b The court may order the trustee to enter his appearance and defend any pending suit against the bankrupt.'

c A trustee may, with the approval of the court, be permitted to prosecute as trustee any suit commenced by the bankrupt prior to the adjudication, with like force and effect as though it had been commenced by him.

d Suits shall not be brought by or against a trustee of a bankrupt estate subsequent to two years after the estate has been closed.3

1Since a pending suit can ordinarily have no other substantial effect, if prosecuted to a judgment, than to fix the amount of the bankrupt's indebtedness (Norton v. Switzer, 93 U. S. 355), if this is not disputed or the claim is not such as comes within the statute there can be no purpose served by the trustee appearing to defend, for he has his remedy in the bankruptcy court (Trader's Bank v. Campbell, 14 Wall. 87; s. c. 6 B. R. 353; 2 Biss. 423; 3 B. R. 498. See also 57 as to proof and allowance of claims). A trustee should always intervene, when necessary to protect rights of estate (In re Kanavaugh [D. C.], 99 Fed. Rep. 928), and where a suit is pending against the bankrupt in a State court by a judgment creditor and a receiver has been appointed in such case and has property of the bankrupt in his possession, then the trustee should intervene to protect the rights of the general creditors, and to enable him so to do, the bankruptcy court will restrain the proceedings in the State court for a reasonable length of time (In re Klein [D, C.], 97 Fed. Rep. 31). A creditor cannot institute an ejectment suit against a bankrupt or his representative in a State court after adjudication if the effect will injure the rights of the general creditors. He must seek redress in the bankruptcy court (In re Chambers, Calder and Co. [D. C.], 98 Fed. Rep. 865). Yet, if for any reason he does enter his appearance, he becomes subrogated to all the rights of the bankrupt and may take such action relative to the proceedings as he deems advisable (Louden v Blanford, 56 Geo. 150; Knox v. Bank, 12 Wall. 379; Sandford v. Sandford, 58 N. Y. 67; Home Ins. Co. v. Hollis, 53 Geo. 659).

After a trustee enters his appearance, the cause will be continued in his name (Ames v. Gilman, 51 Mass. 239), and while the costs which have accrued previous to the entry of his appearance cannot be taxed against him, yet such as are made afterwards may be so taxed though he is not personally liable for them unless so ordered by the court on the ground of bad faith or mismanagement (Norton v. Switzer, 93 U. S. 355; Reade v. Waterhouse, 10 B. R. 277). Where a State court has, before the filing of the petition in bankruptcy, rendered a decree in a foreclosure proceeding, that court retains exclusive jurisdiction for the purpose of selling the encumbered property, though any balance from the sale belongs to the trustee to protect which he should apply to the State court to be made a party and ask to have such balance paid him (In re Gerdes [D. C.], 102 Fed. Rep. 318). In submitting himself to the jurisdiction of the State court, the trustee becomes bound by its action (In re Van Alstyne [D. C.], 100 Fed. Rep. 929).

2The word, suits, seems to include every form of action that may be brought in any court (Bailey v. Weir, 21 Wall. 342; Union Canal Co. v. Woodside, 11 Penn. 176; Ames v. Gilman, 51 Mass. 239; Jenkins v. Bank, 106 U. S. 571; Walker v. Towner, 4 Dill. 165; Payson v. Coffin, 4 Dill. 386).

The right of Congress to enact such a limitation on suits has been upheld (Peiper v. Harmer, 5 B. R. 252), and it seems to supersede all other national and

SEC. 12. Compositions, when Confirmed. — a A bankrupt may offer terms of composition' to his creditors after, but not before, he has been examined in open court or at a meeting of his creditors and filed in court the schedule of his property and list of his creditors, required to be filed by bankrupts."

b An application for the confirmation3 of a composition may be filed in the court of bankruptcy after, but not before, it has been accepted in writing by a majority in number of all creditors whose claims have been allowed, which number must represent a majority in amount of such claims, and the consideration to be paid by the bankrupt to his creditors, and the money necessary to pay all debts which have priority and the cost of the proceedings, have been deposited in such place as shall be designated by and subject to the order of the judge.

