Full text of Bankruptcy Act of 1898 (Nelson Act)
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FIFTY-FIFTH CONGRESS. 544 SEss. II. CHS. 510,541. 1898. amount during the fiscal year eighteen hundred and ninety-nine than they make on the appropriations arising from the revenues, including drawback certificates, of said District. Approved, June 30,1898. July l, 1898. Bankruptcy. taubifm system esd CHAP. 541.-An Act To establish a uniform system of bankruptcy throughout the United States. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, CHAPTER I. DEFINITIONS. Definitiona. SECTION 1. MEANING OF WORDS AND PHRASES.-a The words and phrases used in this Act and in proceedings pursuant hereto shall, unless the same be inconsistent with the context, be construed as folA person 1 whom "a been filed. ain ( (1) whom: perstition person against has been filed" shall tition has include a person who has filed a voluntary petition; (2) "adjudication" Adjudication. shall mean the date of the entry of a decree that the defendant, in a bankruptcy proceeding, is a bankrupt, or if such decree is appealed Appellate courts. Bankrupt. Clerk. Corporations. / Court. Cl.urts from, then the date when such decree is finally confirmed; (3) "appel- late courts" shall include the circuit courts of appeals of the United States, the supreme courts of the Territories, and the Supreme Court of the United States; (4) "bankrupt" shall include a person against whom an involuntary petition or an application to set a composition aside or to revoke a discharge has been filed, or who has filed a voluntary petition, or who has been adjudged a bankrupt; (5) "clerk" shall mean the clerk of a court of bankruptcy; (6) "corporations" shall mean all bodies having any of the powers and privileges of private corporations not possessed by individuals or partnerships, and shall include limited or other partnership associations organized under laws making the capital subscribed alone responsible for the debts of the association; (7) "court" shall mean the court of bankruptcy ill which the proceedof bank- ings are pending, and may include the referee; (8) "courts of bank- ruptcy. ruptcy" shall include the district courts of the United States and of the Territories, the supreme court of the District of Columbia, and the United States court of the Indian Territory, and of Alaska; (9) "creditor" shall include anyone who owns a demand or claim provable in bankruptcy, and may include his duly authorized agent, atbalnkrurpty. torney, or proxy; (10) "date of bankruptcy," or "time of bankruptcy," Creditor. Dater l)elt. or "commencement of proceedings," or "bankruptcy," with reference to time, shall mean the date when the petition was filed; (11) "debt" fl)wumulnt. shall include any debt, demand, or claim provable in bankruptcy; (12) " discharge " shall mean the release of a bankrupt from all of his debts which are provable in bankruptcy, except such as are excepted by this Act; (13) "document" shall include any book, deed, or iustru- Iniditiay. ment in writing; (14) "holiday" shall include Christmas, the Fourth Discharge. of July, the Twenty-second of February, and any day appointed by the President of the United States or the Congress of the United States as a holiday or as a day of public :asting or thanksgiving; (15) ilnsleucy. .Judge. ()ath. Odficer. a person shall be deemed insolvent within the provisions of this Act whenever the aggregate of his property, exclusive of any property which he may have conveyed, transferred, concealed, or removed, or permitted to be concealed or removed, with intent to defraud, hinder or delay his creditors, shall not, at a fair valuation, be sufficient in amount to pay his debts; (16) "judge" shall mean a judge of a court of bankruptcy, not including the referee; (17) "oath" shall include affirmation; (18) " officer" shall include clerk, marshal, receiver, referee, and trustee, and the imposing of a duty upon or the forbidding of an FIFTY-FIFTH CONGRESS. SESS. II. CH. 541. 1898. 545 act by any officer shall include his successor and any person authorized by law to perform the duties of such officer; (19) "persons" shall Persons. include corporations, except where otherwise specified, and officers, partnerships, and women, and when used with reference to the commission of acts which are herein forbidden shall include persons who are participants in the forbidden acts, and the agents, officers, and members of the board of directors or trustees, or other similar controlling bodies of corporations; (20) " petition " shall mean a paper filed in Petition. a court. of bankruptcy or with a clerk or deputy clerk by a debtor praying for the benefits of this Act, or by creditors alleging the commission of an act of bankruptcy by a debtor therein named; (21) " referee " shall mean the referee who has jurisdiction of the case or to Referee. whom the case has been referred, or anyone acting in his stead; (22) conceal "conceal" shall include secrete, falsify, and mutilate; (23) "secured secured creditor. creditor shall include a creditor who has security for his debt upon the property of the bankrupt of a nature to be assignable under this Act, or who owns such a debt for which some indorser, surety, or other persons secondarily liable for the bankrupt has such security upon the bankrupt's assets; (24) "States" shall include the Territories, the states. Indian Territory, Alaska, and the District of Columbia; (25) "trans- Transfer. fer " shall include the sale and every other and different mode of disposing of or parting with property, or the possession of property, absolutely or conditionally, as a payment, pledge, mortgage, gift, or security; (26) " trustee " shall include all of the trustees of an estate; (27) "( wage- Trustee. earner" shall mean an individual who works for wages, salary, or hire, age earner at a rate of compensation not exceeding one thousand five hundred dollars per year; (28) words importing the masculine gender may be scope of words imapplied to and include corporations, partnerships, and women; (29) prting the masculine words importing the plural number may be applied to and mean only a -plural number. single person or thing; (30) words importing the singular number may -Binglar number. be applied to and mean several persons or things. CHAPTER II. CREATION OF COURTS OF BANKRUPTCY AND THEIR JURISDICTION. SEC. 2. That the courts of bankruptcy as hereinbefore defined, viz, Creation of courts the district courts of the United States in the several States, the of bankruptcy. supreme court of the District of Columbia, the district courts of the several Territories, and the United States courts in the Indian Territory and the District of Alaska, are hereby made courts of bankruptcy, and are hereby invested, within their respective territorial limits as now --jnrisdiction. established, or as they may be hereafter changed, with such jurisdiction at law and in equity as will enable them to exercise original jurisdiction in bankruptcy proceedings, in vacation in chambers and during their respective terms, as they are now or may be hereafter held, to (1) -secific powers. adjudge persons bankrupt who lave had their principal place of business, resided, or had their domicile within their respective territorial jurisdictions for the preceding six months, or the greater portion thereof, or who do not have their principal place of business, reside, or have their domicile within the United States, but have property within their jurisdictions, or who have been adjudged bankrupts by courts of competent jurisdiction without the United States and have property within their jurisdictions; (2) allow claims, disallow claims, reconsider allowed or disallowed claims, and allow or disallow them against bankrupt estates; (3) appoint receivers or the marshals, upon application of parties in interest, in case the courts shall find it absolutely necessary, for the preservation of estates, to take charge of the property of bankrupts after the filing of the petition and until it is dismissed or the trustee is qualified; (4) arraign, try, and punish bankrupts, officers, and other persons, and the agents, officers, members of the board of directors or trustees, or other similar controlling bodies, of corporations VOL XX35 FIFTY-FIFTH CONGRESS. rnspecified powers continued, SESS. I. CH. 541. 1898. for violations of this Act, in accordance with the laws of procedure of the United States now in force, or such as may be hereafter enacted, regulating trials for the alleged violation of laws of the United States; (5) authorize the business of bankrupts to be conducted for limited periods by receivers, the marshals, or trustees, if necessary in the best interests of the estates; (6) bring in and substitute additional persons or parties in proceedings in bankruptcy when necessary for the complete determination of a matter in controversy; (7) cause the estates of bankrupts to be collected, reduced to money and distributed, and determine controversies in relation thereto, except as herein otherwise provided; (8) close estates, whenever it appears that they have been fully administered, by approving the final accounts and discharging the trustees, and reopen them whenever it appears they were closed before being fully administered; (9) confirm or reject compositions between debtors and their creditors, and set aside compositions and reinstate the cases; (10) consider and confirm, modify or overrule, or return, with instructions for further proceedings, records and findings certified to them by referees; (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 bankrupts, officers, and other persons to all lawful orders, by fine or imprisonment or fine and imprisonment; (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; (16) punish persons for contempts committed before referees; (17) pursuant to the recommendation of creditors, or when they neglect to recommend the appointment of trustees, appoint trustees, and upon complaints of creditors, remove trustees for cause upon hearings and after notices to them; (18) tax costs, whenever they are allowed by law, and render judgments therefor against the unsuccessful party, or the successful party for cause, or in part against each of the parties, and against estates, in proceedings in bankruptcy; and (19) transfer cases to other courts of bankruptcy. 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. Ban k rulpts. BANKRUPTS. A *tt fhanitkruptcy, SEC. 3. ACTS OF BANKRIUPTCY.-a Acts of bankruptcy by a person shall consist of his having (1) conveyed, transterred, concealed, or what cstitutra. Filing petiton 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 (2) transferred, while insolvent, any portion of his property to one or more of his creditors with intent to prefer such creditors over his other creditors; or (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 final disposition of any property affected by such preference vacated or discharged such preference; or (4) made a general assignment for the benefit of his creditors; or (5) admitted in writing his inability to pay his debts and his willingness to be adjudged a bankrupt on that ground. ) A petition may be filed against a person who is insolvent and who 1 act ,,' bank-:has committed an act of bankruptcy within four months after the com]i't:ti mission of such act. Such time shall not expire until four months after ulptt y -timue of. (1) the date of the recording or registering of the transfer or assignnlelt when the act consists in having imade 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 FIFTY-FIFTH CONGRESS. SESS.II. C. . 