SECTION FORTY-NINE

ACCOUNTS AND PAPERS OF TRUSTEES

§ 49. Accounts and Papers of Trustees.— a The accounts and papers of trustees shall be open to the inspection of officers and all parties in interest.

Analogous provisions: In U. S.: R. S., § 5062-b.

In Eng. Act of 1914, § 86; Generally to the General Rules, as Rules 345, 346.

In Can.: Act of 1919, § 23. Cross-references: To the law:

ing papers, § 29-a.

Punishment of trustee for secreting or destroy

Trustee to keep accounts of receipts and disbursements, § 47-a (6); to lay before creditors detailed statements of administration of estate, 847-a (7); to make final reports and file final accounts, § 47-a (8); to report to court as to condition of estate, § 47-a (10).

To the General Orders: Report as to exemptions, XVII.

Failure of trustee to file report or statement required by the act; order to show cause, XVII.

I. ACCOUNTS AND PAPERS OF TRUSTEES

That the accounts and papers of trustees shall always be open to the inspection of officers and all parties in interest, seems to follow from § 47-a.1 This section is, therefore, of little importance. "Accounts and papers" includes the books of the bankrupt in the possession of the trustee; in fact, any documents whether originated by him or received by him from the bankrupt. The penalties for secreting documents and for refusing to permit inspection are discussed elsewhere.2

1. See pp. 663, 664, ante.

2. See under § 29.

[1081]

SECTION FIFTY

BONDS OF REFEREES AND TRUSTEES

§ 50. Bonds of Referees and Trustees.- a Referees, before assuming the duties of their offices, and within such time as the district courts of the United States having jurisdiction shall prescribe, shall respectively qualify by entering into bond to the United States in such sum as shall be fixed by such courts, not to exceed five thousand dollars, with such sureties as shall be approved by such courts, conditioned for the faithful performance of their official duties.

b Trustees, before entering upon the performance of their official duties, and within ten days after their appointment, or within such further time, not to exceed five days, as the court may permit, shall respectively qualify by entering into bond to the United States, with such sureties as shall be approved by the courts, conditioned for the faithful performance of their official duties.

c The creditors of a bankrupt estate, at their first meeting after the adjudication, or after a vacancy has occurred in the office of trustee, or after an estate has been reopened, or after a composition has been set aside or a discharge revoked, if there is a vacancy in the office of trustee, shall fix the amount of the bond of the trustee; they may at any time increase the amount of the bond. If the creditors do not fix the amount of the bond of the trustee as herein provided the court shall do so.

d The court shall require evidence as to the actual value of the property of sureties.

e There shall be at least two sureties upon each bond.

ƒ The actual value of the property of the sureties, over and above their liabilities and exemptions, on each bond shall equal at least the amount of such bond.

g Corporations organized for the purpose of becoming sureties upon bonds, or authorized by law to do so, may be accepted as sureties upon the bonds of referees and trustees whenever the courts are satisfied that the rights of all parties in interest will be thereby amply protected.

h Bonds of referees, trustees, and designated depositories shall be filed of record in the office of the clerk of the court and may be sued upon in the name of the United States for the use of any person injured by a breach of their conditions.

i Trustees shall not be liable, personally or on their bonds, to the United States, for any penalties or forfeitures incurred by the bankrupts under this act, of whose estates they are respectively trustees.

j Joint trustees may give joint or several bonds.

k If any referee or trustee shall fail to give bond, as herein provided and within the time limited, he shall be deemed to have declined his appointment, and such failure shall create a vacancy in his office.

7 Suits upon referees' bonds shall not be brought subsequent to two years after the alleged breach of the bond.

m Suits upon trustees' bonds shall not be brought subsequent to two years after the estate has been closed.

Analogous provisions: In U. S.: As to registers bonds, Act of 1867, § 3, R. S., § 4995; As to assignees' bonds, Act of 1867, § 13, R. S., § 5036; Act of 1841, § 9.

In Eng. As to trustees, Act of 1883, § 21 (2); Act of 1914, § 19 (2);
General Rule 353.

In Can.: As to trustees, Act of 1919, § 14 (4).

Cross-references: To the law: Certified copy of order approving bond evidence

of vesting title in trustee, § 21-e.

Bond not required on appeals or writs of error by trustee, § 25-c.

To the General Order: Notice to trustee of his appointment to state penal sum of bond, XVI.

To Official Forms: Bond of referee No. 17; bond of trustee, No. 25; order approving trustee's bond, No. 26.

To Supplementary Forms: (Vol. III, post) Bond of trustee, with justification of sureties, No. 228; another form of order approving trustee's bond, No. 229.

SYNOPSIS OF SECTION

I. Bonds of Referees and Trustees, 1084.

a. Of referees, 1084,

b. Of trustees, 1084.

c. Sureties on bonds; forms, 1084.

d. Filing bond, 1085.

e. Suits on bonds, 1085.

f. Effect of failure to give bond, 1086.

