Chapter IV

COURTS AND PROCEDURE THEREIN

Sec. 18. (11 U.S.C. § 41.) Process; Pleadings; and Adjudications

Upon the filing of a petition for involuntary bankruptcy, service thereof, with a writ of subpena, shall be made upon the person therein named as defendant. Upon the filing of a voluntary petition in behalf of a partnership by less than all of the general partners, service thereof, with a writ of subpena, shall be made upon the general partner or partners not parties to the filing of such petition. Such service shall be returnable within ten days, unless the court shall, for cause shown, fix a longer time, and shall be made at least five days prior to the return day, and in other respects shall be made in the same manner that service of summons is had upon the commencement of a civil action in the courts of the United States; but in case personal service cannot be made within the time allowed, then notice shall be given by publication in the same manner as provided by law for notice by publication in suits to enforce a legal or equitable lien in courts of the United States, except that, unless the court shall otherwise direct, the order shall be published only once and the return day shall be five days after such publication.

As Amended by the Chandler Act (1938) and the Act of July 7, 1952, P.L. 456, 82d Cong., 2d Sess., § 7. The second sentence is a result of the amendment of section 5b.

The amendment of July 7, 1952, substituted a reference to the commencement of a "civil action" for the previous reference to a "suit in equity", which had been rendered obsolete by the adoption of the Federal Rules of Civil Procedure in 1938.

b. The bankrupt and, in the case of a petition against a partnership, any general partner or, in the case of a petition in behalf of a partnership, any general partner not joining therein, may appear and plead to the petition within five days after the return day or within such further time as the court may allow.

As Amended by the Chandler Act (1938). As amended in 1903 a and b read: "a. Upon the filing of a petition for involuntary bankruptcy, service thereof, with a writ of subpoena, shall be made upon the person therein named as defendant in the same manner that service of such process is now had upon the commencement of a suit in equity in the courts of the United States, except that it shall be returnable within fifteen days, unless the judge shall for cause fix a longer time; but in case personal service cannot be made, then notice shall be given by publication in the same manner and for the same time as provided by law for notice by publication in suits to enforce a legal or equitable lien in courts of the United States, except that, unless the judge shall otherwise direct, the order shall be published not more than once a week

for two consecutive weeks, and the return day shall be ten days after the last publication unless the judge shall for cause fix a longer time.

"b. The bankrupt, or any creditor, may appear and plead to the petition within five days after the return day, or within such further time as the court may allow."

The provision for pleas by creditors was dropped because such pleas had been chiefly employed in the hope of making preferences indefeasible and served no proper purpose.

c. All pleadings setting up matters of fact shall be verified under oath.

d. If a party entitled to appear and plead shall appear, within the time limit, and controvert the facts alleged in the petition, the court shall determine, as soon as may be, the issues presented by the pleadings, without the intervention of a jury except in cases where a jury trial is given by this Act, and make the adjudication or dismiss the petition.

As Amended by the Chandler Act (1938). This originally commenced: "If the bankrupt, or any of his creditors "Court" has been substituted for "judge."

e. If on the last day within which pleadings may be filed none is filed, the court shall on the next day, or as soon thereafter as practicable, make the adjudication or dismiss the petition.

f. If the judge is absent from the district, or the division of the district in which the petition is pending, on the next day after the last day on which pleadings may be filed, and none has been filed, the clerk shall, if the case has not already been referred, forthwith refer it to the referee.

e. and f. These originally read: "e. If on the last day within which pleadings may be filed none are filed by the bankrupt or any of his creditors, the judge shall on the next day, if present, or as soon thereafter as practicable, make the adjudication or dismiss the petition.

"f. If the judge is absent from the district, or the division of the district in which the petition is pending, on the next day after the last day on which pleadings may be filed, and none have been filed by the bankrupt or any of his creditors, the clerk shall forthwith refer the case to the referee."

g. Upon the filing of a voluntary petition, other than a petition filed in behalf of a partnership by less than all of the partners, the judge shall hear the petition and make the adjudication or dismiss the petition. If the judge is absent from the district, or the division of the district in which the petition is filed, at the time of the filing, the clerk shall forthwith refer the case to the referee.

"Other than a petition filed in behalf of a partnership by less than all of the partners" was added by the Chandler Act (1938).

Sec. 19. (11 U.S.C. § 42.)

a.

Jury Trials

A person against whom an involuntary petition has been filed shall be entitled to have a trial by jury in respect to the question of his insolvency, except as herein otherwise provided, and of any act of bankruptcy alleged in such petition to have been committed, upon filing a written application therefor at or before the time within which an answer may be filed. If such application is not filed within such time, a trial by jury shall be deemed to have been waived.

b. If a jury is not in attendance upon the court, one may be specially summoned for the trial or the case may be postponed.

As Amended by the Chandler Act (1938). b originally contained a provision relating to circuit courts which has been obsolete since 1911. See 36 Stat. 1167 (1911).

C. The right to submit to a jury matters in controversy or an alleged offense under this Act shall be determined and enjoyed, except as provided by this Act, according to the laws of the United States now in force or such as may be hereafter enacted in relation to trials by jury.

Sec. 20. (11 U.S.C. § 43.)

Oaths; Affirmations

a. Oaths required by this Act, except upon hearing before a judge, may be administered by (1) referees; (2) officers authorized to administer oaths in proceedings before the courts of the United States, or under the laws of the State where the same are to be taken; and (3) diplomatic or consular officers of the United States in any foreign country.