c A date and place, with reference to the convenience of the parties in interest, shall be fixed for the hearing upon each application for the confirmation of a composition, and such objections as may be made to its confirmation.

state enactments on that subject (Freelander & Gerson v. Holloman, 9 B. R. 331). The limitation does not go to the jurisdiction of a court, and should be pleaded in bar (Chemung Bank v. Judson, 8 N. Y. 254). A trustee who is barred by the limitation cannot avoid the statute by assigning his claim, since the assignee can become vested with no rights which the assignor does not possess (Cleveland v. Boerum, 24 N. Y. 613).

1 Analogous provisions: R. S. 5103A. This section is in derogation of the common law, and all its provisions should be strictly construed (In re Shields, 15 B. R. 552). To be valid, the composition must be offered to all the creditors, and they are entitled to a reasonable opportunity to consider it (In re Rider [D. C.], 96 Fed. Rep. 808). If a copartnership is the bankrupt, it has been held that the application for a composition may be made by any one of its members, all being unnecessary (Pool v. McDonald, 15 B. R. 560) This holding is opposed to the general rule which regulates the authority of the individual members of a copartnership, and if necessity requires it to be made, it should at least be in the firm name, for it is extremely doubtful whether, under the present statute, the holding in Pool v. McDonald will be followed.

2 As to examination and other duties of bankrupts, see 7 and notes. It is no defense to an involuntary petition that the petitioning creditors have agreed to compromise where the composition has not been paid (Simonson v. Sinsheimer [C. C. A.], 95 Fed. Rep. 948).

Applications for the confirmation of a composition shall be heard and decided by the Judge (Rule XII [3]), the opposing creditors being required to enter appear

d The judge shall confirm a composition if satisfied that (1) it is for the best interests of the creditors; (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; and (3) the offer and its acceptance are in good faith and have not been made or procured except as herein provided, or by any means, promises, or acts herein forbidden. 3

2

ance thereto on the day when the creditors are required to show cause, and file a specification in writing within ten days thereafter (Rule XXXII). This specification should be verified, but neglect to do so will be treated as a mere irregularity and may be cured by a verification nunc pro tunc (In re Wolfstein [D. C.], 1 N. B. News, 202).

1A composition "for the best interest of creditors" should be construed as referring to the interests of the minority as well as the majority, otherwise the section would be open to constitutional objections in that it did not operate uniformly, a feature which must characterize all bankrupt provisions (In re Silverman, 4 B. R. 523; s. c. I Saw. 410; in re Reiman & Friedlander, 11 B. R. 21; S. c. 7 Ben. 445; 12 Blatch. 562; 13 B. R. 128; Leidigh Carriage Co. v. Stengel [C. C. A.], 1 N. B. News, 296, 387; s. c. 95 Fed. Rep. 637). The court will presume the action of the majority to be for the best interest of all the creditors unless that action is assailed (In re Weber Furniture Co., 13 B. R. 559). The composition should not be confirmed unless it will pay each creditor as large a percentage of his claim as could be paid by an administration of the estate in the regular course of bankruptcy (In re Whipple, 11 B. R. 524; in re Reiman & Friedlander, supra; in re Morris, 11 B. R. 443; in re Weber Furniture Co., supra; in re Scott, Collins & Co., 15 B. R. 73). It has been said that the interest to be considered is that of creditors at the time of the acceptance of the composition (In re Haskell, 11 B. R. 164). This should be accepted only as a general rule. Each case should be considered upon its own facts, otherwise an avenue would be open for the rampage of fraud in all its disguises. The court should not rest its conclusion upon the action of the majority of the creditors, but should examine the composition. If it seems unreasonable or greatly disproportionate to the assets, it is the duty of the court to reject it, upon its own motion if necessary (Ex p. Cowen, L. R. 2 Ch. App. 563; Ding well v. Edwards, 4 Best & S. 738; Wells v. Hacon, 5 Best & S. 196; Richmond Hill Hotel Co., L. R. 4 Eq. 566; s. c. 3 Ch. App. 10; Ex p. Nicholson, L. R. 5 Ch. App. 332; ex p. Radcliffe Investment Co., L. R. 17 Eq. 121; ex p. Dingman, L. R. 11 Eq. 604; ex p. Birmingham Gas Light Co., L. R. 11 Eq. 204; ex p. Levy & Co., L. R. 11 Eq. 619; Bell v. Bird, L. R. 6 Eq. 635).