541. 1898. 547 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. cIt shall be a complete defense to any proceedings in bankruptcy Defenseofsolvency. instituted under the first subdivision of this section to allege and prove that the party proceeded against was not insolvent as defined in this Act at the time of the filing the petition against him, and if solvency at such date is proved by the alleged bankrupt the proceedings shall be dismissed, and under said subdivision one the burden of proving solvency shall be on the alleged bankrupt. dWhenever a person against whom a petition has been filed as herein- Denialof insolvency. before provided under the second and third subdivisions of this section takes issue with and denies the allegation of his insolvency, it shall be his duty to appear in court on the hearing, with his books, papers, and accounts, and submit to an examination, and give testimony as to all matters tending to establish solvency or insolvency, and in case of his failure to so attend and submit to examination the burden of proving his solvency shall rest upon him. eWhenever a petition is filed by any person for the purpose of having Bond by petioner another adjudged a bankrupt, and an application is made to take Ponapplieration toold charge of and hold the property of the alleged bankrupt, or any part aanrlopt. of the same, prior to the adjudication and pending a hearing on the petition, the petitioner or applicant shall file in the same court a bond with at least two good and sufficient sureties who shall reside within the jurisdiction of said court, to be approved by the court or a judge thereof, in such sum as the court shall direct, conditioned for the payment, in case such petition is dismissed, to the respondent, his or her personal representatives, all costs, expenses, and damages occasioned by such seizure, taking, and detention of the property of the alleged bankrupt. If such petition be dismissed by the court or withdrawn by the peti- orCst8sonithdrawal tioner, the respondent or respondents shall be allowed all costs, counsel tion. fees, expenses, and damages occasioned by such seizure, taking, or detention of such property. Counsel fees, costs, expenses, and damages shall be fixed and allowed by the court, and paid by the obligors in such bond. SEC. 4. WHO MAY BECOME BANKRUPTS.-a Any person who owes w i ma y become debts, except a corporation, shall be entitled to the benefits of this Act -volunary. as a voluntary bankrupt. b Any natural person, except a wage-earner or a person engaged -involuntary. chiefly in farming or the tillage of the soil, any unincorporated company, and any corporation engaged principally in manufacturing, trading, printing, publishing, or mercantile pursuits, owing debts to the amount of one thousand dollars or over, may be adjudged an involuntary bankrupt upon default or an impartial trial, and shall be subject to the provisions and entitled to the benefits of this Act. Private bankers, but not national banks or banks incorporated under State or Territorial laws, may be adjudged involuntary bankrupts. SEC. 5. PARTNERS.-a A partnership, during the continuation of the Partners. partnership business, or after its dissolution and before the final settlement thereof, may be adjudged a bankrupt b The creditors of the partnership shall appoint the trustee; in other Adminiistration of respects so far as possible the estate shall be administered as herein ec provided for other estates. c The court of bankruptcy which has jurisdiction of one of the part- Jnrisdiction. ners may have jurisdiction of all the partners and of the administration of the partnership and individual property. d The trustee shall keep separate accounts of the partnership property Accounts. and of the property belonging to the individual partners. e The expenses shall be paid from the partnership property and the Expene. individual property in such proportions as the court shall determine. 548 Disposition of net proceeds of partnerr ship propertv -injfividgaestate. -surpls,. Reciprocal claims, paleshtate, detc. Partners not adjudged bankrupt, administration of part nership estate. Exemptionsofbank- rupts. Dutiesofbankrupts specified. FIFTY-FIFTH CONGRESS. SESS. II. CU. 541. 1898. fThe net proceeds of the partnership property shall be appropriated to the payment of the partnership debts, and the net proceeds of the individual estate of each partner to the payment of his individual debts. Should any surplus remain of the property of any partner after paying his individual debts, such surplus shall be added to the partnership assets and be applied to the payment of the partnership debts. Should any surplus of the partnership property remain after paying the partnership debts, such surplus shall be added to the assets of the individual partners in the proportion of their respective interests in the partnership. g The court may permit the proof of the claim of the partnership estate against the individual estates, and vice versa, and may marshal the assets of the partnership estate and individual estates so as to prevent preferences and secure the equitable distribution of the property of the several estates. h In the event of one or more but not all of the members of a partnership being adjudged bankrupt, the partnership property shall not be administered in bankruptcy, unless by consent of the partner or partners not adjudged bankrupt; but such partner or partners not adjudged bankrupt shall settle the partnership business as expeditiously as its nature will permit. and account for the interest of the partner or partners adjudged bankrupt. SEC. 6. EXEMPTIONS OF BANKRUPTS.-a This Act shall not aftect the allowance to bankrupts of the exemptions which are prescribed by the State laws in force at the time of the filing of the petition in the State wherein they have had their domicile for the six months or the greater portion thereof immediately preceding the filing of the petition. SEC. 7. DUTIES OF BANKRUPTS.-a The bankrupt shall (1) attend the first meeting of his creditors. if directed by the court or a judge thereof to do so, and the hearing upon his application for a discharge, if filed- (2) comply with all lawful orders of the court; (3) examine the correctness of all proofs of claims filed against his estate; (4) execute and deliver such papers as shall be ordered by the court; (5) execute to his trustee transfers of all his property in foreign countries; (6) immediately inform his trustee of any attempt, by his creditors or other persons, to evade the provisions of this Act, coming to his knowledge; (7) in case of any person having to his knowledge proved a false claim against his estate, disclose that fact immediately to his trustee; (8) prepare, make oath to, and tile in court within ten days, unless further time is granted, after the adjudication, if an involuntary bankrupt, and with the petition if a voluntary bankrupt, a schedule of his property, showing the amount and kind of property, the location thereof, its money value in detail, and a list of his creditors, showing their residences, if known, if unknown, that fact to be stated, the amounts due each of them, the consideration thereof, the security held by them, if any, and a claim for such exemptions as he may be entitled to, all in triplicate, one copy of each for the clerk, one for the referee. and one for the trustee; and (9) wheli present at the first meeting of his creditors. and at such other times as the court shall order, submit to an examination concerning the conducting of his business, tile cause of his banlkruptcy, his dealings with his creditors and other persons, the amount. kind, and whereabouts of his property, and, in addition, all matters which may affect the administration and settlement of his estate; but no testimony given by him shall be offered in evidence against him in any criminal proceeding. .. .. Prorided,howerer. That he shall not be required to attend a meeting P. of his creditors, or at or for an examination at a place more than one Lmitatiohundred and fifty miles distant from his home or principal place of business, or to examine claims except when presented to him, unless i ni.t ordered by the court. or a judge thereof, for cause shown, and the bankl.allkr lt'l rupt shall be paid his actual expenses from the estate when examined ot trenliauce. et. or required to attend at any place other than the city, town, or village of his residence. FIFTY-FIFTH CONGRESS. SESS. II. CH.5. 549 1898. SEC. 8. DEATH OR INSANITY OF BANKRUPTS.-a The death or insan- Death or insanity of aba ity of a bankrupt shall not abate the proceedings, but the same shall be proceedings. conducted and concluded in the same manner, so far as possible, as though he had not died or become insane: Provided, That in case of Proriso. death the widow and children shall be entitled to all rights of dower and Dower. allowance fixed by the laws of the State of the bankrupt's residence. SEC. 9. PROTECTION AND DETENTION OF BANKRUPTS.-a A bank- Protection and de- SEC. 10. EXTRADITION OF BANKRUPTS.-a Whenever a warrant for Extraditionofbank. of bankrupts. rupt shall be exempt from arrest upon civil process except in the fol- tention -exemptions from arlowing cases: (1) When issued from a court of bankruptcy for contempt rest or disobedience of its lawful orders; (2) when issued from a State court having jurisdiction, and served within such State, upon a debt or claim from which his discharge in bankruptcy would not be a release, and in such case he shall be exempt from such arrest when in attendance upon a court of bankruptcy or engaged in the performance of a duty imposed by this Act. b The judge may, at any time after the filing of a petition by or -detention. against a person, and before the expiration of one month after the qualification of the trustee, upon satisfactory proof by the affidavits of at least two persons that such bankrupt is about to leave the district in which he resides or has his principal place of business to avoid examination, and that his departure will defeat the proceedings in bankruptcy, issue a warrant to the marshal, directing him to bring such bankrupt forthwith before the court for examination. If upon hearing the evidence of the parties it shall appear to the court or a judge thereof that the allegations are true and that it is necessary, he shall order such marshal to keep such bankrupt in custody not exceeding ten days, but not imprison him, until he shall be examined and released or give bail conditioned for his appearance for examination, from time to time, not exceeding in all ten days, as required by the court, and for his obedience to all lawful orders made in reference thereto. the apprehension of a bankrupt shall have been issued, and he shall rupts. have been found within the jurisdiction of a court other than the one issuing the warrant, he may be extradited in the same manner in which persons under indictment are now extradited from one district within which a district court has jurisdiction to another. SEC. 11. SUITS BY AND AGAINST BANKRUPTS.-a A suit which is founded upon a claim from which a discharge would be a release, and which is pending against a person at the time of the filing of a petition against him, shall be stayed until after an adjudication or the dismissal of the petition; if such person is adjudged a bankrupt, such action may be further stayed until twelve months after the date of such adjudication, or, if within that time such person applies for a discharge, then until the question of such discharge is determined. b The court may order the trustee to enter his appearance and defend any pending suit against the bankrupt.f. 