(9) Confirm or reject arrangements or plans proposed under this Act, set aside confirmations of arrangements or wage-earner plans and reinstate the proceedings and cases;

As Amended by the Chandler Act (1938). The Act of 1898 provided: "confirm or reject compositions between debtors and their creditors, and set aside compositions and reinstate the cases." The reference to "arrangements," "plans," and "wage earner plans" is necessary to conform with other changes.

(10) Consider records, findings, and orders certified to the judges by referees, and confirm, modify, or reverse such findings and orders, or return such records with instructions for further proceedings;

As Amended by the Chandler Act (1938). The original clause, which contemplated certification of questions arising during the administration of the estate by referees to judges, for rulings, stated: "consider and confirm, modify or overrule, or return with instructions for further proceedings, records and findings certified to them by referees." In conjunction with an added subsection, 39c, which details review procedure, the revised form codifies and clarifies the universal practice that the judge review only orders of the referee brought before him pursuant to former G. O. 27.

(11) Determine all claims of bankrupts to their exemptions;

(12) Discharge or refuse to discharge bankrupts and set aside discharges and reinstate the cases;

(13) Enforce obedience by persons to all lawful orders, by fine or imprisonment or fine and imprisonment;

"Persons," as defined, is again used instead of "bankrupts, officers, and other persons." Cf. (4).

(14) Extradite bankrupts from their respective districts to other districts;

(15) Make such orders, issue such process, and enter such judgments, in addition to those specifically provided for, as may be necessary for the enforcement of the provisions of this Act: Provided, however, That an injunction to restrain a court may be issued by the judge only;

The proviso was added by the Chandler Act (1938), adopting part of G. O. XII, which provided that the judge should decide applications for an injunction to stay proceedings of a court or officer of the United States or of a state. Previously a difference between the definition of "courts" and "courts of bankruptcy" created ambiguity. Section 2(15), not section 11(a), governs issuance of injunctions.

By the weight of authority, referees might enjoin parties to a suit, but were prohibited under former G. O. XII(3) from enjoining the court itself. See 5 Remington, Bankruptcy (4th Ed., 1936), § 2516.

(16) Punish persons for contempts committed before referees;

(17) Approve the appointment of trustees by creditors or appoint trustees when creditors fail so to do; and, upon complaints of creditors or upon their own motion, remove for cause receivers or trustees upon hearing after notice;

As Amended by the Chandler Act (1938). This authorizes the courts on their own motion to remove trustees. The language replaced provided for removal only at the instance of the creditors, even though the court often was in a better position to observe maladministration.

(18) Tax costs and render judgments therefor against the unsuccessful party, against the successful party for cause, in part against each of the parties, and against estates, in proceedings under this Act;

There is

As Amended by the Chandler Act (1938). "Whenever they are allowed by law," which followed "costs," was eliminated as meaningless. no law regulating costs in bankruptcy proceedings.

(19) Transfer cases to other courts of bankruptcy;

(20) Exercise ancillary jurisdiction over persons or property within their respective territorial limits in aid of a receiver or trustee appointed in any bankruptcy proceedings pending in any other court of bankruptcy: Provided, however, That the jurisdiction of the ancillary court over a bankrupt's property which it takes into its custody shall not extend beyond preserving such property and, where necessary, conducting the business of the bankrupt, and reducing the property to money, paying therefrom such liens as the court shall find valid and the expenses of ancillary administration, and transmitting the property or its proceeds to the court of primary jurisdiction; and

The proviso was added by the Chandler Act (1938). Confusion formerly existed concerning the method and extent of ancillary administration. 5 Remington, Bankruptcy (4th Ed., 1936), § 2213.