2As to acts which will prevent a discharge, see 146.

Any fraud, misrepresentations, concealments, secret arrangements or understandings of any nature, or by any parties or interested persons, or others in his behalf, whereby one creditor gains an advantage over any other, or which induces a creditor to accept the composition or in any way injures a creditor, will justify the court in refusing to confirm it (In re Sawyer, 14 B. R. 241; S. c. 4 Cent. L. J. 470; In re Whitney, 14 B. R. 1; Jackson v. Lomas, 4 Term R. 166; Leicester v. Rose, East 372; Irving v. Humphrey, Hopk. Ct. (N. Y.), 284; Graham v. Meyer, 99 N. Y. 611; Whiteside v. Hyman, 10 Hun. 218; Coolong v. Noyes, 6 T. R. 263; Seving v. Gale, 28 Ind. 486; Bean v. Amsink, 8 B. R. 228; Knight v. Hunt, 5 Bing. 432; Anshall v. Denby, 6 Hurl & N. 788; Bean v. Bookmier, 7 B. R. 568; Dexter v.

e Upon the confirmation of a composition, the consideration shall be distributed as the judge shall direct, and the case dismissed.' Whenever a composition is not confirmed, the estate shall be administered in bankruptcy as herein provided.

SEC. 13. Compositions, when set Aside.—a The judge may, upon the application of the parties in interest filed at any time within six months after a composition. has been confirmed, set the same aside and reinstate the case if it shall be made to appear upon a trial that fraud was practiced in the procuring of such composition, and that the knowledge thereof has come to the petitioners since the confirmation of such composition.2

Snow, 66 Mass. 594). Very slight evidence will be required to impute to the debtor a fraud perpetrated by another when it inures to the benefit of the debtor (In re Sawyer, supra); but if a fraud exists and cannot be charged to the debtor, he may be given leave to make a new offer of composition on which the creditors may again act (Ex p. Harrison, 2 Buck. 247). The fact that a creditor has failed to get the notice required to be mailed to him under 258, will be no ground on which to set the composition aside (In re Rudnick [D. C.], 1 N. B. News, 276; s. c. 93 Fed. Rep. 787).

1 When the case is dismissed, on the confirmation of the composition, the title to the property re-vests in the bankrupt (870f), and no further order to discharge him from his debts is necessary (In re Bechet, 12 B. R. 201; s. c. 2 Woods, 173).

The general rule of law that a creditor who releases his principal debtor thereby discharges the surety is not followed in bankruptcy, the surety not being released by the composition of the principal with his creditors (Mason & Hamilton Organ Co. v. Bancrost, 1 Abb. N. C. 415; s. c. 4 Cent. L. J. 295; ex p. Jacobs, 44 L. J. B. 34; 16). If the consideration agreed upon in the composition is not paid in substantial accordance with the terms thereof the debts remain unaffected, and the debtor, or bankrupt, is liable for the full amount of the original claims (In re Hurst, 13 B. R. 455-465; in re Reiman & Friedlander, 11 B. R. 21; S. c. 13 B. R. 128; Edwards v. Coombe, 7 L. R. Com. Pleas Div. 519; in re Hatton, L. R. Ch. App. 723; Newall v. Van Prague, L. R. Com. Pleas Div. 96; Goldney v. Lording, L. R. 8 Q B. 182; Simonson v. Sinsheimer [C. C. A.], 95 Fed. Rep. 948).