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. SEC. 12. COMiPOSITIONS, 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 Anu application for the confirmation 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 Suits by and againt -pn1'3 i8. g s lits stayed, etc. Trustee, appearance -prosecution of snit by. -limit of time. Compositions. -time when terms may be offered -when application for confirmation may be iled. FIFTY-FIFTH CONGRESS. SESS. II. Cn. 541. 1898. 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. Time and place of C A date and place, with reference to the convenience of the parties hearing. in interest, shall be fixed for the hearing npon each application for the confirmation of a composition, and such objections as may be made to its confirmation. dThe judge shall confirm a composition if satisfied that (1) it is for Conditions requisite the best interests of the creditors; (2) the bankrupt has not been guilty to confrmation 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. eUpon the confirmation of a composition, the consideration shall be Composition condistributed as the judge shall direct, and the case dismissed. When-unconfirned. ever a composition is not confirmed, the estate shall be administered in bankruptcy as herein provided. Compositions, when Discharges. -application for. -time of hearing. -conditionl to discharge. SEC. 13. COMPOSITIONS, WHEN SET ASIDE.-a The judge may, upon the application of 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. 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. b The judge shall hear the application for a discharge, and such proofs and pleas as may be made in opposition thereto by parties in interest, at such time as will give parties in interest a reasonable opportunity to be fully heard, and investigate the merits of the application set aside. requisite and discharge the applicant unless he has (1) committed an offense punishable by imprisonment as herein provided; or (2) with fraudulent I)isirge by oln- po.'tillI. intent to conceal his true financial condition and in contemplation of bankruptcy, destroyed, concealed, or failed to keep books of account or records from which his true condition might be ascertained. C The contirmnation of a composition shall discharge the bankrupt from his debts, other than those agreed to be paid by the terms of the composition and those not affected by a discharge. SEC. 15. DISCHARGES, WHEN REVOKED.-a The judge may, upon the application of parties in interest who have not been guilty of undue laches, tiled at any time within one year after a discharge shall have been granted, revoke it upon a trial if it shall be made to appear that it was obtained through the fraud of the bankrupt, and that the knowledge of the fraud has conic to the petitioners since the granting of the discharge, and that the actual facts did not warrant the discharge. (',,>lt,t,,r it anfSEC. 16. CO-DEBTORS OF BANKRUPTS.-a The liability of a person fe tq,i iv dlischarge of t who is a co debtor with, or guarantor or in any manner a surety for, a ' a,'l' bankrupt shall not be altered by the discharge of such bankrupt. blxto nor nafecte. SEC. 17. DEBTS NOT AFFECTED BY A DISCHARGE.-aA discharge l: optci by a ,tis in bankruptcy shall release a bankrupt from all of his provable debts, " tll. except such as (I) are due as a tax levied by the United States. the State, county, district, or nmunicipality in which he resides; (2) are judlgments in actions for frauds, or obtaining property by false pretenses or false representations, or for willful and malicious injuries to the person or property of another; (3) have not been duly scheduled in time for proof and allowance, with the name of the creditor if known to the bankrupt. unless such creditor had notice or actual knowledge of the proceedings in bankruptcy; or (4) were created by his fraud, l)i, ar.M l wihel re,,k '. FIFTY FIFTH CONGRESS. SESS. I. CH. 541. 1898. 551 embezzlement, misappropriation, or defalcation while acting as an officer or in any fiduciary capacity. CHAPTER IV. COURTS AND PROCEDURE THEREIN. Courts and pro. cedure therein. SEC. 18. PROCESS, PLEADINGS, AND ADJUDICATIONS.-a Upon the and Process, pleadings, adjudications. filing of a petition for involuntary bankruptcy, service thereof, with Service of petition a writ of subpoena, shall be made upon the person therein named as invpoltary bank- 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 can not 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 in equity in courts of the United States. b The bankrupt, or any creditor, may appear and plead to the petition Pleadinga within ten days after the return day, or within such further time as the court may allow. c All pleadings setting up matters of fact shall be verified under oath. -verification of. d If the bankrupt, or any of his creditors, shall appear, within the sues. time limited, and controvert the facts alleged in the petition, the judge 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 makes the adjudication or dismiss the petition. elf on the last day within which pleadings may be filed none are Failure to plead, filed by the bankrupt or any of his creditors, the judge shall on the judgment. next day, if present, or as soon thereafter as practicable, make the adjudication or dismiss the petition. fIf 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 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. SEC. 19. JURY TRIALS.-a A person against whom an involuntary petition has been filed shall be entitled to have a trial byjury. in respect to the question of his insolvency, except as herein otherwise provided, Absence judge, reference to ofrefeiree. Voluntary petition. .nl ry trials and any act of bankruptcy alleged in such petition to have been committed, upon filing a written application therefor at or before the tim within which an answer may be filed. If such application is not file 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 Attendance ofjur, summoned for the trial, or the case may be postponed, or, if the case is pending in one of the district courts within the jurisdiction of a circuit court of the United States, it may be certified for trial to the circuit court sitting at the same place, or by consent of parties when sitting at any other place in the same district, if such circuit court has or is to have a jury first in attendance. c The right to submit matters in controversy, or an alleged offense jxisrtinag laws as to under this Act, to a jury shall be determined and enjoyed, except as provided by this Act, according to the United States laws now in force or such as may be hereafter enacted in relation to trials by jury. SEC. 20. OATHS. AFFIRMATIONS.-a Oaths required by this Act, -1thom iadmnis except upon hearings in court, may be administered by (1) referees; (2) tered. officers authorized to administer oaths in proceedings before the courts FIFTY-FIFTH CONGRESS. 552 SESS. II. CH. 541. 1898. 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. Affirmations. 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. EVIDENCE.-a A court of bankruptcy may, upon application of any officer, bankrupt, or creditor, by order require any designated person, including the bankrupt, who is a competent witness under the Evidence. Appearance of wit- laws of the State in which the proceedings are pending, 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. nesses. Existin, t gotionns laws to f de n -notice, filing of, and servicesevery Certified copies of records, force of. -of copy of order ap- proving bond of trstee. -of order confirming composition etc. b The right to take depositions in proceedings under this Act shall be determined and enjoyed according to the United States laws now in force, or such as may be hereafter enacted relating to the taking of depositions, except as herein provided. C Notice of the taking of depositions shall be filed with the referee in 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 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 an order confirming or setting aside a compositio, 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 an order confirming a composition shall constitute evidence of the revesting of the title of his property in the bankrupt, and if recorded shall impart the same notice that a deed from the trustee to the bankrupt if recorded would impart. Referenc,- of cases atter a it udiction. t'ira:l.er.'f lt afllt her -,er Jiri,^ti ['n11,ed ita a-Reto satt. .,,rl.i. (tll',,llr-i. ,t,4ro,rl llatll suirt, to proceed with the administration of the estate, or refer it (1) generally to the referee or specially with only limited authority to act in the premises or to consider and report upon specified issues; or (2) to any referee within the territorial jurisdiction of the court, if the convenience of parties in interest will be served thereby, or for cause, or if the bankrupt does not do business, reside, or have his domicile in the district. b The judge may, at any time, for the convenience of parties or for cause, transfer a case from one referee to another. 's lld SEC. :3. JURISDICTION OF UNITEI) STATES AND STATE COURTS.I a The United States circuit courts shall have jurisdiction of all conIS le, troversies at law and in equity, as distinguished from proceedings in bankruptcy, between trustees as such and adverse claimants concern- i,- trustee. v>,iroliitt SEC. 22. REFERENCE OF' CASES AFTER ADJUDICATION.-a After a person has been adjudged a bankrupt the judge may cause the trustee ing the property acquired or claimed by the trustees, in the same manner and to the same extent only as though bankruptcy proceedings had not been instituted and such controversies had been between the bankrupts and such adverse claimants. b Suits by the trustee shall only be brought or prosecuted in the courts where the bankrupt, whose estate is being administered by such trustee, might have brought or prosecuted them if proceedings in bankruptcy had not been instituted, unless by consent of the proposed defendant. FIFTH-FIFTH CONGRESS. SESS. II. CH. 541. 553 1898. c The United States circuit courts shall have concurrent jurisdiction Concurrent with the courts of bankruptcy, within their respective territorial limits, d of the offenses enumerated in this Act. SEC. 24. JURISDICTION OF APPELLATE COURTS.-a The Supreme Court of the United States, the circuit courts of appeals of the United States, and the supreme courts of the Territories, in vacation in chambers and during their respective terms, as now or as they may be hereafter held, are hereby invested with appellate jurisdiction of controversies arising in bankruptcy proceedings from the courts of bankruptcy from which they have appellate jurisdiction in other cases. The Supreme Court of the United States shall exercise a like jurisdiction from courts of bankruptcy not within any organized circuit of the United States and from the supreme court of the District of Columbia. b The several circuit courts of appeal shall have jurisdiction in equity, either interlocutory or final, to superintend and revise in matter of law the proceedings of the several inferior courts of bankruptcy within their jurisdiction. Such power shall be exercised on due notice and petition by any party aggrieved. SEC. 25. APPEALS AND WRITS OF ERBOB.