800 ences. FIFTY-SEVENTH CONGRESS. SESS. II. CH. 487. 1903. months after the date of the recording or registering of the transfer, if by law such recording or registering is required.' Voidable prefer." If a bankrupt shall have given a preference, and the person receiving it, or to be benefited thereby, or his agent acting therein, shall have had reasonable cause to believe that it was intended thereby to give a preference, it shall be voidable by the trustee, and he may Jurisdiction for re- recover the property or its value from such person. And, for the purpose of such recovery, any court of bankruptcy, as hereinbefore defined, and any State court which would have had jurisdiction if bankruptcy had not intervened, shall have concurrent jurisdiction.” covery. Debts which have priority Expenses of recov. ening property transferred added. Dividends. Vol. 30, p. 563. Declaration of. SEC. 14. That clause two of subdivision b of section sixty-four of said Act be, and the same is hereby, amended so as to read as follows: "(2) the filing fees paid by creditors in involuntary cases, and, where property of the bankrupt, transferred or concealed by him either before or after the filing of the petition, shall have been recovered for the benefit of the estate of the bankrupt by the efforts and at the expense of one or more creditors, the reasonable expenses of such recovery." SEC. 15. That subdivision b of section sixty-five be, and the same is hereby, amended so as to read as follows: "The first dividend shall be declared within thirty days after the adjudication, if the money of the estate in excess of the amount necessary to pay the debts which have priority and such claims as have not been, but probably will be, allowed equals five per centum or more of such allowed claims. Dividends subsequent to the first shall be declared upon like terms as the first and as often as the amount shall equal ten per centum or more and upon closing the estate. Dividends may be declared oftener and in smaller proportions if the judge shall so order: Don on first Provided, That the first dividend shall not include more than fifty per centum of the money of the estate in excess of the amount necessary to pay the debts which have priority and such claims as probably will be allowed: And provided further, That the final dividend shall not be declared within three months after the first dividend shall be declared." dividend. Final dividend. Liens and titles. SEC. 16. That subdivision e of section sixty-seven and subdivision e of section seventy of said Act be, and the same are hereby, amended by adding at the end of each such subdivision the words: "For the purpose of such recovery any court of bankruptcy as hereinbefore defined, and any State court which would have had jurisdiction if bankruptcy had not intervened, shall have concurrent jurisdiction." SEC. 17. That said Act is also amended by adding thereto a new section, section seventy-one, to read as follows: "SEC. 71. That the clerks of the several district courts of the United States shall prepare and keep in their respective offices complete and convenient indexes of all petitions and discharges in bankruptcy heretofore or hereafter filed in the said courts, and shall, when requested so to do, issue certificates of search certifying as to whether or not any such petitions or discharges have been filed; and said clerks shall be entitled to receive for such certificates the same fees as now allowed by law for certificates as to judgments in said courts: Provided, That said bankruptcy indexes and dockets shall at all times be open to inspection and examination by all persons or corporations without any fee or charge therefor." SEC. 18. That said Act is also amended by adding thereto a new section as follows: "SEC. 72. That neither the referee nor the trustee shall in any form or guise receive, nor shall the court allow them, any other or further compensation for their services than that expressly authorized and prescribed in this Act." FIFTY-SEVENTH CONGRESS. SESS. II. Cнs. 487,512. 1903. SEC. 19. That the provisions of this amendatory Act shall not apply to bankruptcy cases pending when this Act takes effect, but such cases shall be adjudicated and disposed of conformably to the provisions of the said Act of July first, eighteen hundred and ninety-eight. Approved, February 5, 1903. 57TH CONGRESS, HOUSE OF REPRESENTATIVES. S REPORT 1st Session. } No. 1698. AMENDING THE BANKRUPTCY LAW. APRIL 21, 1902.—Referred to the House Calendar and ordered to be printed. Mr. RAY, from the Committee on the Judiciary, submitted the following REPORT. [To accompany H. R. 13679.] The Committee on the Judiciary, to which was referred the bill (H. R. 13679) amending the bankruptcy law, has carefully considered the same and reports the bill back with the recommendation that it pass. There have been laid before the committee resolutions and communications from more than 20,000 manufacturing and producing industries, merchants, wholesale and retail; credit men's and other business associations, lawyers, judges, and business men generally, representing wholesale and retail dealers, emphatically approving the law, asking its retention, and approving the amendments suggested by this bill. Of all communications received on the subject less than 10 per cent are opposed to the bankruptcy law, and these in the main place their opposition on the ground of the defects in the law sought to be remedied and which will be remedied if these amendments are adopted. These communications are not the result of concerted action for the retention of the law, but are the result of a desire on the part of the Judiciary Committee to fully ascertain the sentiment of the country on the question of the retention or repeal of the law. Near the close of the Fifty-sixth Congress the chairman of the Committee on the Judiciary sent out something like 15,000 inquiries indiscriminately throughout the United States addressed to all business interests, wholesale and retail, merchants, lawyers, judges, etc., asking their opinion of the law and the advisability of its retention and also asking their approval or disapproval of the amendments proposed, and which amendments are in substance those reported by the committee. There was no selection except to direct inquiries to the leading business houses, wholesale and retail, and the leading lawyers and business men of the country. It is conclusively proved that the business interests and the people of the United States approve and demand the retention of the 2 AMENDING THE BANKRUPTCY LAW. bankruptcy law and also desire these amendments which are in the interest of honest dealing. The amendments proposed are not numer ous, but are such as