far as they do not conflict with the paramount Federal law. Any change therefore, would seem to be with the court. (See also Carling v. Seymour, 113 Fed. 483). The authority of a state to deal with the property of a debtor therein, so long as it does not impair the obligations of contracts is conceded by the Supreme Court in Brown v. Smith (145 U. S. 454,7, 12 S. Ct. 958. 36 L.ed. 773) citing Denny v. Bennett (128 U. S. 498, 9 S. Ct. 134, 32 L.ed. 491.) How far may a State go in dealing with the property of a debtor therein? We learn from Hanover National Bank v. Moy'es (186 U. S. 181) that the estate — the amount of funds subject to distribution amongst creditors depends upon geography and not upon persons. Distribution, in spite of a National System, is therefore measured by State and not by Federal laws. One cannot but be mindful that, excepting the discharge, distribution is the only essential thing involved in bankruptcy. Obviously, then, it was embraced by Congress in its enactment. Let us set down the Court's exact interpretation:

"The Trustee takes in each State for distribution amonst the creditors whatever would have been available to such creditors, if the Bankruptcy Act had not been enacted."

Wherefore we conclude that the Federal Bankruptcy Act operates on only such property as the State in which it is located chooses to release to the Federal Government for that purpose.

No two states have the same laws.

ILLUSTRATED IN PRACTICE

Obviously, a national uniformity in result is impossible if a State sees proper to exempt certain property or rights, like the poor laws, dower rights and homesteads, or to establish varying priorities like the liens of mechanics and materialmen and those of merchants supplying industrial, railroad, or canal corporations; or for damages for inquiries by a carrier; or if a distinction in liability be set up between corporations and individuals. (Lerdigh v. Stengle, 95 Fed. 637).

The bulk of the estate may be taken from the other creditors and the costs put upon them in spite of the boasted "equality of distribution" (Bacon v. Glover, 21 Wall. 342, 22 L.ed 636) and the destruction of "preferences and favoritism." Both of these inequities, differing in degree in different states, lawfully flourish in the American Bankruptcy System.

Moreover there may be forty-nine distinct systems lawfully prevailing at one time for whatever the Federal Act has not embraced in the field of Bankruptcy, both as to persons and property, a state may take over. (Ogden v. Saunders, supra.)

PROCEDURE

Let us now turn to procedure that bane to the administration of justice.

Let the inquiry be made if any two Courts proceed alike in discharges; in fixing the time for filing answers in involuntary proceedings where interlocutory matters are in

volved; in appraising property; in distributing estates in ancillary proceedings; in oversight of proxies and meetings of creditors; in overseeing compositions; appointing receivers; selecting Counsel; fixing compensation; and in many other matters that occur instantly to a Referee.

All these things sum up the measure of uniformity. That which is best administered is best and the best should be made uniform in every District Court in the United States. (Applause)

HISTORICAL ADDENDA

The Act of 1800 (2 Stat. L. 19) had hardly gotten under way before it was repealed on December 19th, 1803 (2 Stat. L. 246). On August 19, 1841, (5 St. L. 440) 38 years afterwards, another Act was enacted only to follow a like fate on March 3, 1843 (5 St. L. 614). It stood less than 3 years. On March 2, 1867 (14 St. L. 517) Congress tried again. This effort was soon amended and incorporated into the Revised Statutes as Sections 4972 to 5132 inclusive, on June 22, 1874. (18 St. L. 178). Within 7 years the Act was rewritten and within four years more, on June 8th, 1878 (20 St. L. 99) was wiped out entirely. A period of 20 years followed before Senator Knute Nelson put through his Act on July 1, 1898 (30 St. L. 544) which, subject to amendments, yet stands.

TOASTMASTER: Thank you, Mr. Shelton, for this very interesting discourse.

Referee Olmsted of Pennsylvania will speak to us on "District Organizations". (Applause)

DISTRICT ORGANIZATIONS

REFEREE JOHN T. OLMSTED, of Harrisburgh, Pennsylvania.

