813.] Compositions, When Set Aside - Fraud the Sole Ground. vided for by section 25a, cl. 3. He might as well claim that the refusal of his creditors to approve his offer of a composition is a denial of his discharge. It so operates just as much as the disapproval of the court. It requires the combined action of court and creditors in the process. As well might any other disputed question of fact be carried to the court of appeals, among the vast interests involved in the proceedings in bankruptcy. All he has a right to demand is his discharge in the regular way, and, if that be denied him, he may appeal under this section; but he cannot have two appeals under it,—one on the disaproval of the composition, and the other on the denial of his certificate of discharge. If the appeal on this controversy is permissible, it should be taken by the parties to the controversy, namely, the assenting creditors as against the opposing creditors, who are to determine whether there ought to be a composition or proceedings in the ordinary way. The court has determined that it is better for the creditors that they shall proceed in the regular way. If there be an appeal, it is theirs, but the statute has not given the bankrupt an appeal from that decision, neither by direction nor indirection. The bankrupt has not lost anything which he has a right to claim, and has no grievance to be redressed by appeal. Having gone into voluntary bankruptcy, he has only the right to proceed in the regular way. He may offer to proceed in another way, but he has not at all been given by the statute any right to demand that the case shall be dismissed and a composition substituted, because, forsooth, if a composition be adopted he would be released of his debts. That important right has not been indicated by apt language, but is claimed as an inference only upon a right to offer. If it be not adopted, he may still be released. Therefore his discharge has not been affected by the failure of his offer of composition. Not having a right to demand a composition, he has not the right to an appeal if it fail. In other words, it is optional, wholly with the creditors and the court whether he shall be discharged by a composition. He has only a bare right to offer. This seems to me the plain meaning of the statute." 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. the Fraud the Sole Ground.-The sole ground upon which, under present statute, a composition may be set aside, is fraud in Proceedings After Re-instatement - Discharges, When Granted. [Ch. III. procuring it, unknown to the petitioner at the time of the confirmation. See notes to section 12 as to what constitutes fraud in such cases and also what acts, means and promises are forbidden. The Act of 1874 authorized the court to set aside a composition if it was shown that the agreement could not be carried out without injustice or delay to the creditors, but now, fraud is the only ground for revoking. Section 2 (9), which in general terms gives courts of bankruptcy jurisdiction to set aside compositions is limited by the terms of section 13 (In re Rudnick, 2 Am. B. R. 114; 93 Fed. 787.) Where there has been a composition in a bankruptcy proceeding it will not be set aside on the ground that a creditor has failed to get notice of the proceedings because his address was by mistake incorrectly given in the schedules. In re Rudnick, supra, holding in re Dupee (2) Low. 18; Fed. Cas. 4,183) inapplicable under the present Act. The practice is the same as upon revocation of discharges. (Section 15.) Proceedings After Re-instatement.-Compare sections 2 (9), 44, 70 d. 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 and discharge the applicant unless he has (1) committed an offense punishable by imprisonment as herein provided; or (2) with fraudulent 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. §14.] Application for Discharge and Proceedings Thereon. c The confirmation 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. As to application for discharge: R. S. section 5108 (amended act of July 26th, 1876, ch. 234, section 1), act of 1867, section 29; act of 1841, section 4. As to the hearing upon application: R. S. section 5109; act of 1867, section 29; act of 1841, section 4. As to grounds for refusing a discharge: R. S. section 5110; act of 1867, section 29; act of 1841, section 4; act of 1800, sections 36 and 37. As to proofs and pleadings in opposition, R. S. section 5111; act of 1867, section 21; act of 1841, section 4. Compare, also, as to assets of one asking for a discharge, R. S. section 5112; act of 1867, section 33; act of 1868, ch 258, section 1. Also R. S. section 5112 A. As to oaths and verification: R. S. section 5113; act of 1867, section 29. As to proceedings, certificate of discharge and second applications: R. S. sections 5114, 5115, 5116; act of 1867, sections 30 and 32; act of 1841, section 12; act of 1800, section 57. Discharges. When Granted.