experience has demonstrated to be essential. The first amendment will make the law more uniform and equitable by providing that where insolvency is the question at issue assets claimed to be exempt shall not be counted in ascertaining the aggre gate of the debtor's property. The second amendment simply authorizes what is now done by the courts; that is, it authorizes the court to allow additional compensa tion when the business of a bankrupt is conducted for a limited period by the receiver, marshal, or trustee in the interest of the creditors. The next amendment makes the equivalent acts of a general assignment by an insolvent person, a voluntary accounting of an insolvent partnership by action brought by one of the partners, and an applica tion for a receivership of an insolvent corporation each acts of bankruptcy. This makes the law more uniform and will reduce many of the inequities now practiced on creditors. The next amendment simply provides that those corporations which can now be adjudged involuntary bankrupts may become voluntary bankrupts on the petition of an officer or stockholder duly authorized at a meeting called for that purpose by a vote of the majority in amount of the total stock of the corporation, and adds mining corporations to those now covered by the law. As a safeguard and to prevent injustice it is provided by a further amendment that the bankruptcy of a corporation shall not release its officers, directors, or stockholders as such from any liability under the laws of a State or Territory or of the United States. That is, if these officers or any of them by wrongdoing or violating the law of the State have incurred any liability they are not to be discharged from such obligations or liabilities. The next amendment, section 5 of the bill, makes definite and certain the purpose of the law as it was framed, to wit. That the words in contemplation of bankruptcy" mean a present or future state of insolvency and purpose to take advantage of the law. The amend ment is necessary because the courts have held that the words "in contemplation of bankruptcy" mean with a view to the actual filing of a petition, and therefore many men have been discharged who ought not to have been, because it was impossible to prove that they committed the fraudulent acts mentioned at a time when they had in mind the filing of a petition in bankruptcy, although they did have in mind a present or future state of insolvency and committed the acts for the purpose of defrauding their creditors. This amendment also provides four additional grounds for refusing a discharge in bankruptcy: (1) Obtaining property on credit on materially false statements; (2) making a fraudulent transfer of property; (3) having been granted or denied a discharge in bankruptcy within six years, and (4) having refused to obey the lawful orders of the court or having refused to answer material questions approved by the court. No person who has been guilty of any of these fraudulent acts should be discharged, and a person who has refused to obey the order of the court ought not to be discharged, and it is quite clear that no person should have the benefit of the act as a voluntary bankrupt oftener than once in six years. Some men in some of the large AMENDING THE BANKRUPTCY LAW. 8 cities have made bankruptcy a profession, and it is proposed by the amendment to stamp out these practices. The next amendiment provides that liabilities for frauds, etc., as described in the act shall not be released by the discharge. As the law now is these liabilities must have been reduced to judginent or else the bankrupt is discharged. This amendment is in the interest of justice and honest dealing and honest conduct. This amendment further provides that a discharge in bankruptcy shall not release the bankrupt from liability for alimony due or to become due the wife, or for maintenance or support of wife or child, or for seduction of an unmarried female, or for criminal conversation. It seems to the committee, and this is the universal sentiment, that the bankrupt ought not to be discharged from liabilities of this description. The next amendment shortens the time for joining issue in involuntary cases. The expeditious disposition of an estate in bankruptcy is what all creditors desire, and this amendment is in the interest of all parties and simply prevents undue delay. The next amendment permits the wife to be examined as a witness as to business transactions to which she is or has been a party. In some of the States the wife may now be examined the same as any other witness. In other States she can not be, and this amendment, carefully guarded by a proviso, simply allows her examination as to business transactions to which she has been a party. To this there can be no reasonable objection. The next amendment is in the interest of the speedy settlement of bankrupt estates. It has been held that actions to recover property belonging to the estate and fraudulently withheld or disposed of must be brought in the local courts. In great cities this works a practical denial of justice, as the calendars of the State courts are many times years behind, and it is conceded that in the city of New York a case can not be reached for trial in less than from two to three years after the action is brought, unless for some reason it is preferred. The next amendment gives a larger fee to the clerk. It is conceded on all hands that the present fee is so small that the clerk can not afford to do the work required of him. The increase given by this amendment is very small, indeed, and can not be reasonably objected to. The same remarks apply to the next amendment. The next amendment, section 12 of the bill, is the most important of all. Under the holding of the Supreme Court of the United States in Pirie v. Chicago Title and Trust Company (182 U. S., 438), that section 60, subdivision A, is a definition of a preference, it followed that payments made in good faith and other bona fide transactions after actual insolvency, though in due course of trade and business and without knowledge or reasonable cause to believe that a preference was intended, must be, under section 57 G, surrendered before a creditor who received such a payment could prove the balance of his debt. This was never intended by the framers of the law, and it works obvious injustice and is the source of 99 per cent of the objections to the law. The amendments proposed by section 12 of the bill and the other sections remedy all this. The next amendment puts the four months' clause in subdivision A instead of subdivision B, and where it ought to be. As the law now stands, a preferential mortgage may be given and the creditor preferred, 79-956-77 pt. 1 - 13 |