-a That appeals, as in juris- Jurisdiction of ap- pellate courts. fAPpea and rite equity cases, may be taken in bankruptcy proceedings from the courts -- hen taken from of bankruptcy to the circuit court of appeals of the United States, and courts of bankruptcy. to the supreme court of the Territories, in the following cases, to wit, (1) from a judgment adjudging or refusing to adjudge the defendant a bankrupt; (2) from a judgment granting or denying a discharge; and (3) from a judgment allowing or rejecting a debt or claim of five hundred dollars or over. Such appeal shall be taken within ten days after the judgment appealed from has been rendered, and may be heard and determined by the appellate court in term or vacation, as the case may be. b From any final decision of a court of appeals, allowing or rejecting -from courts of ap a claim under this Act, an appeal may be had under such rules and within such time as may be prescribed by the Supreme Court of the United.States, in the following cases and no other: 1. Where the amount in controversy exceeds the sum of two thou sand dollars, and the question involved is one which might have been taken on appeal or writ of error from the highest court of a State to the Supreme Court of the United States; or 2. Where some Justice of the Supreme Court of the United States shall certify that in his opinion the determination of the question or questions involved in the allowance or rejection of such claim is essential to a uniform construction of this Act throughout the United States. ubond reqred c Trustees shall not be required to give bond when they take appeals frNo or sue out writs of error. d Controversies may be certified to the Supreme Court of the United (ertiorari to SuStates from other courts of the United States, and the former court may exercise jurisdiction thereof and issue writs of certiorari pursuant to the provisions of the United States laws now in force or such as may be hereafter enacted. SEC. 26. ARBITRATION OF CONTROVERSIES.-a The trustee may, Arbitration of clnpursuant to the direction of the court, submit to arbitration any controversy arising in the settlement of the estate. b Three arbitrators shall be chosen by mutual consent, or one by the pArbitrators aptrustee, one by the other party to the controversy, and the third by pontmeof. the two so chosen, or if they fail to agree in five days after their appointment the court shall appoint the third arbitrator. c The written finding of the arbitrators, or a majority of them, as to Finding, force of. the issues presented, may be filed in court and shall have like force and efect as the verdict of a jury. SEC. 27. COMPROMISES.-a The trustee may, with the approval of Compremmse the court, compromise any controversy arising in the administration of FIFTY-FIFTH CONGRESS. 554 Designation of newspapers. Offenses. -punishable Cu. 541. 1898. the estate upon such terms as he may deem for the best interests of the estate. SEC. 28. DESIGNATION OF NEWSPAPERS.-a Courts of bankruptcy shall by order designate a newspaper published within their respective territorial districts, and in the county in which the bankrupt resides or the major part of his property is situated, in which notices required to be published by this Act and orders which the court may direct to be published shall be inserted. Any court may in a particular case, for the convenience of parties in interest, designate some additional newspaper in which notices and orders in such case shall be published. by im- prisonmentn to e- ceedfiveyars. -two SESS. II. SEC. 29. OFFENSES.-a A person shall be punished, by imprisonment for a period not to exceed five years, upon conviction of the offense of having knowingly and fraudulently appropriated to his own use, embezzled, spent, or unlawfully transferred any property or secreted or destroyed any document belonging to a bankrupt estate which came into his charge as trustee. years. -fine not exceeding 50. etc. Tim for tiling indict- b A person shall be punished, by imprisonment for a period not to exceed two years, upon conviction of the offense of having knowingly and fraudulently (1) concealed while a bankrupt, or after his discharge. from his trustee any of the property belonging to his estate in bankruptcy; or (2) made a false oath or account in, or in relation to, any proceeding in bankruptcy; (3) presented under oath any false claim for proof against the estate of a bankrupt, or used any such claim in composition personally or by agent, proxy, or attorney, or as agent, proxy, or attorney; or (4) received any material amount of property from a bankrupt after the filing of the petition, with intent to defeat this Act; or (5) extorted or attempted to extort any money or property from any person as a consideration for acting or forbearing to act in bankruptcy proceedings. c A person shall be punished by fine, not to exceed five hundred dollars, and forfeit his office, and the same shall thereupon become vacant, noon conviction of the offense of having knowingly (1) acted as a referee in a case in which he is directly or indirectly interested; or (2) purchased, while a referee, directly or indirectly, any property of the estate in bankruptcy of which he is referee; or (3) refused, while a referee or trustee, to permit a reasonable opportunity for the inspection of the accounts relating to the affairs of, and the papers and records of, estates in his charge by parties in interest when directed by the court so to do. d A person shall not be prosecuted for any offense arising under this Act unless the indictment is found or the information is filed in court within one year after the commission of the offense. Rules, formi, anl. SEC. 30. RULES, FOR'MS, AND ORDERS.-a All necessary rules, forms, orders. siprem.ne O(:,rt to and orders as to procedure and for carrying this Act into force and ment. prrerib.CompntLtinlftile. TranSter :,f,,e. effect shall be prescribed, and may be amended from time to time, by the Supreme Court of the United States. >SEC. 31. COMPUTATION OF TI[rE.-a Whenever time is enumerated by days in this Act, or in any proceeding in bankruptcy, the number of days shall be computed by excluding the first and including the last, unless the last fall on a Sunday or holiday, in which event the day last included shall be the next day thereafter which is not a Sunday or a legal holiday. SEC. 32. TRANSFER OF CASES.-a In the event petitions are filed against the same person, or against different members of a partnership, in different courts of bankruptcy each of which has jurisdiction, the cases shall be transferred, by order of the courts relinquishing jurisdic tion, to and be consolidated by the one of such courts which can proceed with the same for the greatest convenience of parties in interest. FIFTY-FIFTH CONGRESS. SESS. II. CH. 541. 555 1898. CHAPTER V. OFFICERS, THEIR DUTIES AND COMIPENSATION. Officers, their duties and compensation. SEC. 33 CREATION OF Two OFFICES.-a The offices of referee and Referee and trustee, offices created trustee are hereby created. SEC. 34. APPOINTMENT, REMOVAL, AND DISTRICTS OF REFER- Referees. EES.-a Courts of bankruptcy shall, within the territorial limits of -appointment, removwhich they respectively have jurisdiction, (1) appoint referees, each for ' a " districts of. a term of two years, and may, in their discretion, remove them because their services are not needed or for other cause; and (2) designate, and from time to time change, the limits of the districts of referees, so that each county, where the services of a referee are needed, may constitute at least one district. SEC. 35. QUALIFICATIONS OF REFEREES.-a Individuals shall not -qualifications of. be eligible to appointment as referees unless they are respectively (1) competent to perform the duties of that office; (2) not holding any office of profit or emolument under the laws of the United States or of any State other than commissioners of deeds, justices of the peace, masters in chancery, or notaries public; (3) not related by consanguinity or affinity, within the third degree as determined by the common law, to any of the judges of the courts of bankruptcy or circuit courts of the United States, or of the justices or judges of the appellate courts of the districts wherein they may be appointed; and (4) residents of, or have their offices in, the territorial districts for which they are to be appointed. SEC. 36. OATHS OF OFFICE OF REFEREES.-a Referees shall take -oaths of office. the same oath of office as that prescribed for judges of United States courts. SEC. 37. NUMBER OF REFEBEES.-a Such number of referees shall -nuber of. be appointed as may be necessary to assist in expeditiously transacting the bankruptcy business pending in the various courts of bankruptcy. SEC. 38. JURISDICTION OF REFEREES.-a Referees respectively are -jurisdiction speci- hereby invested, subject always to a review by the judge, within the ed. limits of their districts as established from time to time, with jurisdiction to (1) consider all petitions referred to them by the clerks and make the adjudications or dismiss the petitions; (2) exercise the powers vested in courts of bankruptcy for the administering of oaths to and the examination of persons as witnesses and for requiring the production of documents in proceedings before them, except the power of commitment; (3) exercise the powers of the judge for the taking possession and releasing of the property of the bankrupt in the event of the issuance by the clerk of a certificate showing the absence of a judge from the judicial district, or the division of the district, or his sickness, or inability to act; (4) perform such part of the duties, except as to questions arising out of the applications of bankrupts for compositions or discharges, as are by this Act conferred on courts of bankruptcy and as shall be prescribed by rules or orders of the courts of bankruptcy of their respective districts, except as herein otherwise provided; and (5) upon the application of the trustee during the examination of the bankrupts, or other proceedings, authorize the employment of stenographers at the expense of the estates at a compensation not to exceed ten cents per folio for reporting and transcribing the proceedings. SEC. 39. DUTIES OF REFEREES.-a Referees shall (1) declare divi- Duties of referees dends and prepare and deliver to trustees dividend sheets showing the spcid. dividends declared and to whom payable; (2) examine all schedules of property and lists of creditors filed by bankrupts and cause such as are incomplete or defective to be amended; (3) furnish such information concerning the estates in process of administration before them as may be requested by the parties in interest; (4) give notices to creditors as herein provided; (5) make up records embodying the evidence, or the substance thereof, as agreed upon by the parties in all contested matters arising before them, whenever requested to do so by either of the parties 556 FIFTY-FIFTH CONGRESS. Disqualification of reerees SESS.II. CH. 541. 