I. BONDS OF REFEREES AND TRUSTEES

a. Of referees. The referee, though, a judicial officer, is required to give a bond. So was the assignee under the former law. The amount, the sufficiency of the sureties, and the time within which the bond must be filed are usually fixed in the order of appointment. The condition is "the faithful performance of their official duties." The amount cannot be larger than five thousand dollars. A referee cannot act as such until he has filed his bond. Form No. 17 should be used. A bond conditioned for the faithful performance of the duties of the office of referee covers moneys collected in the form of illegal fees.2

b. Of trustees.3- A trustee, too, must give a bond. This was not necessarily so under the former law; the judge might order the assignee to give a bond and, on the request in writing of a creditor, was required so to order. Trustees' bonds must be given within ten days after appointment, or within five days additional if permitted by the court. This seems mandatory, but the practice of extending the time still further when no objection is made is quite general. Where the question of the trustee's failure to give a bond is raised in a State court, the presumption is that the trustee duly qualified by complying with the provisions of the statute relating to a bond." The condition is the same as that in the referee's bond. But the creditors, not the court, fix the amount of a trustee's bond. This should be done at the first meeting, immediately after the appointment of the trustee. If the creditors fail so to do, the judge or referee fixes it. The amount is specified in the notice of appointment. Upon the approval of the bond by the referee the trustee takes title to the bankrupt's property, and the order of approval when duly certified and recorded is conclusive evidence of the vesting of the title."

c. Sureties on bonds; forms.- Where bonds are given by individuals, there must be two sureties; if by a bonding company, there need be but one. The sureties, if individuals, must be worth “above

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1. Act of 1867, § 3, R. S., § 4495. 2. United States v. Ward (C. C. A., 8th Cir.), 43 Am. B. R. 711, 257 Fed. 372.

3. See also Am. B. R. Dig., § 321. 4. Act of 1867, § 13, R. S., § 5036. Compare In re Sands, Fed. Cas. 12,301.

5. Breckons v. Snyder (a. Sup. Ct.), 15 Am. B. R. 112, 211 Pa. St. 176.

6. See General Order XVI and Form

No. 24. See also Supplementary
Forms No. 228, Vol. III, post.

7. Anderson v. Stayton State Bank (Ore. Sup. Ct.), 38 Am. B. R. 4, 159 Pac. 1033, citing text.

Cross-reference.- See Bankr. Act,

§ 21-e.

8. In re Kalter (Ref., Pa.), 2 Am. B. R. 590. Compare Act of August 13, 1894.

their liabilities and exemptions," the penal sum mentioned in the bond. As to this, the "court shall require evidence." In actual practice, this is often done by adding affidavits of justification to the bond. This is, of course, not required of bonding companies in good standing. Joint trustees should give joint and several bonds. The form of the bond is prescribed.10 But, as has been suggested elsewhere, Form No. 26, the order approving the bond, should usually be modified by inserting certain dates, that when a certified copy is recorded in a local registry office parties interested in titles passing from a bankrupt to his trustee may have the same information that would be given had the bankrupt actually executed a deed." The practice of giving surety company bonds is now quite general. They are sufficient if the company is within the terms of subsection g. Sureties on the bond of a trustee are liable for negligence or malfeasance of the principal in the performance of acts which are done virtute officii.12 The liability of a surety extends to the expenditure of such funds of the bankrupt estate as becomes necessary as the immediate result of embezzlement by the trustee, but not including the premium of the bond of the new trustee.13

d. Filing bond.- Referees' and trustees' bonds must be filed and recorded in the office of the clerk. A trustee's bond is usually approved by the referee, whose duty it is forthwith to transmit the bond and the order of approval to the clerk.

e. Suits on bonds. Though the bond runs to the United States, a suit may be brought thereon "in the name of the United States for the use of any person injured." 14 Leave of court is not necessary for the bringing of such an action in the name of the United States."

9. See form in "Supplementary Forms," post.

10. Form No. 25.

11. See § 21, ante. See also requirement of § 47-c which was added by the amendatory act of 1903. See Supplementary Forms No. 229, Vol. III post.

12. Liability for mere negligence.Since the bond provides only for the faithful discharge by the principal of his official duties, the condition of the bond is considered to have been broken by the mere negligence without corruption of the principal in the performance of a ministerial duty, which performance involves the exercise of discretion, and where the duty which has not been faithfully discharged was

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owing to the person injured, such person may sue upon the bond. United States v. Perkins (C. C. A., 8th Cir.), 48 Am. B. R. 507, 280 Fed. 546.

13. Matter of Kajita (D. C., Hawaii), 13 Am. B. R. 19, 2 U. S. D. C., Hawaii, 194.

14. United States v. Ward (C. C. A., 8th Cir.), 43 Am. B. R. 711, 257 Fed. 352; United States v. Perkins (C. C. A., 8th Cir.), 48 Am. B. R. 507, 280 Fed. 546.

15. Alexander v. Union Surety & Guar. Co. (N. Y. Sup. Ct.), 11 Am. B. R. 32, 89 N. Y. App. Div. 3; United States v. Ward (C. C. A., 8th Cir.), 43 Am. B. R. 711, 257 Fed. 352.