See

(21) Require receivers or trustees appointed in proceedings not under this Act, assignees for the benefit of creditors, and agents authorized to take possession of or to liquidate a person's property to deliver the property in their possession or under their control to the receiver or trustee appointed under this Act or, where an arrangement or a plan under this Act has been confirmed and such property has not prior thereto been delivered to a receiver or trustee appointed under this Act, to deliver such property to the debtor or other person entitled to such property according to the provisions of the arrangement or plan, and in all such cases to account to the court for the disposition by them of the property of such bankrupt or debtor: Provided, however, That such delivery and accounting shall not be required, except in proceedings under section 77 and chapters X and XII of this Act, if the receiver or trustee was appointed, the assignment was made, or the agent was authorized more than four months prior

to the date of bankruptcy. Upon such accounting, the court shall reexamine and determine the propriety and reasonableness of all disbursements made out of such property by such receiver, trustee, assignee, or agent, either to himself or to others, for services and expenses under such receivership, trusteeship, assignment, or agency, and shall, unless such disbursements have been approved, upon notice to creditors and other parties in interest, by a court of competent jurisdiction prior to the proceeding under this Act, surcharge such receiver, trustee, assignee, or agent the amount of any disbursement determined by the court to have been improper or excessive.

Added by the Chandler Act (1938) and amended July 7, 1952, P.L 456, 82d Cong., 2d Sess., § 2(c). The Chandler amendment codified and expanded the doctrine of Taylor v. Sternberg, 293 U.S. 470, 55 S.Ct. 260, 79 L.Ed. 599 (1935), and Gross v. Irving Trust Co., 289 U.S. 342, 53 S.Ct. 605, 77 L.Ed. 1243, 90 A.L.R. 1215 (1933). Assignees for the benefit of creditors are subjected to the orders of the bankruptcy court in the same terms as are receivers in other proceedings. This would seem to reverse a distinction between assignees and receivers taken in Galbraith v. Vallely, 256 U.S. 46, 41 S.Ct. 415, 65 L.Ed. 823 (1921); Taylor v. Sternberg, supra; and In re Stolkin, Inc., 42 F.2d 829 (C.C.A.2d, 1930). The compensation of attorneys and receivers in equity receivership proceedings within four months prior to bankruptcy is subject to the exclusive control of the bankruptcy court, if an adjudication follows. Trustees are not to the same extent as previously (see 5 Remington, Bankruptcy (4th Ed., 1936), § 2394.50) relegated to plenary suits concerning disbursements prior to bankruptcy. "Fortunately the recent amendment

er

.

gives the court more pow

than it formerly had." Per Peters D.J., In re Lucille's Inc., 26 F.Supp. 943 (D.Me.1939), disallowing all compensation of an assignee who had acted against the interests of creditors. "The statute was badly needed. Many abuses had grown up under the antiquated assignment practice." Per Atwell, D.J., In re Young, 27 F.Supp. 692, 693 (N.D.Tex.1938). While the referee has jurisdiction by summary order to direct an assignee for the benefit of creditors to turn over the assets he has been administering, it is erroneous to order the turn-over of funds previously disbursed without first affording the assignee an opportunity to show the reasonableness and propriety of the disbursements. Shor v. McGregor, 105 F.2d 140 (C.C.A.5th, 1939), reversing on this point only In re Young supra.

The reference to section 77 was added by the amendment of July 7, 1952, § 2(c). This codified the presumed intention of the preexisting law.

b. Nothing in this section contained shall be construed to deprive a court of bankruptcy of any power it would possess were certain specific powers not herein enumerated.

Chapter III

BANKRUPTS

Sec. 3. (11 U.S.C. § 21.) Acts of Bankruptcy

a.

Acts of bankruptcy by a person shall consist of his having (1) concealed, removed, or permitted to be concealed or removed any part of his property, with intent to hinder, delay, or defraud his creditors or any of them, or made or suffered a transfer of any of his property, fraudulent under the provisions of section 67 or 70 of this Act; or (2) made or suffered a preferential transfer, as defined in subdivision a of section 60 of this Act; or (3) suffered or permitted, while insolvent, any creditor to obtain a lien upon any of his property through legal proceedings or distraint and not having vacated or discharged such lien within thirty days from the date thereof or at least five days before the date set for any sale or other disposition of such property; or (4) made a general assignment for the benefit of his creditors; or (5) while insolvent or unable to pay his debts as they mature, procured, permitted, or suffered voluntarily or involuntarily the appointment of a receiver or trustee to take charge of his property; or (6) admitted in writing his inability to pay his debts and his willingness to be adjudged a bankrupt.