1898. thereto, together with their findings therein, and transmit them to the judges; (6) prepare and file the schedules of property and lists of creditors required to be filed by the bankrupts, or cause the same to be done, when the bankrupts fail, refuse, or neglect to do so; (7) safely keep, perfect, and transmit to the clerks the records, herein required to be kept by them, when the cases are concluded; (8) transmit to the clerks such papers as may be on file before them whenever the same are needed in any proceedings in courts, and in like manner secure the return of such papers after they have been used, or, if it be impracticable to transmit the original papers, transmit certified copies thereof by mail; (9) upon application of any party in interest, preserve the evidence taken or the substance thereof as agreed upon by the parties before them when a stenographer is not in attendance; and (10) whenever their respective offices are in the same cities or towns where the courts of bankruptcy convene, call upon and receive from the clerks all papers filed in courts of bankruptcy which have been referred to them. b Referees shall not (1) act in cases in which they are directly or indirectly interested; (2) practice as attorneys and counselors at law in any bankruptcy proceedings; or (3) purchase, directly or indirectly, any property of an estate in bankruptcy. ompensation. -on transferfrom to another referee. to SEC. 40. COMPENSATION OF REFEREES.-a Referees shall receive as full compensation for their services, payable after they are rendered, a fee of ten dollars deposited with the clerk at the time the petition is filed in each case, except when a fee is not required from a voluntary bankrupt, and from estates which have been administered before them one per centum commissions on sums to be paid as dividends and commissions, or one half of one per centum on the amount to be paid to creditors upon the confirmation of a composition. one anoer -revocation of referenceetc. rCoereeupt before Proriso. Attlenl.ane ,,f *it b Whenever a case is transferred from one referee to another the judge shall determine the proportion in which the fee and commissions therefor shall be divided between the referees. c In the event of the reference of a case being revoked before it is concluded, and when the case is specially referred, the judge shall determine what part of the fee and commissions shall be paid to the referee. SEC. 41. CONTEMPTS BEFORE REFEREES.-aA person shall not, in proceedings before a referee, (1) disobey or resist any lawful order, process, or writ; (2) misbehave during a hearing or so near the place thereof as to obstruct the same; (3) neglect to produce, after having been ordered to do so, any pertinent document; or (4) refuse to appear after having been subp(enaed, or. upon appearing, refuse to take the oath as a witness, or, after having taken the oath, refuse to be examinel according to law: Provided, That no person shall be required to attend as a witness before a referee at a place outside of the State of shis residence, and more'than one hundred miles from such place of residence, and only in case his lawful mileage and fee for one day's attendance shall be first paid or tendered to him. Pr:elwd,-C . telll lt -p'"na v. on"' b The referee shall certify the facts to the judge, if any person shall do any of the things forbidden in this section. The judge shall thereupon. in a summary manner, hear the evidence as to the acts complained of, and, if it is such as to warrant him in so doing, punish such person 'in the same manner and to the same extent as for a contempt committed before the court of bankruptcy. or commit such person upon the same conditions as if the doing of the forbidden act had occurred with reference to the process of, or in the presence of, the court. Records ,,f refere.es SEC. 42. EECORDS OF REFEREES.-a The records of all proceedings -i,,iialnr ot keeping. in each case before a referee shall be kept as nearly as may be in the same manner as records are now kept in equity cases in circuit courts of the United States. b A record of the proceedings in each case shall be kept in a separate book or books, and shall, together with the papers on file, constitute the records of the case. FIFTY-FIFTH CONGRESS. SESS. II. CH. 541. '1898. 557 c The book or books containing a record of the proceedings shall, -certificate. when the case is concluded before the referee, be certified to by him, and, together with such papers as are on filebefore him, be transmitted -transmission to to the court of bankruptcy and shall there remain as a part of the courtof bankrptcy. records of the court. SEC. 43. REFEREE'S ABSENCE OR DISABILITY.-a Whenever the Referee's absence or office of a referee is vacant, or its occupant is absent or disqualified to disability act, the judge may act, or may appoint another referee, or another referee holding an appointment under the same court may, by order of the judge, temporarily fill the vacancy. SEC. 44. APPOINTMENT OF TRUSTEES.-a The creditors of a bank- Trustees. rupt estate shall, at their first meeting after the adjudication or after a -appointment of vacancy has occurred in the office of trustee, or after an estate has been reopened, or after a composition has been set aside or a discharge revoked, or if there is a vacancy in the office of trustee, appoint one trustee or three trustees of such estate. If the creditors do not appoint a trustee or trustees as herein provided, the court shall do so. SEC. 45. QUALIFICATIONS OF TRUSTEES.-a Trustees may be (1) -qalifications o individuals who are respectively competent to perform the duties of that office, and reside or have an office in the judicial district within which they are appointed, or (2) corporations authorized by their charters or by law to act in such capacity and having an office in the judicial district within which they are appointed. SEC. 46. DEATH OR REMOVAL OF TRUSTEES.-a The death or -deathor removal. removal of a trustee shall not abate any suit or proceeding which he is prosecuting or defending at the time of his death or removal, but the same may be proceeded with or defended by his joint trustee or successor in the same manner as though the same had been commenced or was being defended by such joint trustee alone or by such successor. SEC. 47. DUTIES OF TRUSTEES.-a Trustees shall respectively (1) -duties specified. account for and pay over to the estates under their control all interest received by them upon property of such estates; (2) collect and reduce to money the property of the estates for which they are trustees, under the direction of the court, and close up the estate as expeditiously as is compatible with the best interests of the parties in interest; (3) deposit all money received by them in one of the designated depositories; (4) disburse money only by check or draft on the depositories in which it has been deposited; (5) furnish such information concerning the estates of which they are trustees and their administration as may be requested by parties in interest; (6) keep regular accounts showing all amounts received and from what sources and all amounts expended and on what accounts; (7) lay before the final meeting of the creditors detailed statements of the administration of the estates; (8) make final reports and file final accounts with the courts fifteen days before the days fixed for the final meetings of the creditors; (9) pay dividends within ten days after they are declared by the referees: (10) report to the courts, in writing, the condition of the estates and the amounts of money on hand, and such other details as may be required by the courts, within the first month after their appointment and every two months thereafter, unless otherwise ordered by the courts; and (11) set apart the bankrupt's exemptions and report the items and estimated value thereof to the court as soon as practicable after their appointment. b Whenever three trustees have been appointed for an estate, the concurrence of at least two of them shall be necessary to the validity Concurrence of two ree trustees tec of their every act concerning the administration of the estate. SEC. 48. COMPENSATION OF TRUSTEES.-a Trustees shall receive, as Compensation. full compensation for their services, payable after they are rendered, a fee of five dollars deposited with the clerk at the time the petition is -fees filed in each case, except when a fee is not required from a voluntary bankrupt, and from estates which they have administered, such corn- -commssion missions on sums to be paid as dividends and commissions as may be allowed by the courts, not to exceed three per centum on the first five thousand dollars or less, two per centum on the second five thousand FIFTY-FIFTH CONGRESS. 558 SESS. II. CH. 541. 1898. dollars or part thereof, and one per centum on such sums il excess of ten thousand dollars. -apportionment be- b In the event of an estate being administered by three trustees Accounts and pa- SEC. 49. ACCOUNTS AND PAPERS OF TRUSTEES.-- The accounts and papers of trustees shall be open to the inspection of officers and instead of one trustee or by successive trustees, the court shall apportion the fees and commissions between them according to the services actually rendered, so that there shall not be paid to trustees for the administering of any estate a greater amount than one trustee would be entitled to. Compensation withc The court may, in its discretion, withhold all compensation from any trustee who has been removed for cause. tween three trustee. inpers of trustees, s spection of. all parties in interest. Bonds ofreferees. -trustees. SEC. 50. BONDS OF REFEREES AND TRUSTEES.-a Referees, before assuming the duties of their offices, and within such time as the district courts of the United States having jurisdiction shall prescribe, shall respectively qualify by entering into bond to the United States in such sum as shall be fixed by such courts, not to exceed five thousand dollars, with such sureties as shall be approved by such courts, conditioned for the faithful performance of their official duties. b Trustees, before entering upon the performance of their official -fixing amount of. duties, and within ten days after their appointment, or within such further time, not to exceed five days, as the court may permit, shall respectively qualify by entering into bond to the United States, with such sureties as shall be approved by the courts, conditioned for the faithful performance of their official duties. c The creditors of a bankrupt estate, at their first meeting after the adjudication, or after a vacancy has occurred in the office of trustee, or after an estate has been reopened, or after a composition has been set aside or a discharge revoked, if there is a vacancy in the office of trustee, shall fix the amount of the bond of the trustee; they may at any time increase the amount of the bond. If the creditors do not fix the amount of the bond of the trustee as herein provided the court shall do so. d The court shall require evidence as to the actual value of the prop- Sureties. erty of sureties. e There shall be at least two sureties upon each bond. f Tie actual value of the property of the sureties, over and above their liabilities and exemptions, on each bond shall equal at least the amount of such bond. a]Irporti.-l Filin m cl a g Corporations organized tbr the purpose of becoming sureties upon bonilsetc. bonds, or authorized by law to do so. may be accepted as sureties upon the bonds of referees and trustees whenever the courts are satisfied that the rights of all parties in interest will be thereby amply protected. h Bonds of re!erees, trustees, and designated depositories shall be filed of recordl in the office of the clerk of the court and may be sued upon in the name of the United States for the use of any person injured by a breach of their conditions. t^ronl . liaility " 1 t.null jiint trlsFaiiir. ti i.o1,i. it. 0on bond. I)un,. ,,f l speei tii. l i.rks i Trustees shall not be liable, personally or on their bonds, to the United States, for any penalties or forfeitures incurred by the bankrupts under this Act, of whose estates they are respectively trustees. j Joint trustees may give joint or several bonds. k If any referee or trustee shall fail to give bond, as herein provided and within the time limited, he shall be deemed to have declined his appointment, and such failure shall create a vacancy in his office. I Suits upon referees' bonds shall not be brought subsequent to two years after the alleged breach of the bond. m Suits upon trustees' bonds shall not be brought subsequent to two years after the estate has been closed. SEC. 51. DUTIES OF CLERKS.