I believe this subject was assigned to me because of the fact that following the Conference of this Association last year I took up the matter of holding a meeting of the Referees in the Middle District of Pennsylvania, with our District Judge, Honorable Albert W. Johnson, and with a number of the Referees whom I knew personally, and finally completed the arrangements for such a Conference. This was held at Harrisburgh and we were pleased to have fifteen Referees out of the total number of twenty-two for the District. I may add that Judge Johnson expressed a desire to have the United States Commissioners of the District present at the Conference, also, and eleven of them were in attnedance. This gave the Judge, who had been quite recently appointed, an opportunity to get in personal touch with the Referees and Commissioners and to express to them some of the thoughts which he had in mind as to the administration of their respective offices. His formal address was upon the subject "The Arms of the Court." I consider this meeting of the Court with the Referees as one of the great advantages of a District organization, as it often happens that a Judge may not have any personal touch with the Referees appointed by him for a long period of time. Aside from this, the opportunity for the Referees of the same District operating under the same rules of procedure to meet one another and discuss topics of common interest is very helpful to all of them.

When the meeting was called it was not definitely decided that there would be an attempt to form an associa

tion but it was hoped that from the conference there might arise suggestons relative to bankruptcy administration which might be incorporated in new rules of practice for the District. The rules under which the practice in the Middle District of Pennsylvania is now governed were adopted at least as early as 1912, when they were compiled, with the other rules of practice of our District Court, by Honorable R. W. Archbald, then a District Judge. Since 1912 there have been numerous amendments and it has

been rather difficult to determine from time to time just what the rule may be with reference to certain procedure.

This matter was discussed at the conference and a resolution was adopted to the effect that our District Judge be earnestly requested to appoint a committee to revise, amend and modify the Rules and Orders, and cause the same to be printed and distributed at a price covering the costs incident thereto. Judge Johnson has indicated his willingness to do this and has as a matter of fact himself amended some of the rules, although there is not yet a committee actively at work for the revision. It is possible that we will have another District conference near the end of September and again urge the Judge to put a committee actively to work.

There has been some discussion among the directors of the National Association as to whether it is advisable for District organizations to be formed, lest they might interfere with the meetings and membership of the National Association. It is my opinion that they are likely to be helpful to the National Association rather than otherwise. At the conference held in our District we had a full report of the meeting of the National Association in July of 1926, and a resolution was adopted which read as follows:

Be it hereby resolved by the Referees in Bankruptcy of the Middle District of Pennsylvania, in convention met, that the heartiest support and approval be given the National Association of Referees in Bankruptcy, and that it be highly recommended that all the Referees in the Middle District of Pennsylvania obtain membership therein.

It is, of course, not possible for a very large percentage of the Referees throughout our nation to attend the conferences of the National Association, but if a few from each District may attend and subsequently take back to a gathering of the Referees of that District the new ideas which they acquire at the National Conference and explain to those Referees such suggestions as to procedure or practice as may be made by the National Association, it will therefore become much more possible for the National Association to actually make its work effective. My thought is that it would be desirable for conferences of the Referees of each District to follow very soon after the National Association's Conference so that the matters taken up by the National Association will be fresh in the mind of the referees who attended from each particular District. I think it would be well for the District programs to be patterned after that of the National Conference and I am frank to say that this was the method in the Middle District of Pennsylvania. For instance, at the Detroit Convention there were addresses with reference to "Uniformity of Practice", "The new Amendments to the Act", "The New General Orders", "Comity between State and Fed

eral Courts in Bankruptcy Cases", and "The Relation of the Referee to the Judge." With slight changes in the phrasing of the subjects these same topics were discussed at the District meeting. We had present at that meeting, as speakers, four Referees who had attended the National Association.

Another feature of interest and importance in our conference at Harrisburgh was the presence of one of the Deputy Clerks of our District Court, who is the one who gives his attention particularly to bankruptcy matters. Only a comparatively small number of our Referees had previously made his acquaintance in person and they were much interested to hear the comments which he had to make as to the supervision exercised by his office over reports made to it by the Referees.

We were pleased to have present at our meeting Hon. Watson B. Adair, the Vice President of the National Association. I, of course, also in a measure represented the National Association, being one of the Directors. I think it will be helpful for any District Association, when in Conference to have present some officer of the National Association if it is readily possible. Mr. Adair addressed us in a most instructive way on the matter of Uniformity of Practice. A Referee coming from a place where bankruptcy proceedings are numerous and frequently complicated is, of course, listened to with interest by those Referees who may have had less experience and his suggestions can hardly help but be very valuable.

