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accepted it in writing an application to confirm the composition may be filed. Even then the composition may be rejected if the judge be convinced that it is not for the best interests of the creditors.

A construction which permits the bankrupt to select a time when but few creditors have proved and then to present his terms only to such creditors as he believes to be friendly to his interests, keeping the general creditors in the dark until he has obtained a majority of the few who have proved, is contrary to the intent and spirit of the law. It would enable a few active and friendly creditors on the spot so to manipulate the proceedings that the necessary majority could be secured while distant creditors were wholly ignorant of the proposed settlement. That the Supreme Court entertain views similar to the foregoing may be inferred from form No. 60 (18 Sup. Ct. xlvi.), adopted pursuant to general order 38 (Id. x.).

Without pursuing the subject further the court is constrained to deny the application to confirm this composition. The reasons for this conclusion may be briefly stated as follows:

First. It is not approved by a majority in number and amount of creditors whose claims have been allowed.

Second. No notice was given to the general creditors of the bankrupt.

Third. The composition was not presented to all the creditors whose claims were allowed.

Fourth. At the present time the consideration deposited is not in form to be distributed.

Fifth. The amount deposited as costs is inadequate.
Motion denied.

In re LEVY

110 Fed. 744

(District Court, W. D. Pennsylvania. July, 1901)

A majority in number and amount of bankrupt's creditors signed an acceptance of the offer of composition, whereby it was agreed to pay 25 cents on the dollar. Subsequently a number of the creditors who had agreed to accept such composition came into court, and desired to file a paper, asking leave to withdraw their acceptance, and that the application for the composition be dismissed; stating that when they signed the acceptance they were not aware of all the facts in the case.

BUFFINGTON, District Judge (orally). These creditors voluntarily came into court, accepted the proposed composition, and asked the court to act in the matter, and confirm the composition. They procured the court to act, and they are now estopped from interfering with the further conduct of the case in the matter of this composition. Had they alleged fraud or misrepresentation in the procuring of their signatures to the acceptance, the case would be different. They are presumed to have had the same knowledge when they signed as they have now. The application for their withdrawal will be refused, and the court will proceed to pass upon the merits of the proposed composition. If it is not for the best interests of the creditors, it can be shown on the hearing before the referee.

MCCORMICK v. SOLINSKY

152 Fed. 984, 82 C. C. A. 134

(Circuit Court of Appeals, Fifth Circuit. April 15, 1907) PER CURIAM. On the case made, the contract by the Citizens' National Bank of Beaumont, under which it advanced the money to pay the composition to creditors in the bankruptcy of E. N. Brown, was illegal, because a part of the consideration thereof was that the bank's debt against the bankrupt should be paid in full, notwithstanding the composition.

Solinsky was a party to the illegal contract, and therein. agreed as a part of the inducement that he would return to the bank the amounts received by him under the composition as one of the creditors of the bankrupt, Brown. The present suit, being one to recover from Solinsky the amounts received by him under the composition, is clearly a suit to recover moneys knowingly advanced under an illegal contract.

The judgment of the Circuit Court is therefore affirmed.

In re GRIFFIN

180 Fed. 792

(District Court, N. D. Georgia. May 27, 1910)

NEWMAN, District Judge. The above bankrupt, M. M. Griffin, has applied to the court for the confirmation of a composition, which he has offered to his creditors and which has been accepted by a majority in number and amount. Objection

is made to the confirmation of the composition by the SilveySmith Hat Company for the following reason:

"Because said bankrupt obtained the property on credit from them upon a materially false statement in writing, made to them for the purpose of obtaining such property on credit; such statement being made on June 28, 1909, and being, as therein shown, made 'for the purpose of obtaining credit,' and standing 'good as to each purchase now and hereafter, unless there should be a material change, in which case [I or we] will notify them before making purchases from them.' Copy of said statement is hereto attached and made a part hereof, marked 'Exhibit A.' On such statement these objectors sold said bankrupt goods from time to time, and at the time the petition in bankruptcy was filed said bankrupt was and is indebted to these objectors on account of such purchases, as shown by statement of account hereto attached and made a part hereof, marked 'Exhibit B,' to which reference is prayed as often as may be necessary. Said statement was materially false, in that said bankrupt represented therein one house and lot located in Manchester, Georgia, of the value of $1,000, as among his assets. Said house and lot was at the time the property of said bankrupt's wife, and is still her property."