-aClerks shall respectively (1) account for, as for other fees received by them, the clerk's fee paid in each case and such other fees as may be received for certified copies of records which may be prepared for persons other than officers; (2) collect FIFTY-FIFTH CONGRESS. SESS. I. CH. 541. 1898. 559 the fees of the clerk, referee, and trustee in each case instituted before filing the petition, except the petition of a proposed voluntary bankrupt which is accompanied by an affidavit stating that the petitioner is without, and can not obtain, the money with which to pay such fees; (3) deliver to the referees upon application all papers which may be referred to them, or, if the offices of such referees are not in the same cities or towns as the offices of such clerks, transmit such papers by mail, and in like manner return papers which were received from such referees after they have been used; (4) and within ten days after each case has been closed pay to the referee, if the case was referred, the fee collected for him, and to the trustee the fee collected for him at the time of filing the petition. SEC. 52. COMPENSATION OF CLERKS AND MARSHAIS.-a Clerks shall Compensation SEC. 53. DUTIES OF ATTORNEY-GENERAL.-a The Attorney-General Attorney-Generalto respectively receive as full compensation for their service to each estate, clerks. a filing fee of ten dollars, except when a fee is not required from a voluntary bankrupt. b Marshals shall respectively receive from the estate where an adju- --ofmarshals. dication in bankruptcy is made, except as herein otherwise provided, for the performance of their services in proceedings in bankruptcy, the same fees, and account for them in the same way, as they are entitled to receive for the performance of the same or similar services in other cases in accordance with laws now in force, or such as may be hereafter enacted, fixing the compensation of marshals. shall annually lay before Congress statistical tables showing for the stati.ctics whole country, and by States, the number of cases during the year of voluntary and involuntary bankruptcy; the amount of the property of the estates; the dividends paid and the expenses of administering such estates; and such other like information as he may deem important. SEC. 54. STATISTICS OF BANKRUPTCY or e PROCEEDINGS.-a Officers -tobefurniehedwith shall furnish in writing and transmit by mail such information as is statisticsbyoficers. within their knowledge, and as may be shown by the records and papers in their possession, to the Attorney-General, for statistical purposes, within ten days after being requested by him to do so. CHAPTER VI. CREDITORS. Creditors. SEC. 55. MEETINGS OF CREDITORS.-a The court shall cause the first Meetings of, time meeting of the creditors of a bankrupt to be held, not less than ten nor andl place. more than thirty days after the adjudication, at the county seat of the county in which the bankrupt has had his principal place of business, resided, or had his domicile; or if that place would be manifestly incon. venient as a place of meeting for the parties in interest, or if the bankrupt is one who does not do business, reside, or have his domicile within the United States, the court shall fix a place for the meeting which is the most convenient for parties in interest. If such meeting should by any mischance not be held within such time, the court shall fix the date, as soon as may be thereafter, when it shall be held. b1At the first meeting of creditors the judge or referee shall preside, Presiding officer, and, before proceeding with the other business, may allow or disallow powers. the claims of creditors there presented, and may publicly examine the bankrupt or cause him to be examined at the instance of any creditor. c The creditors shall at each meeting take such steps as may be Duties of creditors. pertinent and necessary for the promotion of the best interests of the estate and the enforcement of this Act. d A meeting of creditors, subsequent to the first one, may be held at Subsequent meetany time and place when all of the creditors who have secured the c oredtorsf allowance of their claims sign a written consent to hold a meeting at such time and place. FIFTY-FIFTH CONGRESS. Finalmeeting. Voters at meetings. 1898. more in number of those who have proven their claims shall file a written request to that effect; if such request is signed by a majority of such creditors, which number represents a majority in amount of such claims, and contains a request for such meeting to be held at a designated place, the court shall call such meeting at such place within thirty days after the date of the filing of the request. f Whenever the affairs of the estate are ready to be closed a final meeting of creditors shall be ordered. SEC. 56. VOTERS AT MEETINGS OF CREDITOBS.-a Creditors shall pass upon matters submitted to them at their meetings by a majority vote in number and amount of claims of all creditors whose claims have been allowed and are present, except as herein otherwise provided. b Creditors holding claims which are secured or have priority shall Secured creditors. Proof of CH. 541. e The court shall call a meeting of creditors whenever one-fourth or Call of meeting by court . SEssII. claims, what to conit of. not, il respect to such claims, be entitled to vote at creditors' meetings, nor shall such claims be counted in computing either the number of creditors or the amount of their claims, unless the amounts of such claims exceed the values of such securities or priorities, and then only for such excess. SEC. 57. PROOF AND ALLOWACE OF CLAIMS.-a Proof of claims shall consist of a statement under oath, in writing, signed by a creditor setting forth the claim, the consideration therefor, and whether any, and, if so what, securities are held therefor, and whether any, and. if so what, payments have been made thereon, and that the sum claimed is justly owing from the bankrupt to the creditor. inb Whenever a claim is founded upon an instrument of writing, such Production of strunient on which claim is ounded. instrument, unless lost or destroyed, shall be filed with the proof of claim. If such instrument is lost or destroyed, a statement of such fact and of the circumstances of such loss or destruction shall be filed under oath with the claim. After the claim is allowed or disallowed, such instrument may be withdrawn by permission of the court, upon leaving a copy thereof on file with the claim. cClaims after being proved may, for the purpose of allowance, be Filing of claims for filed by the claimants in the court where the proceedings are pending oan Allowance ofclaimns. or before the referee if the case has been referred. d Claims which have been duly proved shall be allowed, upon receipt by or upon presentation to the court, unless objection to their allowance shall be made by parties in interest, or their consideration be continued for cause by the court upon its own motion. S.urlntd rdittors. dlie 1;tieon-to;,aiimn. Pr.ftrrrd 'rditors. eClaims of secured creditors and those who have priority may be allowed to enable such creditors to participate in the proceedings at creditors' meetings held prior to the determination of the value of their securities or priorities, but shall be allowed for such sums only as to the courts seem to be owing over and above the value of their securities or priorities. fObjections to claims shall be heard and determined as soon as the convenience of the court and the best interests of the estates and the claimants will permit. gThe claims of creditors who have received preferences shall not be valie :,,f allowed unless such creditors shall surrender their preferences. h The value of securities held by secured creditors shall be deter- imlidividmd agreement pursuant to which such securities were delivered to such creditors or by such creditors and the trustee, by agreement, arbitration, compromise, or litigation. as the court may direct, and the amount of such value shall be credited upon such claims, and a dividend shall be paid only on the unpaid balance. i Whenever a creditor, whose claim against a bankrupt estate is lnf of aclt^inatilnt securities se^lrel .reciitors. i rit mined by converting the same into money according to the terms of the 1 .'criduolr'tak,rd'i:ily, secured by the individual undertaking of any person, tails to prove 'iti.e. t.'. such claim, such person may do so in the creditor's name, and it he discharge such undertaking in whole or in part he shall be subrogated to that extent to the rights of the creditor. FIFTY-FIFTH CONGRESS. SESS. II. CH. 541. 1898. 561 j Debts owing to the United States, a State, a county, a district, or Cewrtain debts not a municipality as a penalty or forfeiture shall not be allowed, except for the amount of the pecuniary loss sustained by the act, transaction, or proceeding out of which the penalty or forfeiture arose, with reasonable and actual costs occasioned thereby and such interest as may have accrued thereon according to law. kClaims which have been allowed may be reconsidered for cause and Reconsideration of reallowed or rejected in whole or in part, according to the equities of allowed laims the case, before but not after the estate has been closed. Reconsideration of 1Whenever a claim shall have been reconsidered and rejected, in claims on which diviwhole or in part, upon which a dividend has been paid, the trustee may dend has been paid, etc. upon received dividend of the amount the recover from the creditor the claim if rejected in whole, or the proportional part thereof if rejected only in part. Claims of one bankmThe claim of any estate which is being administered in bankruptcy rupt estate against against any like estate may be proved by the trustee and allowed by another. the court in the same manner and upon like terms as the claims of other creditors. nClaims shall not be proved against a bankrupt estate subsequent to Limit of time for one year after the adjudication; or if they are liquidated by litigation proving claims. and the final judgment therein is rendered within thirty days before or after the expiration of such time, then within sixty days after the rendition of such judgment: Provided, That the right of infants and insane P'ro"8o. persons without guardians, without notice of the proceedings, may con- -ifants, etc. tinue six months longer. SEC. 58. NOTICES TO CREDITORS.