cobb (D. C., N. Car.), 7 Am. B. R. 202, 112 Fed. 655.

120. See Form No. 20; Form No. 21 is not enough.

Authority of attorney.-An attorney, who has had his appearance on behalf of a creditor entered on the record of the referee and has prepared and had allowed the creditor's proof of debt, is the "duly authorized" attor. ney of such creditor for the purpose of collecting the money due, to the extent

attached to the check but marked off from it by a perforated line, and containing a statement that the check will not be paid on presentation unless the receipt is filled out and signed, has been found convenient.121 Trustees will also find it time saving to recite on the face of the check the name and number of the estate, whether it is a first, second, or final dividend, and the rate per cent.122 To this end, dividend checks, if numerous, should be specially printed; if not, the use of rubber stamps containing the suggested information will be found inexpensive and effective. But checks should not be signed or countersigned by such a stamp.

V. MISCELLANEOUS DUTIES

a. Setting apart exemptions.- While exemption rights depend upon State statutes, the manner of claiming such exemptions and of setting apart and awarding them is regulated by the bankruptcy act. Subdivision 11 of this section requires the trustee to set apart and report the value of the bankrupt's exemptions. In this connection section six should also be consulted, where the question is discussed more in detail.124 Preliminary to this, the trustee must "set

apart the bankrupt's exemptions and report on the items and estimated value thereof." He should thereupon surrender possession of such property to the bankrupt.125 This should be done within twenty days after the trustee receives notice of his appointment.126 Thus, the trustee acts in a quasi-judicial capacity in the first instance, and, if there is no exception taken, the referee usually approves. But any creditor may take exception to the trustee's action.127 If exception is taken, the practice is defined in General Order XVII, which requires it to be taken within twenty days after filing the report and the referee may not extend such time.128 This whole subject was also regulated by a general order under the former law.129

b. Furnishing information.- The trustee's duty here is similar to the referee's.130 He is also liable to the same penalties.131 This duty is akin to that of frequent accountings, the latter seeming for the whole body of creditors, the former for any individual who may request. Any person interested in the bankrupt estate has a right to an inspection of the accounts and papers of the trustee,132 and to any information in respect to the estate which the trustee can impart. It is not thought, however, that, in answering inquiries by mail, the trustee can use the "official business" envelope, as can the referee. Cases under the former law are still in point."

133

125. In re Soper (D. C., Nebr.), 22 Am. B. R. 868, 173 Fed. 116. The trustee takes no title to exempt property and it is his duty to set the same apart as soon as practicable. In re Goodman (C. C. A., 5th Cir.), 23 Am. B. R. 504, 174 Fed. 644; Matter of Vonhee (D. C., Wash.), 38 Am. B. R. 799, 238 Fed. 422; Matter of Shrimer (D. C., N. Car.), 36 Am. B. R. 404, 228 Fed. 794.

Order of State court to turn over exemptions of officers of that court; contempt.- A trustee, who, prior to an order made in a State court directing him to turn over a bankrupt's exemption to a receiver in the State court, has turned the exemption over to the bankrupt, is not guilty of contempt. Garlington v. Coker (Sup. Ct., Ga.), 32 Am. B. R. 416, 141 Ga. 678, 81 S. E. 1107.

126. General Order XVII, Form No. 47.

134

127. For forms, see Supplementary Forms, No. 231, Vol. III, post. As to the right of a trustee to except to his own formal administrative act setting apart an exemption claimed by the bankrupt, see In re Rice (D. C., Pa.), 21 Am. B. R. 202, 164 Fed. 514. As to right of bankrupt to except to the trustee's action, see discussion under section 6 of this work.

128. Matter of Krecun (C. C. A., 7th Cir.), 36 Am. B. R. 172, 229 Fed. 711. 129. Act of 1867, General Order XIX. 130. Bankr. Act, § 39-a (3).

131. Bankr. Act, § 29-c (3). See also § 29-c.

132. Bankr. Act, § 49, post.

133. Matter of Petersen (Ref., Minn.), 10 Am. B. R. 355. See also Petition of Moulthrop (C. C. A., 6th Cir.), 41 Am. B. R. 654, 249 Fed. 468.

134. In re Perkins, Fed. Cas. 10,982; In re Blaisdell, Fed. Cas. 1,488.

c. Other duties. The trustee also has other miscellaneous duties, as, for instance, the examination and correction of proofs of debt,135 attendance on examinations of the bankrupt, and to assist the creditors and the referee generally in the realization and distribution of

assets.

VI. CONCURRENCE OF TWO OF THREE TRUSTEES

Three trustees are rarely appointed. If they are, a majority must always concur. This seems a variance from the rule that a trust to two or more is vested in all and that all must, therefore, join in exercising it. The law being mandatory in requiring either one or three trustees,136 it seems doubtful whether, on the death of one, the survivors can do anything until the vacancy is filled in the regular Way 137

VII. TRUSTEE TO RECORD CERTIFIED COPY OF ADJUDICATION

The subsection was added in 1903. Section 21-e seems to have been overlooked. There can be no doubt, however, as to the meaning of the new subsection. The trustee is bound within the time limited to file, which doubtless means also to record, in all counties where the bankrupt has real estate, a certified copy of the decree of adjudication. It is unfortunate that this filing is not in words given the effect of actual notice. Thus the recording of the certified copy of the order approving the trustee's bond is still essential.138 Careful trustees will see that both these copies are recorded. This new duty is put only on trustees in proceedings begun after February 5, 1903.1

139

135. Compare under section 57 of this work.

136. Bankr. Act, § 44.

137. Id. But see Bankr. Act, § 46. 138. See under section 21 of this

work. But see article in The Lawyer and Banker, v. 15, p. 238.

139. See " Supplementary Section to Amendatory Act," post.