I have said that it was not known when we held our meeting in Harrisburgh whether the Referees would consider it desirable to effect an organization with the purpose of holding future meetings, but those present seemed to be unanimous in their thought that such an Association would be valuable. A committee was accordingly appointed to draft a constitution and arrange for another convention. This committee has framed a constitution, which is based very largely on that of the National Association. If any of you are interested in having a copy of this constitution, I shall be glad to furnish you with one upon request, although your purpose may perhaps be just as well served by patterning directly after the constitution of the National Association. We elected as officers of the District association, a President, a Vice President, a Secretary and a Treasurer, but did not elect directors, although the committee on the constitution has recommended that there should be a board consisting of the four officers and one additional member.

Finally I would like to call attention to the fact that one of the advantages of the District meeting was the association of the Referees with the Judges of the County Courts of Dauphin County, one of whom was a speaker at the evening session on the subject of Comity between State and Federal Courts. It is, of course, frequently the case that there are questions which might produce a conflict of jurisdiction, or cases where the State courts necessarily pass upon questions involved in bankruptcy proceedings. It is surely helpful for the Judges of the State Courts to have opportunity to become acquainted with the "Personnel", so to speak of the Bankruptcy Courts, and to understand from the mouths of the Referees, the difficulties and questions of procedure which confront them. I feel

that I should at this point say that there has, so far as I know, been the finest spirit of co-operation between the State judiciary and the Federal Judges for the Middle District of Pennsylvania.

The holding of this conference at Harrisburgh was welcomed by nearly all Referees of the District, who expressed the desire to have it repeated annually and I am of the opinion that the fostering of such District organizations or conferences will be one of the best methods in which the National Association may effect the purposes of its founding, as the same are set forth in Article II. of its Constitution. (Applause).

TOASTMASTER: I now announce the first casualty of the program. When we learned that Mr. Piatt had made two engagements for this evening, he was released from this one on the promise that he would provide an able substitute. He has sent as his substitute the man I would have selected from those available to us, in Buffalo, this evening, had the responsibility rested with me. I am glad to have a former president of the Commercial Law League of America as well as the first Chairman of the special committee on Bankruptcy Practice of the American Bar Association with us, Honorable Henry Deutsch, of Minneapolis, (Applause)

PROGRESS

MR. HENRY DEUTSCH, of Minneapolis, Minnesota:
Mr. Chairman, Ladies and Gentlemen:

I am suffering tonight under several very embarrassing handicaps. I was catapulted, so to speak, into this program at half past five, when I was held up by our mutual friend, Mr. Piatt, and asked if I would not take his place on this program over here. When I arrived this evening I was informed by your genial toastmaster that this time he was the "Major Domo" of this performance and he would take advantage of the fact that at other times

HENRY DEUTSCH of the Minneapolis, Minn., Bar he has served under me and that he was going to limit my time in any way that he pleased.

I am the only man here at this table who has neither notes nor a prepared speech to read and one of the young ladies when she came to ask if I had, was thrown into consternation when I told her I had none. She begged me to speak slowly and I finally made an aggrement with her that if I spoke slowly she would in exchange therefor greet me with an osculatory embrace after the session was over. (Laughter)

(Editor: Mr. Deutsch did not speak slowly.)

I am further embarrassed by the fact that I have no prepared speech. All of the speech I had on this subject was furnished to my predecessor on the program tonight, Honorable Thomas W. Shelton, and part of it was stolen

by Referee Jones, and, therefore, the speech that I make I will have to write when I get home.

As they were speaking of appraisers in bankruptcy, I was reminded of a story. In a certain town a man, who was very popular as one of the boys and club men, passed away. One of his bosom friends was appointed executor and two of the other boys were appointed appraisers. They went down to his house to take an inventory and appraise the value of his belongings. He was noted for having a fine liquor cellar. The rest of the boys of the club waited for the return of the appraisers and when they did not show up after a lapse of two days, they became worried and went down to see what had happened. They found the men there in a drunken stupor in the dining room. Apparently, however, they had attempted to perform their duties for they found the inventory sheet with one item entered on it as follows, "One revolving rug." (Laughter)

I have not had as much experience in the Bankruptcy Court as have my partners at home, but I have sometimes run up against the Scotch-like propensities of Referees when it comes to the allowance of attorney fees.

Mr. Piatt was down on the program on the subject of "Needed Reforms" and I think that is one of the reasons he "ducked." I think we all need to be reformed. If the sample we have here of beautiful ladies is what may be expected of the good taste of Referees, I do not think that they need to be reformed in that respect, but the rest ought to either get married or bring their sweethearts.