7

A discharge under a composition is a discharge by operation of law (Ex p. Jacobs, 44 L. J. B. 34), and may be pleaded as a defense to any action brought on a claim affected by it (In re Tooker, 14 B. R. 35. See also McDonald v. Davis, 105 N. Y. 508; Dimock v. Revere Copper Co., 117 U. S. 559; s. c. 90 N. Y. 33). It has been held that the confirmation of the composition conclusively settles the fact that every requirement of the statute has been complied with (Smith v. Engle, 14 B. R. 481).

2For analogous provisions, see R. S. 85103A; for a revocation of a discharge, 15, and notes under the preceding section. When all the creditors of an insolvent agreed between themselves and with him, to take his property and divide it pro rata among them in full of their claims, some of such property being in the

SEC. 14. Discharges, when Granted.-a Any person may, after the expiration of one month and within the next twelve months subsequent to being adjudged a bankrupt, file an application for a discharge in the court of bankruptcy in which the proceedings are pending; if it shall be made to appear to the judge that the bankrupt was unavoidably prevented from filing it within such time, it may be filed within but not after the expiration of the next six months.1

hands of an assignee for the benefit of creditors, a composition made by them in such settlement will not afterwards be vitiated on some of the creditors dissenting therefrom and procuring an adjudication in bankruptcy against such insolvent for having made the general assignment referred to (Botts v. Hammond et al. [C. C. A.], 99 Fed Rep. 916).

1See Rule XII(3) as to applications for a discharge, approval of compositions, injunctions, etc.; Rule XXXI as to petition for discharge; Rule XXXII as to opposition to discharge; Rule XXXIV as to costs in contested adjudications; Rule XXXV(4) and 51(2) as to payment of filing fees. See also 5 as to partners; 16 as to co-debtors; 17 as to debts not affected by a discharge, and 38(4) relative to the referee's jurisdiction on applications for a discharge, together with the notes to these sections.

The application for a discharge can only be filed as a matter of right within the year following the adjudication, and the time will not be extended unless the application therefor is made within eighteen months after adjudication (in re Wolff [D. C.], 100 Fed. Rep. 430).

The question of discharge does not rest in discretion; it must be granted unless the applicant is guilty of one of the statutory offenses (In re Marshall Paper Co. [C. C. A.], 102 Fed. Rep. 872). He will be presumed to be so guilty as far as the question of a discharge is concerned, when the evidence shows a large unaccountable shrinkage of assets and a fraudulent failure to keep books (In re Cashman [D. C.], 103 Fed. Rep. 67). To warrant a refusal to discharge, it is not enough, when the ground of opposition is the making of a false oath, to show that the bankrupt omitted from his schedule property held in his wife's name. The evidence must not only show such property belonged to the bankrupt, but that he had a clear knowledge of that fact (Fellows v. Frendenthal [C. C. A ], 102 Fed. Rep. 731). If a bankrupt has made a colorable transfer of property, he should set the same out in his schedule of property; if he fails to do so, he will be guilty of concealing it (In re Hoffman [D. C.], 102 Fed. Rep. 979). If no objections are made, a discharge will be granted, for the court will not of its own motion, seek grounds for refusing it (In re Hixon [D. C.], 1 N. B. News, 326; s. c. 93 Fed. Rep. 440; in re Holman [D. C.], 92 Fed. Rep. 512; in re Schuyler, 2 B. R. 549; s. c. 3 Ben. 200; in re Rosenfeldt, 2 B. R. 117). It is no ground for refusing a discharge that the applicant is a minor, if he has been manumitted (In re Brice [D. C.], 1 N. B. News, 276, 310; s. c. 93 Fed. Rep. 942), or that the applicant had been refused a discharge under the Act of 1867 (In re Herman [D. C.], 102 Fed. Rep. 753). On the hearing of the application for discharge, the court will not pass upon the question as to whether a particular debt is excepted from its operation. That is no ground of opposition, it being a defense to the action if the debt is sued (In re Rhutassel [D. C.], 96 Fed. Rep. 597; in re Peacock [D. C.], 101 Fed. Rep. 560; in re Marshall Paper Co. [C. C. A.], 102 Fed. Rep. 872). Nor can the question