CHAPTER VII. VARIOUS DUTIES AND POWERS OF THE BANKRUPT IN RE PRICE. DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, [Reported in 91 Federal Reporter, 635.] BROWN, District Judge. Certain creditors of the bankrupts not having attended at the first meeting when the bankrupts were present and ready for examination, but having afterwards been admitted to prove their claim, applied to the referee to order an examination of the bankrupts in their behalf after the bankrupts had filed their application for discharge. The referee declined to order the examination until specifications in opposition to the discharge should be filed. The question has been certified to me. I do not find anything in the bankrupt act or the rules which limits the examination of the bankrupt to any particular time or occasion. Under subdivision 9 of section 7, it would seem that such an examination may be ordered at any time during the pendency of the proceedings. It is not unreasonable I think to allow creditors to examine the bankrupt concerning the mode of conducting his business, for the purpose of ascertaining whether there has been any such offence committed, or failure to keep books, as would furnish a just ground for refusing a discharge; and therefore I think such applications should be allowed before specifications are filed, if applied for on the return day of the notice of the debtor's application for discharge, and no prior examination of that kind has been had. In re Mawson, 1 N. B. R. 271, Fed. Cas. No. 9,320; In re Seckendorf, 1 N. B. R. 626, Fed. Cas. No. 12,600; In re Vogel, 5 N. B. R. 396, Fed. Cas. No. 16,984. Section 58, however, requires that creditors shall have at least ten days' notice by mail of "all examinations of the bankrupt "; so that such an examination cannot proceed until after ten days' notice to all creditors, unless the notice of application for the bankrupt's discharge mailed to creditors contained also a notice of the bankrupt's examination. Hereafter the published and mailed notices of application for a discharge should contain a notice of examination of the debtor to avoid the necessity of further notice to all creditors in case such an examination is allowed. Only one such examination as respects the discharge should ordinarily be had; since the statute in requiring that all creditors shall have notice of it, presumably intends that all should be equally allowed to participate in it, once for all, and not further harass the bankrupt. In re Vogel, 5 N. B. R. 396, 397, Fed. Cas. No. 16,984. For the present examination, if a new notice to all creditors is required through lack of previous notice, the new notices and examination must be at the expense of the applicants; for which I allow to the referee for necessary clerical aid, as a necessary expense, considering that there are fifty creditors or upwards, $7.50, which the applicants should deposit in advance, as well as pay the cost of clerical or stenographic aid in taking the testimony on the examination.1 IN RE FRANKLIN SYNDICATE. DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK, [Reported in 101 Federal Reporter, 402.] THE Franklin Syndicate, Incorporated, and William F. Miller having been adjudged bankrupt, and a receiver appointed by the court to take charge of their property pending the first meeting of their creditors and the selection and qualification of a trustee, one of the creditors presented a petition for the examination of the bankrupts; whereupon the following order was made by the court: THOMAS, District Judge. Upon reading and filing the annexed petition of Bernard O'Kane, a creditor of the aforesaid bankrupts, the proof of claim hereto annexed, and on all the papers and proceedings herein, and on motion of Belfer & Flash, his attorneys, it is ordered that the examination of the bankrupts, and of all material and necessary witnesses herein, and the taking of their testimony, as prayed for in the petition, be, and the same hereby is, referred to Augustus J. Koehler, Esq., the referee in bankruptcy herein, to take proof under the acts of Congress relating to bankruptcy, and that said examination be directed to the facts and circumstances concerning the acts, conduct, and property of said bankrupts; also concerning the cause of bankruptcy, the conducting of the bankrupts' business, the disposition of the bankrupts' property, and the bankrupts' dealings with creditors; and let subpœnas issue directing the bankrupts, and all other persons whose testimony may be material and necessary herein, to submit to 1 See further Re Mellen, 97 Fed. Rep. 326. examination before the aforesaid referee, pursuant to the rules and practice of this court, and for such other and further relief as may be just herein. Thereafter, in pursuance of the above order, the bankrupt William F. Miller was brought before the referee for examination, and, after counsel for the receiver had been allowed to intervene in the proceeding, counsel for the bankrupt interposed an objection to any proceeding being had or taken under the order of court. This objection was based upon the ground that there was no proof that the creditor who sought the examination had procured the allowance of his claim in bankruptcy; that, if such claim had been allowed, its allowance was illegal, and not in pursuance of the bankruptcy law; that such claim could not be allowed until a first meeting of creditors was held; that the bankrupt had a right to object to the claim, and contest its validity, before it could be allowed, of which right he could not be foreclosed; that there could be no examination of the bankrupt until there had been a first meeting of creditors; that, under section 58 of the bankruptcy law, there could be no examination of the bankrupt without notice to all the creditors of at least ten days; that none of the requirements provided for by the bankruptcy law and the rules had been complied with; and that the order directing the examination of the bankrupt was wholly void, and without power, and that the referee had no jurisdiction to proceed to examine the bankrupt. The referee overruled the objection to the validity of the order, on the ground that he had no power or jurisdiction to modify, set aside, or vacate an order made by the judge of the court. Counsel for the bankrupt, and counsel representing various parties in interest, then moved for a continuance of the proceedings until a meeting of creditors should have been held, and renewed their objection to the examination of the bankrupt on the ground that the statutory notice to creditors had not been given. The referee reserved his decision on this question, and adjourned the proceedings to a future day. Exceptions to the