This is a great age for reform. Everybody wants to reform everybody but himself and when the other fellows are all reformed, he will think about reforming himself. There exists the same problem in the law, and particularly in bankruptcy. We hear a lot about the misuse of the bankruptcy law. The bankruptcy law was intended to relieve the poor and honest debtor and provide ratable distribution of assets among the creditors. At the present time, as it is administered, it often relieves the dishonest debtor, transferring his assets to the attorneys who solicit and collect the claims that give them control of the estate.

We have been talking reforms for years. Then, what is the difficulty with the bankruptcy situation at the present time? As I started to say before, the purpose of the bankruptcy law was to furnish the honest but unfortunate debtor an opportunity to get out from under the load. In other words, to use the thought of the Salvation Army that while "a man may be down, he ought not to be out." The second proposition was that whatever he had in the way of assets ought to be equitably and ratably distributed among all his creditors, a very desirable proposition as, I think, all will admit. The result of the bankruptcy law, however, has been, in many instances, to convert the bankrupt's assets into carrion for the vultures, or the socalled "bankruptcy rings" of lawyers. The bankrupt estate has ceased to be a fund for distribution among creditors, but rather a fund for as large an appropriation for the "rings" of lawyers engaged in attempting to administer it with as little as possible left for the creditors. When we come to the question of remedies or reforms, (and I must speak hurriedly and briefly) it does seem to me the present

needed remedy is not the long drawn out proposition of amendments to the bankruptcy law, but the administration of the law as it is, the enforcement of the Rules and General Orders of the Supreme Court with additions and amendments which the Court has the power and right to make.

I am firmly convinced that ninety per cent of the abuses that we complain of in the bankruptcy practice at the present time could be eliminated if the Referees in Bankruptcy and the United States District Judges could and were willing to give the time and effort to the serious consideration necessary to administer this law in the spirit as well as the letter as it exists today and insist upon the rigid observance of the rules and Orders promulgated by the Supreme Court.

You know we are always asking for some definite statement of principle that we can follow, but when we get that statement of a principle, or an ideal, or a goal to shoot at, we begin to make alibis for failing to go after it, or for refusing to follow the path that leads to that which is right. We find this throughout the history of the world. If we go back to scripture time, we find that the scribes and Pharisees and the lawyers, who were the keepers of the law, so to speak, were most rigid in their study and application of the letter of the law, but entirely lost the spirit. You remember how they sought to entangle Him and to jibe Him, when they asked Him about the law and how, driving right through the mazes of its technicalities and stripping it of its faults and sham appendages, He answered, "Thou shalt love the Lord, thy God, with all thy heart, with all thy soul, and with all thy mind. This is the first and greatest commandment and the second is like unto it, thou shalt love they neighbor as thyself. Upon these two commandments hang all the law and the prophets." Throughout the ages since then men have been trying to avoid the simple application of these two laws by finding reasons and alibis for their impracticability and seeking to substitute other rules or principles to avoid the necessity for complying with those two simple rules that were taught as the basis of all justice and right action among the people of the earth.

In the practice of the law, whether it be in the Bankruptcy Court or other courts, we have certain outstanding principles, certain outstanding goals, certain outstanding ethics of conduct, which ought and should govern the practice and conduct of every lawyer, and if every lawyer followed them, or if those of us who see them would follow them, we would not need a lot of amendments or new laws. And if every lawyer who practices in the Bankruptcy Court would remember that he does not necessarily cease to be a lawyer when he practices there and must live up to the ethics of his profession; and if Referees and Judges in charge of bankruptcy would be insistent on the fact that "Once a lawyer, always a lawyer," we would find that the bankruptcy lawyers, like all other lawyers, would be compelled to recognize the compulsion of legal ethics. I maintain the abuses of the bankruptcy practice arise generally from the fact that the interest of the client does not enter into the consideration of the lawyer and sometimes not of the Referee and of the Judge.

We seem to forget that both lawyers and courts ought, primarily to give consideration to the interest of those whose matters are before the court insofar as those interests are not in conflict with the general public interest.

Of all the remedies that have been and are offered for changing conditions of the bankruptcy practice, I know of none that to my mind (and it is a pet hobby of mine) that would have more beneficial, quick and lasting effects than that of preventing lawyers who solicit claims for the purpose of obtaining fees by the control of the estate from voting such claims or controlling the estate.