-a Creditors shall have at least NOticestoreditors. ten days' notice by mail, to their respective addresses as they appear in the list of creditors of the bankrupt, or as afterwards filed with the papers in the case by the creditors, unless they waive notice in writing, of (1) all examinations of the bankrupt; (2) all hearings upon applications for the confirmation of compositions or the discharge of bankrupts; (3) all meetings of creditors; (4) all proposed sales of property; (5) the declaration and time of payment of dividends; (6) the filing of the final accounts of the trustee, and the time when and the place where they will be examined and passed upon; (7) the pioposed compromise of any controversy, and (8) the proposed dismissal of the proceedings. b Notice to creditors of the first meeting shall be published at least Publication of noonce and may be published such number of additional times as the ts court may direct; the last publication shall be at least one week prior to the date fixed for the meeting. Other notices may be published as the court shall direct. i cAll notices shall be given by the referee, unless otherwise ordered gielwhom note e is by the judge. SEC. 59. WHO MAY FILE AND DISMISS PETITIONS.-a Any qualified ton may file peti-rvolntary bankperson may file a petition to be adjudged a voluntary bankrupt. b Three or more creditors who have provable claims against any person rupnolntry. which amount in the aggregate, in excess of the value of securities held bythem, if any, to five hundred dollars or over; or if all of the creditors of such person are less than twelve in number, then one of such creditors whose claim equals such amount may file a petition to have him adjudged a bankrupt. c Petitions shall be filed in duplicate, one copy for the clerk and one -filing in duplicate. for service on the bankrupt. in petition d If it be averred in the petition that the creditors of the bank- ofJoining sufficient number rupt are less than twelve in number, and less than three creditors have of creditors. joined as petitioners therein, and the answer avers the existence of a larger number of creditors, thereshall be filed with the answera list under oath of all the creditors, with their addresses, and thereupon the court shall cause all such creditors to be notified of the pendency of such petition and shall delay the hearing upon such petition for a reasonable time, to the end that parties in interest shall have an opportunity to be heard; if upon such hearing it shall appear that a sufficient number have joined in such petition, or if prior to or during such hearing a VOL XXX--36 562 FIFTY-FIFTH CONGRESS. SES. II. CH. 541. 1898. sufficient number shall join therein, the case may be proceeded with, but otherwise it shall be dismissed. -computationofnum- her, certain creditors not countedo. e In computing the number of creditors of a bankrupt for the purpose of determining how many creditors must join in the petition, such creditors as were employed by him at the time of the filing of the petition or are related to him by consanguinity or affinity within the third degree, as determined by the common law, and have not joined in the petition, shall not be counted. Appearance of credf Creditors other than original petitioners may at any time enter their appearance and join in the petition, or file an answer and be heard in nalpetitioners. itors other than origi- opposition to the prayer of the petition. Dismissal of petition. g A voluntary or involuntary petition shall not be dismissed by the petitioner or petitioners or for want of prosecution or by consent of parties until after notice to the creditors. Preferred creditors, SEC. 60. PREFERRED CREDITORS.-a A person shall be deemed to have given a preference if, being insolvent, he has procured or suffered how constitute. Preferencevoidable. a judgment to be entered against himself in favor of any person, or made a transfer of any of his property, and the effect of the enforcement of such judgment or transfer will be to enable any one of his creditors to obtain a greater percentage of his debt than any other of such creditors of the same class. b If a bankrupt shall have given a preference within fonr months before the filing of a petition, or after the filing of the petition and before the adjudication, 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 recover the property or its value from such person. snetoff of new "e cured credit to debtor, etc. c If a creditor has been preferred, and afterwards in good faith gives the debtor further credit without security of any kind for property which becomes a part of the debtor's estates, the amount of such new credit remaining unpaid at the time of the adjudication in bankruptcy may be set off against the amount which would otherwise be recoverable from him. Payment to attor- d If a debtor shall, directly or indirectly, in contemplation of the aoet toile pebttionr filing of a petition by or against him, pay money or transfer property to an attorney and counselor at law, solicitor in equity, or proctor in admiralty for services to be rendered, the transaction shall be reexamined by the court on petition of the trustee or any creditor and shall only be held valid to the extent of a reasonable amount to be determined by the court, and the excess may be recovered by the trustee for the benefit of the estate. CHAPTER VII. Estates. ESTATES. Depositories for money. Erpen.es of andmin- ter es. Debts which may be proved. SEC. 61. DEPOSITORIES FOR MONEY.-a Courts of bankruptcy shall designate, by order, banking institutions as depositories for the money of bankrupt estates, as convenient as may be to the residences of trustees, and shall require bonds to the United States, subject to their approval, to be given by such banking institutions, and may from time to time as occasion may require, by like order increase the number of depositories or the amount of any bond or change such depositories. SEC. 62. EXPENSES OF ADMINISTERING ESTATES.-a The actual and necessary expenses incurred by officers in the administration of estates shall, except where other provisions are made for their payment, be reported in detail, under oath, and examined and approved or disapproved by the court. If approved, they shall be paid or allowed out of the estates in which they were incurred. SEC. 63. DEBTS WHICH MAY BE PROVED.-a Debts of the bankrupt may be proved and allowed against his estate which are (1) a fixed FIFTY-FIFTH CONGRESS. SEss. II. CH. 541. 1898. 563 liability, as evidenced by a judgment or an instrument in writing, absolutely owing at the time of the filing of the petition against him, whether then payable or not, with any interest thereon which would have been recoverable at that date or with a rebate of interest upon such as were not then payable and did not bear interest; (2) due as costs taxable against an involuntary bankrupt who was at the time of the filing of the petition against him plaintiff in a cause of action which would pass to the trustee and which the trustee declines to prosecute after notice; (3) founded upon a claim for taxable costs incurred in good faith by a creditor before the filing of the petition in an action to recover a provable debt; (4) founded upon an open account, or upon a contract express or implied; and (5) founded upon provable debts reduced to judgments after the filing of the petition and before the consideration of the bankrupt's application for a discharge, less costs incurred and interests accrued after the filing of the petition and up to the time of the entry of such judgments. b Unliquidated claims against the bankrupt may, pursuant to appli- oIfnda"ate cation to the court, be liquidated in such manner as it shall direct, and claims. may thereafter be proved and allowed against his estate. SEC. 64. DEBTS WHICH HAVE PBIOBITY.-a The court shall order Debts which have the trustee to pay all taxes legally due and owing by the bankrupt to --pryent of taxes the United States, State, county, district, or municipality in advance of the payment of dividends to creditors, and upon filing the receipts of the proper public officers for such payment he shall be credited with the amount thereof, and in case any question arises as to the amount or legality of any such tax the same shall be heard and determined by the court. b The debts to have priority, except as herein provided, and to be -debts peelled. paid in full out of bankrupt estates, and the order of payment shall be (1) the actual and necessary cost of preserving the estate subsequent to filing the petition; (2) the filing fees paid by creditors in involuntary cases; (3) the cost of administration, including the fees and mileage payable to witnesses as now or hereafter provided by the laws of the United States, and one reasonable attorney's fee, for the professional services actually rendered, irrespective of the number of attorneys employed, to the petitioning creditors in involuntary cases, to the bankrupt in involuntary cases while performing the duties herein prescribed, and to the bankrupt in voluntary cases, as the court may allow; (4) wages due to workmen, clerks, or servants which have been earned within three months before the date of the commencement of proceedings, not to exceed three hundred dollars to each claimant; and (5) debts owing to any person who by the laws of the States or the United States is entitled to priority. c In the event of the confirmation of a composition being set aside, Dispositionofbank. or a discharge revoked, the property acquired by the bankrupt in addi- rnired afer composition to his estate at the time the composition was confirmed or the tion, confrhation of ide. adjudication was made shall be applied to the payment in full of the which claims of creditors for property sold to him on credit, in good faith, while such composition or discharge was in force, and the residue, if any, shall be applied to the payment of the debts which were owing at the time of the adjudication. SEC. 65. DECLARATION AND PAYMENT OFDIVIDENDS.-a Dividends Declaration and of an equal per centum shall be declared and paid on all allowed paymentofdividend. *claims, except such as have priority or are secured. b The first dividend shall be declared within thirty days after the -first dividend. 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 centumor moreof such allowed claims. Dividends subsequent to the first shall be declared -subsequent alviupon like terms as the first and as often as the amount shall equal ten dends. per centum or more and upon closing the estate. Dividends may be declared oftener and in smaller proportions if the judge shall so order. FIFTY-FIFTH CONGRESS. 564 Creditors receiving dividends, etc., unaf- SESS. II. CH. 541. 1898. c The rights of creditors who have received dividends, or in whose fected by allowance of favor final dividends have been declared, shall not be affected by the claims subsequent eir ae . to proof and allowance of claims subsequent to the date of such payment or declarations of dividends; but the creditors proving and securing the allowance of such claims shall be paid dividends equal in amount to those already received by the other creditors if the estate equals so much before such other creditors are paid any further dividends. Preference to cerd Whenever a person shall have been adjudged a bankrupt by a court tain creditors of one adjudged bankrupt without the United States and also by a court of bankruptcy, creditors withinsad without residing within the United States shall first be paid a dividend equal to that received in the court without the United States by other creditors before creditors who have received a dividend in such courts shall be paid any amounts. Limit of claimant's right tocollect. Unclaimed divi. dends. e A claimant shall not be entitled to collect from a bankrupt estate any greater amount than shall accrue pursuant to the provisions of this Act. SEC. 66. UNCLAIMED DIVIDENDS.