It appears, from the written statement of the bankrupt made to the objectors, which is in evidence, that among other assets shown by the statement, which amounted in all to $3,450, he claimed to have a house and lot located in Manchester, Ga., where he was doing business, of the value of $1,000. He now acknowledges that he did not own this house and lot, but that it belonged to his wife. That this was a material statement is clear, and that it was untrue is now equally clear.

§ 14 of the bankrupt act of July 1, 1898 (30 Stat. 550, c. 541 [U. S. Comp. St. 1901, p. 3427]), as amended in 1903 (Act Feb. 5, 1903, c. 487, § 4, 32 Stat. 797 [U. S. Comp. St. Supp. 1909, p. 1310]), makes one of the grounds of objection to discharge:

"(3) Obtained property on credit from any person upon a material false statement, in writing, made to such person for the purpose of obtaining such property on credit."

§ 12 of the act provides:

"The judge shall confirm the composition if satisfied that (2) the bankrupt has not been guilty of any of the acts, or failed to perform any of the duties, which would be a bar to his discharge."

It may be that to sustain the objection will prevent the creditors from getting as much as they would if the composition was accepted, but this cannot be considered in passing upon this objection. As Judge J. B. McPherson, in the District Court for the Eastern District of Pennsylvania, in a case very much like this (In re Godwin, 122 Fed. 111), said:

"It is very likely that the creditors may lose by the defeat of the proposed composition; but this consideration cannot be allowed to influence the court in deciding whether the bankrupt has been 'guilty of any of the acts, or failed to perform any of the duties, which would be a bar to his discharge.' Bankr. Act July 1, 1898, c. 541, § 12, cl. 'd' (U. S. Comp. St. 1901, p. 3427). I agree with the learned referee that the testimony establishes the fact satisfactorily that the bankrupt has committed one of the offenses specified in § 14, cl. 'b.' He has 'with fraudulent intent to conceal his true financial condition and in contemplation of bankruptcy destroyed, concealed or failed to keep books of account or records from which his true condition might be ascertained.' This being so, I think the act requires me to refuse approval of the composition, without regard to the question whether the creditors would be benefited thereby; and the fact that only one creditor is actively objecting, while a large majority is in favor of taking what the bankrupt offers, is of no importance in the present inquiry."

The objection must be sustained, and the confirmation of the composition refused.

CHAPTER V

DISCHARGE

In re CHANDLER

138 Fed. 637, 71 C. C. A. 87

(Circuit Court of Appeals, Seventh Circuit. April 11, 1905)

On October 27, 1902, the bankrupt was discharged from his debts by the court below. On October 23, 1903, a petition was filed by William H. Rhodes, John Gray, and Edward G. Pauling to revoke the discharge upon certain grounds therein stated. The only allegation in the petition with respect to the character of the petitioners is "that they are creditors of Frank R. Chandler, who has heretofore been adjudicated a bankrupt." To the petition a demurrer was interposed, and sustained by the District Court, and the petition dismissed. The proceeding here is to review and revise that ruling of the District Court.

HUMPHREY, District Judge. § 146 of the bankruptcy act of July 1, 1898, c. 541, 30 Stat. 550, as amended by Act Feb. 5, 1903, c. 487, 32 Stat. 797 [U. S. Comp. St. Supp. 1903, p. 411], provides that objections to discharge of bankrupts may be made by "parties in interest." The averment in the petition that the objectors are creditors is not such a statement as shows to the court that the petitioners are "parties in interest," within the meaning of the law. The petition does not make such a showing that the court can say that the rights of the petitioners were affected by the discharge. No facts are averred which would justify the legal conclusion that the petitioners are "parties in interest." It is not averred that they were creditors at the time of the bankruptcy. The character of their debt is not shown. It is not averred that their debt was provable in bankruptcy or was proved in the proceedings. The debt or debts they represent, from all that appears from the petition, may have been created since the discharge, or they may have become purchasers of the debts which were discharged, without right to attack the dis

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