Remedy for this has been found in some jurisdictions. If this application could be made universal, I am satisfied that at least seventy-five per cent, if not a larger number, of the abuses of the bankruptcy practice would immediately disappear. (Applause)

THE TOASTMASTER: Mr. Boston, when I arrived in Buffalo, I advanced my watch one hour at the depot; at the hotel I advanced it another hour; but on this occasion I have stopped it, so that there is no time whatsoever in existence. We will have the pleasure of listening to the Honorable Charles A. Boston, Chairman of the Committee on Supplements to Canons of Professional Ethics of the American Bar Association, Mr. Boston coming from New York. (Applause)

MR. CHARLES A. BOSTON, of New York: The Toastmaster has been liberal indeed to me to stop his watch before I looked at it. It is the first time I ever had such an intimation in an introduction that I in my appearance would stop a clock, (laughter) if the Toastmaster had not stopped it first. If anybody is in a position to appreciate the subject of ethical values, I am in that subjective position tonight. There is scarcely anything that I had intended to say that has not already been said. Even the ethics of the bankruptcy practice was fully covered by the last speaker, so that my last hope is gone.

You are not interested in the slightest degree, I assume (although you are charged to love your neighbor as yourself) in my domestic affairs and complications, and yet the last time I made an after dinner speech I urged the other half of my family to make a request that I should never commit the folly of speaking after dinner again. She made that request and I made the promise. I have broken the promise. That is the first breach of ethics that I am guilty of this evening. The only reason I yielded to the urgent persuasion of your President to speak here tonight on this sophomoric topic of "Ethical Values" (and I confess I cudgelled my brain to know how to present it) the only reason I yielded was that I appreciated that I was invited not in my individual capacity but in the capacity which is the excuse he offers for putting my name on the program, namely, that I am the Chairman of the Committee to Supplement the Canons of Ethics of the American Bar Association, and that Committee, I fear, will see its violent demise on Thursday evening. So I have been invited, I think, to make an antemortem statement. (Laughter)

Now, I am the second casualty of the evening. The first was the man who did not come. I, too, made two engagements. I broke the other and here I am. There is not a (Continued on page 50)

PREAMBLE

The members of the National Association of Referees in

Bankruptcy, while fully subscribing to and accepting in every particular, so far as applicable, the Canons of Ethics adopted by the American Bar Association, recognize that there are distinctive features in bankruptcy law, procedure and administration which require particular consideration

and treatment.

ARTICLE I. PRINCIPLES

We, therefore, make the following basic declarations of principle:

FIRST, The office of Referee in Bankruptcy is a high public trust charged with the safe custody, care and distribution annually, of property of tremendous value, and the determination of the property rights of many thousands of people.

SECOND, It, therefore, affords an opportunity, through promoting the proper functioning of our Federal Courts in Bankruptcy, of rendering important service to the country at large in its material welfare, to the business interests of the several communities in which we serve, as well as to individual creditors, to bankrupts, who, through unavoidable reverses, merit relief, and to every other party with rightful interest in bankruptcy cases.

THIRD, The proper administration of this office of public trust and service demands the highest degree of honor, skill and efficiency, and condemns dishonesty in any form, inefficiency, waste and delay.

ARTICLE II. PHASES

There is, first, the conception of the Referee and his office and, second, that of the Referee and his relationships.

ARTICLE III.

THE REFEREE AND HIS OFFICE

If he is properly to perform his duties and fully to discharge his public trust, the Referee shall

1. First of all things — equip himself for the performance of his duties by familiarizing himself with the bank

ruptcy law, decisions and rules of practice.

2. Maintain an office as well situated, as well suited and as well equipped, for the business of the Court as its volume records; and provide as much and as capable clerical aswill warrant; keep it in good order; maintain adequate records; and provide as much and as capable clerical assistance as the necessities require and the income of the office permits.

3. Respect his office and, without personal pride, demand for it from others the respect to which it is entitled. He shall maintain the dignity of the Court by refraining himself from any conduct which would be unbecoming in a judge and prohibit all practices before him which tend in any way to lower the dignity and impressiveness of the Court.

4. Attend punctually at hearings and, with courtesy, consider the matters presented to him.

5. Be ready at all times to furnish full and complete information from his office to those who are entitled to it.