-a Dividends which remain un- claimed for six months after the final dividend has been declared shall be paid by the trustee into court. b Dividends remaining unclaimed for one year shall, under the direction of the court, be distributed to the creditors whose claims have been allowed but not paid in full, and after such claims have been paid in Proviso. -minors. full the balance shall be paid to the bankrupt: Provided, That iu case unclaimed dividends belong to minors such minors may have one year Liens. after arriving at majority to claim such dividends. SEC. 67. LrENS.-a Claims which for want of record or for other n to belens. Trustee subrogated reasons would not have been valid liens as against the claims of the creditors of the bankrupt shall not be liens against his estate. b Whenever a creditor is prevented from enforcing his rights as against ofreditor. a lien created, or attempted to be created, by his debtor, who afterwards becomes a bankrupt, the trustee of the estate of such bankrupt shall be subrogated to and may enforce such rights of such creditor for the benefit of the estate. C A lien created by or obtained in or pursuant to any suit or proceedLien, judgmen t etc.. created within four months of peti- ig at law or in equity, including an attachment upon mesne process or to rights tion to be dissolved. defendant -if a judgment by confession, which was begun against a person within four months before the filing of a petition in bankruptcy by or against such person shall be dissolved by the adjndication of such person to be was in- a bankrupt if (1) it appears that said lien was obtained and permitted while the defendant was insolvent and that its existence and enforcement will work a preference, or (2) the party or parties to be benefited solvent, -knowled'e of. thereby had reasonable cause to believe the defendant was insolvent -through fraud. and in contemplation of bankruptcy, or (3) that such lien was sought -trustee subrogated. Liensnotaffectedby and permitted in fraud of the provisions of this Act; or if the dissolu. tion of such lien would militate against the best interests of the estate of such person the same shall not be dissolved, but the trustee of the estate of such person, for the benefit of the estate, shall be subrogated to the rights of the holder of such lien and empowered to perfect and enforce the same in his name as trustee with like force and effect as such holder might have done had not bankruptcy proceedings intervened. d Liens given or accepted in good faith and not in contemplation of or in fraud upon this Act, and for a present consideration, which have been recorded according to law, if record thereof was necessary in order to impart notice, shall not be affected by this Act. Conveyances. ctc., . e That all conveyances, transfers, assignments, or incumbrances of snim iuent to act and within four months his property, or any part thereof, made or given by a person adjudged of petition, -to etc., defrall. voi. -property remains part of asset., a bankrupt under the provisions of this Act subsequent to the passage of this Act and within four months prior to the filing of the petition, with the intent and purpose on his part to hinder, delay, or defraud his creditors, or any of them, shall be null and void as against the creditors of such debtor, except as to purchasers in good faith and for a present fair consideration; and all property of the debtor conveyed. transferred, assigned, or encumbered as aforesaid shall, if he be adjudged a bank- FIFTY-FIFTH CONGRESS. SESS. II. CH. 541. 1898. 565 rapt, and the same is not exempt from execution and liability for debts by the law of his domicile, be and remain a part of the assets and estate of the bankrupt and shall pass to his said trustee, whose duty it shall be to recover and reclaim the same by legal proceedings or otherwise for the benefit of the creditors. And all conveyances, transfers, or Conveyanneswithin incumbrances of his property made by a debtor at any time within four tion, void under State months prior to the filing of the petition against him, and while insol- lawsvent, which are held null and void as against the creditors of such debtor by the laws of the State, Territory, or District in which such property is situate, shall be deemed null and void under this Act against -void under this act. the creditors of such debtor if he be adjudged a bankrupt, and such property shall pass to the assignee and be by him reclaimed and recovered for the benefit of the creditors of the bankrupt. fThat all levies, judgments, attachments, or other liens, obtained- Liens, etc., created legal a proceed. through legal proceedings against a person who is insolvent, at any through ings. ed time within four months prior to the filing of a petition in bankruptcy against him, shall be deemed null and void in case he is adjudged a -void,etc. bankrupt, and the property affected by the levy, judgment, attachment, -property passes to or other lien shall be deemed wholly discharged and released from the trstee. same, and shall pass to the trustee as a part of the estate of the bankrupt, unless the court shall, on due notice, order that the right u'nder such levy, judgment, attachment, or other lien shall be preserved for the benefit of the estate; and thereupon the same may pass to and shall be preserved by the trustee for the benefit of the estate as aforesaid. And the court may order such conveyance as shall be necessary --courtmayorderconto carry the purposes of this section into effect: Provided, That noth- V o'so. ing herein contained shall have the effect to destroy or impair the title Purchaserforvalue. obtained by such levy, judgment, attachment, or other lien, of a bona fide purchaser for value who shall have acquired the same without notice or reasonable cause for inquiry. SEC. 68. SBT-OFFS AND COUNTERCLAIMS.-a In all cases of mutual Settoffs and counte debts or mutual credits between the estat e of a bankrupt and a creditor claims. the account shall be stated and one debt shall be set off against the other, and the balance only shall be allowed or paid. b A set-off or counterclaim shall not be allowed in favor of any debtor -not allowed. of the bankrupt which (1) is not provable against the estate; or (2) was purchased by or transferred to him after the filing of the petition, or within four months before such filing, with a view to such use and with knowledge or notice that such bankrupt was insolvent, or had committed an act of bankruptcy. SEC. 69. POSSESSION OF PBOPERTY.-a A judge may, upon satis- erPoession of prop- factory proof, by affidavit, that a bankrupt against whom an involun- -seizure of banktary petition has been filed and is pending has committed an act of rupt'" property. bankruptcy, or has neglected or is neglecting, or is about to so neglect his property that it has thereby deteriorated or is thereby deteriorating or is about thereby to deteriorate in value, issue a warrant to the marshal to seize and hold it subject to further orders. Before such war- -petitioners to give rant is issued the petitioners applying therefor shall enter into a bond bond. in such an amount as the judge shall fix, with such sureties as he shall approve, conditioned to indemnify such bankrupt for such damages as he shall sustain in the event such seizure shall prove to have been wrongfully obtained. Such property shall be released, if such bankrupt -release of property. shall give bond in a sum which shall be fixed by the judge, with such sureties as he shall approve, conditioned to turn over such property, or pay the value thereof in money to the trustee, in the event he is adjudged a bankrupt pursuant to such petition. SEC. 70. TITLE TO PROPERTY.-a The trustee of the estate of a bank- -- Title to property. to be in trustee. rapt, upon his appointment and qualification, and his successor or successors, if he shall have one or more, upon his or their appointment and qualification, shall in turn be vested by operation of law with the title of the bankrupt, as of the date he was adjudged a bankrupt, except in -xcept, etc. so far as it is to property which is exempt, to all (1) documents relating FIFTY-FIFTH CONGRESS. 566 SESS. II. CH. 541. 1898. to his property; (2) interests in patents, patent rights, copyrights, and trade-marks; (3) powers which he might have exercised for his own benefit, but not those which he might have exercised for some other person; (4) property transferred by him in fraud of his creditors; (5) property which prior to the filing of the petition he could by any means have transferred or which might have been levied upon and sold under judicial process against him: Provided,That when any bankrupt Provio. Inesance policies, shall have any insurance policy which has a cash surrender value payetc. able to himself, his estate, or personal representatives, he may, within thirty days after the cash surrender value has been ascertained and stated to the trustee by the company issuing the same, pay or secure to the trustee the sum so ascertained and stated, and continue to hold, own, and carry such policy free from the claims of the creditors participating in the distribution of his estate under the bankruptcy proceedings, otherwise the policy shall pass to the trustee as assets; and (6) rights of action arising upon contracts or from the unlawful taking or detention of, or injury to, his property. b All real and personalproperty belonging to bankrupt estates shall Appraisal of bankrapt estates. be appraised by three disinterested appraisers; they shall be appointed by, and report to, the court. Real and personal property shall, when --sale. practicable, be sold subject to the approval of the court; it shall not be sold otherwise than subject to the approval of the court for less than seventy-five per centum of its appraised value. Conveyance of title. c The title to property of a bankrupt estate which has been sold, as herein provided, shall be conveyed to the purchaser by the trustee Revocation of die eharge. etc.. title of es- tate i trustee. -date. Avoidance oftrans- d Whenever a composition shall be set aside, or discharge revoked, the trustee shall, upon his appointment and qualification, be vested as herein provided with the title to all of the property of the bankrupt as of the date of the final decree setting aside the composition or revoking the discharge. e The trustee may avoid any transfer by the bankrupt of his property pt fs which any creditor of such bankrupt might have avoided, and may pferpbytbnkruop -recovery of proper- recover the property so transferred, or its value, from the person to whom it was transferred, unless he was a bona fide holder for value prior to the date of the adjudication. Such property may be recovered or its value collected from whoever may have received it, except a bona fide holder for value. Title reveuted on f Upon the confirmation of a composition offered by a bankrupt, the confirmation of corntitle to his property shall thereupon revest in him. poaition. THE TIME WHEN THIS ACT SHALL GO INTO EFFECT. Act to take effect on passage. Proi"o'f eti.on a This Act shall go into full force and effect upon its passage: Pro- for voluntary bank- vided, however, That no petition for voluntary bankruptcy shall be filed within one month of the passage thereof, and no petition for involuninvPoluntary tary bankruptcy shall be filed within four months of the passage ren.lingcicaes uniler State laws unaffected. thereof. b Proceedings commenced under State insolvency laws before the passage of this Act shall not be affected by it. Approved, July 1, 1898.