ruling of the referee having been noted, he certified the record of the proceedings to the court for review, together with his decision on the question reserved, wherein he said: 6 "An objection of a nature which warrants due consideration is made by the attorney for the bankrupt, and by Mr. Goldsmith, of counsel for certain creditors, and the receiver, and other attorneys, representing different creditors, that no examination can be had, for the reason that the notice required by Bankr. Act, § 58 a, subd. 1, was not given.' I do not deem the objections so made by the attorney for the bankrupt, as to the failure of such notice required by section 58 a, subd. 1, to be available to him; but as this objection also emanates from Mr. Goldsmith, representing a large number of creditors, as well as representing the petitioning creditors on the application to have said Miller adjudicated a bankrupt, and also Mr. Burr, and other attorneys representing different creditors, as well as by the receiver, and affects the statutory rights of all the creditors in this proceeding, it seems to me that this objection should be considered, in view of the rights and privileges of all the creditors concerned and interested in the bankrupt's estate and property. It is my opinion, upon a careful examination of all the proceedings before me, and of the petition and order of February 16, 1900, which directs me to take proof under the acts of Congress relating to bankruptcy, pursuant to the rules and practice of this court,' that this objection to the examination of the bankrupt, for failure to give the notice required by section 58 a, subd. 1, should be sustained, and that, before proceeding with such examination, at least ten days' notice be given by mail to the creditors herein." THOMAS, District Judge. The order for the examination of William F. Miller will be amended so as to authorize and to limit the examination solely for the purpose of preparing the schedules, and the examination will proceed without notice to creditors. IN RE FELDSTEIN. DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, JULY 17, 1900. [Reported in 103 Federal Reporter, 269.] BROWN, District Judge. Application is made for an order to commit the witness A. C. Maynard for contempt in refusing to answer certain questions put to him in an examination at the instance of the receiver of the bankrupt, pending before the referee, which questions the witness refused to answer on the ground that his answer would or might tend to criminate him. The subjects of inquiry were some thirty-five checks, amounting altogether to $72,486.53, which had been given by the bankrupt to the witness between September 19, 1898, and August 10, 1899. The object of the examination was to ascertain the consideration for those checks, and in fact to ascertain whether they were not given for gambling debts which the trustee might recover by action against the witness. Two actions of that kind on various other checks had already been brought by the bankrupt's receiver in the State court, and are still pending there. By the Penal Code of the State of New York, gambling is a criminal offence. Section 340 provides that any person exacting or receiving anything from another won by any game of chance, shall forfeit five times the value thereof; section 341 provides that a person who wins or loses at play by betting at any time the sum of $25 or upward, within twenty-four hours, is punishable by a fine of five times the value of sum so lost or won. Various other sections make it penal to keep a room or building to use for gambling purposes, or tables, apparatus, or other implements for such purposes. The witness had stated in general that the checks referred to were given to him in payment of moneys loaned to the bankrupt at the times mentioned in the checks; or rather that each check was given the next time he saw the bankrupt after the loan. Numerous other questions were asked, some of which were answered, the purpose of which evidently was to show that the checks were really given to pay gambling debts, and that the so-called loans by the witness were a device to conceal that fact. Among the questions which the witness declined to answer were: Whether he slept at any other place than his ordinary place of abode; whether he had played cards with the bankrupt; whether he had seen the bankrupt playing roulette during the time which was covered by the checks; why his answer to such questions might tend to criminate him; whether during this period he was interested in an establishment where roulette was played; whether he had seen the bankrupt in certain premises named; whether any of the checks referred to were given to the witness at that place; whether all the checks were not given to him by the bankrupt for losses incurred by him in games of chance at the establishment conducted by the witness, or in which the witness was interested; whether the witness had any business at this period other than the carriage business in which he had stated he was interested; whether he had ever seen the bankrupt use any of the money loaned to him by the witness for any purpose; whether the greater part of the money was not used in settling up losses which the bankrupt had incurred in a gaming establishment in which the witness was interested, and the checks given on each occasion of a loss; whether the bankrupt had won any money of the witness during the same period; whether during this period the witness resided temporarily or otherwise at the place indicated; whether the bankrupt was not in the habit of continually during that period visiting the premises and gambling there with the witness. It is evident from these questions that the object of the examination was to require the witness to furnish evidence which would enable the receiver to recover back money of the bankrupt lost in gambling and paid by him to the witness. Under the Penal Code of this State such acts are made punishable as offences. The witness is therefore protected not only by the constitution of the State, but also by the United States Constitution, from any compulsory answers to such inquiries, unless perfect statutory immunity is afforded to the witness in answering such questions. Section 7a (9) of the present bankrupt act provides as respect the bankrupt himself, that "no testimony given by him shall be offered in evidence against him in any criminal proceeding." This provision, even if applicable in favor of a witness (which it is not in terms), seems to be no stronger or more effective as a protection than section 860 of the Revised Statutes, which in Counselman v. Hitchcock, 142 U. S. 547, 12 Sup. Ct. 195, 35 L. Ed. 1110, was on full discussion |