As amended by the Chandler Act (1938), and the Act of July 7, 1952, P.L. 456, 82d Cong., 2d Sess., § 3(a). The Chandler Act combined in section 3a(3) the substance of (3) and (4), which were amended in 1926 to read as follows: "(3) suffered or permitted, while insolvent, any creditor to obtain a preference through legal proceedings and not having at least five days before a sale or other disposition of any property affected by such preference vacated or discharged such preference; or (4) suffered or permitted, while insolvent, any creditor to obtain through legal proceedings any levy, attachment, judgment or other lien, and not having vacated or discharged the same within thirty days from the aate such levy, attachment, judgment or other lien was obtained."

See

The confusing reference to preference was omitted, and the misleading inference that a judgment necessarily constitutes a lien was avoided, McLaughlin, "Amendment to Bankruptcy Act", 40 Harv.L.Rev. 341, 370 (1927). Section 3a(4) (now (4) and (5)) as enacted in 1903 read: "or made a general assignment for the benefit of his creditors, or, being insolvent, applied for a receiver or trustee for his property or because of insolvency a receiver or trustee has been put in charge of his property under the laws of a State, of a Territory, or of the United States."

The 1926 amendment, designating this section 3a(5), still required insolvency with reference to receiverships, but eliminated the causal element. Prior to 1926 there was authority that only receiverships because of insolvency in the bankruptcy sense were included, i. e., virtually none in practice. In re Bucyrus Road Machinery Co., 10 F.2d 333 (C.C.A.6th, 1926). See McLaughlin, "Amendment of Bankruptcy Act," 40 Harv.L.Rev. 341, 366

(1927). The present law makes practically all "umbrella" receiverships acts of bankruptcy. This does not compel liquidation, since Chapter X, revising section 77B, provides for reorganization by bankruptcy courts.

Amendments were made to the first three acts of bankruptcy by the amendment of July 7, 1952. The first two acts of bankruptcy were tied to transactions voidable under the Act for the first time by this legislation. Until 1952, intent to prefer was required for the second act of bankruptcy, although this had been construed more or less objectively. This amendment also added the word "distraint" in the third act of bankruptcy.

b. A petition may be filed against a person within four months after the commission of an act of bankruptcy. Such time with respect to the third act of bankruptcy shall expire four months after the date the lien through legal proceedings or distraint was obtained and, with respect to the first or fourth act of bankruptcy, such time shall not expire until four months after the date when the transfer or assignment became so far perfected that no bona fide purchaser from the debtor could thereafter have acquired any rights in the property so transferred or assigned superior to the rights of the transferee or assignee therein, and such time with respect to the second act of bankruptcy shall not expire until four months after the date when the transfer became perfected as prescribed in subdivision a of section 60 of this Act. For the purposes of this section, it is sufficient if intent to hinder, delay or defraud under the first act of bankruptcy, where such intent is an element of such act, or if insolvency under the second act of bankruptcy, exists either at the time when the transfer was made or at the time when it became perfected, as hereinabove provided.

As amended by the Chandler Act (1938) and the Act of July 7, 1952, P.L. 456, 82d Cong., 2d Sess., Section 3b had previously escaped amendment. It originally read: "A petition may be filed against a person who is insolvent and who has committed an act of bankruptcy within four months after the commission of such act. Such time shall not expire until four months after (1) the date of the recording or registering of the transfer, or assignment, when the act consists in having made a transfer of any of his property with intent to hinder, delay or defraud his creditors or for the purpose of giving a preference, as hereinbefore provided, or a general assignment for the benefit of his creditors, if by law such recording or registering is required or permitted, or, if it is not, from the date when the beneficiary takes notorious, exclusive or continuous possession of the property unless the petitioning creditors have received actual notice of such transfer or assignment." "Who is insolvent" was dropped by the Chandler Act as meaningless and confusing. See West Co. v. Lea, 174 U.S. 590, 19 S.Ct. 836, 43 L.Ed. 1098 (1899).

The amendment of July 7, 1952, § 3(b), tied in, more closely than previous texts, periods of limitation in relation to acts of bankruptcy and the corresponding limitations upon voidable transactions.

c. It shall be a complete defense to any proceedings under the first act of bankruptcy to allege and prove that the party proceeded against was not insolvent as defined in this Act at the time of the filing of the petition against him. If solvency at such