"Before a judge" was substituted for "in court" by the Chandler Act (1938), in view of the expanded definition of "court," section 1(9).

b. Any person conscientiously opposed to taking an oath may, in lieu thereof, affirm. Any person who shall affirm falsely shall be punished as for the making of a false oath.

Sec. 21. (11 U.S.C. § 44.) Evidence

a. The court may, upon application of any officer, bankrupt, or creditor, by order require any designated persons, including the bankrupt and his or her spouse, to appear before the court or before the judge of any State court, to be examined concerning the acts, conduct, or property of a bankrupt: Provided, That the spouse may be examined only touching business transacted by such spouse or to which such spouse is a party and to determine the fact whether such spouse has transacted or been a party to any business of the bankrupt: And provided further, That the spouse may be so examined, any law of the United States or of any State to the contrary notwithstanding.

As Amended by the Chandler Act (1938). The text as amended in 1903 stated: "a. A court of bankruptcy may, upon application of any officer, bankrupt, or creditor, by order require any designated person, including the bankrupt and his wife, to appear in court or before a referee or the judge of any State court, to be examined concerning the acts, conduct, or property of a bankrupt whose estate is in process of administration under this Act: Provided, That the wife may be examined only touching the business transacted by her or to which she is a party, and to determine the fact whether she has transacted or been a party to any business of the bankrupt." Under the old language some courts were doubtful whether the wife could be examined in view of certain hostile state statutes. See In re Hyman, 48 F.2d 814 (C.C.A. 6th, 1931). "Whose estate is in the process of administration under this Act" was eliminated to permit an examination by a creditor without the expense of a receiver that was previously required. Cameron v. U. S., 231 U.S. 710, 34 S.Ct. 244, 58 L.Ed. 448 (1914).

b. Except as herein otherwise provided, the right to take depositions in proceedings under this Act shall be determined and enjoyed according to the laws of the United States now in force, or such as may be hereafter enacted, relating to the taking of depositions.

As Amended by the Chandler Act (1938). The opening expression "except as herein otherwise provided" took the place of "except as herein provided," originally located at the end.

c. Notice of the taking of depositions shall be filed with the court and a copy of such notice shall be served upon the adverse party in every case.

As Amended by the Chandler Act (1938). This originally read: "c. Notice of the taking of depositions shall be filed with the referee in every case. When depositions are to be taken in opposition to the allowance of a claim notice shall also be served upon the claimant, and when in opposition to a discharge notice shall also be served upon the bankrupt."

d. Certified copies of proceedings before a referee, or of papers, when issued by the clerk or referee, shall be admitted as evidence with like force and effect as certified copies of the records of district courts of the United States are now or may hereafter be admitted as evidence.

e. A certified copy of the order approving the bond of a trustee shall constitute conclusive evidence of his appointment and qualification.

This formerly read: “e. A certified copy of the order approving the bond of a trustee shall constitute conclusive evidence of the vesting in him of the title to the property of the bankrupt, and if recorded, shall impart the same notice that a deed from the bankrupt to the trustee if recorded would have imparted had not bankruptcy proceedings intervened."

f. A certified copy of any order or decree entered in a proceeding under this Act shall be evidence of the jurisdiction of the court, the regularity of the proceedings, the fact that the order or decree was made, and the contents thereof, and, if re

corded, shall impart the same notice that a deed or other instrument affecting property, if recorded, would impart.

As Amended by the Chandler Act (1938). Derived from section 77Bj (1934). Section 21f originally read: "f. A certified copy of an order confirming or setting aside a composition, or granting or setting aside a discharge, not revoked, shall be evidence of the jurisdiction of the court, the regularity of the proceedings, and of the fact that the order was made."

g. A certified copy of the petition with the schedules omitted, of the decree of adjudication or of the order approving the trustee's bond may be recorded at any time in the office where conveyances of real property are recorded, in every county where the bankrupt owns or has an interest in real property. Such certified copy may be recorded by the bankrupt, trustee, receiver, custodian, referee, or any creditor, and the cost of such recording shall be paid out of the estate of the bankrupt as part of the expenses of administration. Unless a certified copy of the petition, decree, or order has been recorded in such office, in any county wherein the bankrupt owns or has an interest in real property in any State whose laws authorize such recording, the commencement of a proceeding under this Act shall not be constructive notice to or affect the title of any subsequent bonafide purchaser or lienor of real property in such county for a present fair equivalent value and without actual notice of the pendency of such proceeding: Provided, however, That where such purchaser or lienor has given less than such value, he shall nevertheless have a lien upon such property, but only to the extent of the consideration actually given by him. The exercise by any court of the United States or of any State of jurisdiction to authorize or effect a judicial sale of real property of the bankrupt within any county in any State whose laws authorize the recording aforesaid shall not be impaired by the pendency of such proceeding unless such copy be recorded in such county, as aforesaid, prior to the consummation of such judicial sale: Provided, however, That this subdivision shall not apply to the county in which is kept the record of the original proceedings under this Act.

Inserted by the Chandler Act (1938).

h. A certified copy of an arrangement or wage-earner plan and of the order confirming it shall constitute evidence of the revesting in the debtor of title to the property dealt with by the arrangement or wage-earner plan, or of the vesting of title to such property in such other person as may be provided by the arrangement or wage-earner plan, and if recorded shall impart the same notice that an instrument of transfer from the trustee to the debtor or to such person if recorded would impart.