-The time is fixed by the adjudication. The application cannot be filed until one month has expired; it may be made as of course within the next twelve months subsequent to the adjudication. The statute contemplates that when a petition for discharge is not filed within twelve months after the adjudication the same may be thereafter filed within the next six months upon the order of the judge, based upon satisfactory evidence that the bankrupt was unavoidably prevented from filing the application within the twelve months after adjudication. The express and positive statement in the section as to the time when the application can be made seems to take it out of the power of the court to extend such time except, perhaps, when the delay is the fault of the court, when in accordance with the general rules of practice an order nunc pro tunc may be granted. (See for construction of this part of the section In re Wolff, 4 Am. B. R. 74; 100 Fed. 430.) As to method of computing time under this Act see section 31. Application for Discharge and Proceedings Thereon. Section 14b. -The statute says that the judge shall hear the application for Application for Discharge and Proceedings Thereon. [Ch. III. discharge and by section 38 (4) questions arising on the bankrupt's application for such discharge are expressly beyond the jurisdiction of the referee to determine, but by G. O. 12 (3) any specified issue of fact arising upon such application may be sent to the referee to ascertain and report upon. The first step in the application is the petition for the discharge which by G. O. 31 shall state concisely, in accordance with the provisions of the act and the orders of the court, the proceedings in the case and the acts of the bankrupt. The petition for the discharge is to be filed with the clerk. Thereupon an order to show cause why the discharge should not be granted is entered by the clerk or deputy clerk which states the time and place of the hearing and directs that the referee give notice, as provided in section 58, to all creditors and persons having any interest in the application, which notice must be given and published at least ten days before the hearing. A form of the bankrupt's application and the order of notice thereon to show cause is given in Form No. 57. By G. O. 32 a creditor opposing the application for discharge must enter his appearance in opposition thereto on the day on which the creditors are required to show cause and file a written specification of the grounds of his opposition within ten days thereafter unless the time is further enlarged. The form of such specification is given in Form No. 58. See as to cases when notices are to be published under order of the court, section 28 and G. O. 32. The specifications to be filed by the creditors must be clear and specific. It is uniformly held that specifications of objections to discharge must contain a distinct averment of the facts bringing the case within the denunciation of the statute. Mere conclusions of law or alternative averments will not suffice; the specifications are to be tested by the general rules applying to criminal pleadings. (See especially In re Hirsch, 2 Am. B. R. 715; 96 Fed. 471; in re Kaiser, 3 Am. B. R. 767: 99 Fed. 689; in re Holman, I Am. B. R. 600; 92 Fed. 512; in re Quackenbush, 4 Am. B. R. 274; 102 Fed. 282; in re Morgan, 4 Am. B. R. 402; 101 Fed. 982; in re McGurn, 4 Am. B. R. 459; 102 Fed. 743.) A valuable collection of authorities on this subject § 14-] Application for Discharge and Proceedings Thereon. will be found in the report, in 4 Am. B. R. 274, of In re Quackenbush, which report also includes the referee's opinion. It is there held that sufficiency of specifications in opposition to the discharge may be attacked before the referee to whom the issue is referred. Where fraud is alleged, scienter must be alleged, id. It is discretionary with the court to allow an extension of time to file specifications and amendments to such specifications are liberally allowed. (See In re Frice, 2 Am. B. R. 674; 96 Fed. 611; in re Quackenbush, 4 Am. B. R. 274; 102 Fed. 282.) As the statute says "parties in interest " are to have an opportunity to be heard, the right to object to discharge is not restricted to creditors who have proven up their claims. Any persons having a pecuniary interest in resisting the discharge of the bankrupt from his debts even though they have not proved their claims, are entitled to go into court and object. (See In re Frice, supra.) If a party in interest who files objections to the granting of the discharge, afterwards declines to prove them, other creditors may be allowed to do so. (In re S. S. Houghton, Fed. Cas. 6,730; 10 N. B. R. 337, citing Foster v. Goulding, 9 Gray, 50; contra, in re D. A. McDonald, Fed. Cas. 8,753; 14 N. B. R. 477.) Compare section 59 (f) as to the right of creditors other than original petitioners to join in the petition to have one adjudged a bankrupt involuntarily. While the objections are not to be pleaded with the strictness of an indictment perhaps, it is necessary that the facts be alleged, and that such allegations be distinct, specific, and definite so as to clearly inform the bankrupt what he is to disprove. See ante under this section. If they are vague and general, the court will dismiss them or compel the objecting party to be more definite. (In re Hill, Fed. Cas. 6,482; 1 N. B. R. 275; s. c. 2 Ben. 136; in re Burk, Fed. Cas. 2,156; 3 N. B. R. 296; in re Bellis & Milligan, Fed. Cas. 1,275; 3 N. B. R. 496; in re Waggoner, Fed. Cas. 17.037; 1 Ben. 532; in re Tyrrel, Fed. Cas. 14,314; 2 N. B. R. 200.) The bankrupt may answer or demur, or may move for a dismissal of the objections for insufficiency appearing |