stayed without requiring the bankrupt to apply for a stay. Under the act of 1867 it was necessary to ask for a stay in the court where the suit was pending.1 This clause includes an action by a creditor who has proved his debt, and renders unnecessary the provisions of § 5105 of the Revised Statutes,2 that a creditor who has proved shall not prosecute his action. In this respect also the present law differs from § 5106 of the Revised Statutes, which applied only to creditors who had provable debts which they had not proved.5 The trustee may prosecute or defend any suit pending at the time of the bankruptcy if the court authorizes it. He may institute any new suit without requiring authority of the court, apparently (70 a, (6)). Section 5047 of the Revised Statutes 6 applied to the right of assignees with regard to all suits, whether brought before the bankruptcy of the debtor or afterward by the assignee, and did not require an order of court to allow him to proceed. The trustee's duty is to collect the estate of the bankrupt, and he should have the right not to prosecute or defend a suit if he thinks it best for the estate not to do so. The sections here considered seem to adopt this view, as the word "may" is used. 8 Under the Act of 1867 an action against a bankrupt was valid if the trustee allowed it to proceed, and if he appeared and defended he could not afterward object to the jurisdiction of the court. These decisions are applicable to the present act subject to the qualification that if the suit be on a claim which would be released by a discharge it will be stayed by the operation of the first clause of section 11. 1 Supra, § 451. 7 Doe v. Childress, 21 Wall. 642; 2 Formerly § 21 of the Act of 1867, Eyster v. Gaff, 91 U. S. 521; Burbank v. 14 Stats. 526. 3 Scott v. Ellery, 142 U. S. 381. 4 Formerly § 21 of the Act of 1867, 14 Stats. 526. 5 Scott v. Ellery, 142 U. S. 381. 6 Formerly §§ 14, 16 of the Act of 1867, 14 Stats. 523, 524. Bigelow, 92 U. S. 179; McHenry v. La Scott v. Kelly, 22 Wall. 57; Davis v. Friedlander, 104 U. S. 570; Winchester v. Heiskell, 119 U. S. 450. A trustee can not defend an action against a bankrupt which is of a purely personal nature.1 The trustee may authorize the bankrupt to sue.2 Section 2 of the Act of 18673 provided that no suit at law or in equity should be maintained between the assignee and a person claiming an adverse interest in any property transferable to the assignee more than two years after the cause of action arose. It was held in several cases that this section did not apply to an action to collect a debt or for breach of a contract, but these decisions were overruled in Jenkins v. International Bank.5 This question could not arise under the present act. It was held in Bailey v. Glover that where a cause of action arose from fraud the assignee could sue at any time within two years after the fraud was discovered, but all other suits will be barred, it seems, under the present act whether they relate to property vested in the assignee or not. One chief purpose of this act is to settle up bankruptcy proceedings as quickly as possible and the clause in terms applies to all suits. Re Conant decided that a provision of the law of 1841 similar to the section of the Revised Statutes already cited did not apply to suits against an assignee arising out of his dealings with the estate after it came into his hands. That case is not an authority in determining the meaning of the present act. The difference in phraseology between this clause and the former act is significant. Here the suit must be brought within two years after the estate is closed. Under that law it had to be begun within two years after the cause of action arose. The courts were anxious to afford a remedy in the case of fraud and seized on the pretext that no cause of action arises on a fraud till it is discovered. This is not a strictly accurate 1 McClurg v. State Bindery Co., 3 So. Dak. 362. 2 Thatcher v. Rockwell, 105 U. S. 467. 314 Stats. 518, R. S. § 5057. 4 Clark v. Clark, 17 How. 315; Banks v. Ogden, 2 Wall. 57; Gifford v. Helms, 98 U. S. 248; Doe v. Hyde, 114 U. S. 247. 5 106 U. S. 571. See also Rosenthal v. Walker, 111 U. S. 185; Traer v. Clews, 115 U. S. 529. 7 See infra, § 528. 85 Blatch. 54, Fed. Cas. No. 3086. statement of law but is a good enough excuse for refusing to follow the strict rule. But at present no such excuse can be devised. The right of action is barred after the estate has been closed for two years and no ingenuity can work out a remedy where a fraud is discovered after that time. Bailey v. Glover therefore is not an authority under the present act. It was held that a suit by an assignee against a bankrupt for property concealed by him was not barred by § 5057 of the Revised Statutes.2 Such a suit would be barred by § 11 d, which applies to all suits by a trustee. A purchaser from a trustee whose rights are barred by lapse of time takes no greater title than the trustee had.3 The bar of the statute runs after transfer by the trustee as well as before. The estate will be closed when the final account of the trustee has been accepted at the final meeting of the creditors (§ 55 f.). The trustee must file his final report and accounts. fifteen days before this (§ 47 (8)) and make a detailed statement of the administration of the estate which he must lay before the final meeting (§ 47 (7)). There is no provision in this act for the discharge of the trustee, but this is provided by Form 51.5 Suits on a trustee's bond must be brought within two years after the estate is closed. Trustees are not liable personally or on their bonds to the United States for any penalties or forfeitures incurred by the bankrupts. It is clear that the district court has no power over a suit brought before his bankruptcy by a debtor on a cause of action which will not pass to the trustee. If such a suit is pending the bankrupt may prosecute it himself and need not apply to the district court for authority to do so.8 475. Act of 1898.-SEC. 12. COMPOSITIONS, WHEN CONFIRMED.-a. A bankrupt may offer terms of compo 961. 1 21 Wall. 342. 2 Thomas v. Blythe, 55 Fed. Rep. 3 Gifford v. Helms, 98 U. S. 248; Wisner v. Brown, 122 U. S. 214. 4 Greene v. Taylor, 132 U. S. 415. 5 See infra, § 510. 6 Act of 1898, § 50 m. Act of 1898, § 50 i. 8 Re Haensell, 91 Fed Rep. 355. sition to his creditors after, but not before, he has been examined in open court or at a meeting of his creditors and filed in court the schedule of his property and list of his creditors, required to be filed by bankrupts. b. An application for the 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 creditors, and the money necessary to pay all debts which have priority and the cost of the proceedings, have been deposited in such place as shall be designated by and subject to the order of the judge. c. A date and place, with reference to the convenience of the parties in interest, shall be fixed for the hearing upon each application for the confirmation of a composition, and such objections as may be made to its confirmation. d. The judge shall confirm a composition if satisfied that (1) it is for the best interests of the creditors; (2) the bankrupt has not been guilty of any of the acts or failed to perform any of the duties which would be a bar to his discharge; and (3) the offer and its acceptance are in good faith and have not been made or procured except as herein provided, or by any means, promises, or acts herein forbidden. e. Upon the confirmation of a composition, the consideration shall be distributed as the judge shall direct, and the case dismissed. Whenever a composition is not confirmed, the estate shall be administered in bankruptcy as herein provided. 3 In June, 1874,1 Congress amended the bankrupt act so as to provide for compositions before or after an adjudication. This act was like a provision in the act of 1869 in England. It was found that this scheme was open to several objections. The bankrupt could often get his discharge by paying less than his assets would enable him to pay if the composition were confirmed before his examination. Creditors were very likely to require an undue advantage to themselves before agreeing to the composition; and difficulties were encountered in carrying out its provisions. These obstacles are met in the present act by providing that the bankrupt shall not offer a composition before his examination (§ 12 a), and shall not file the application in court until he has deposited in some place designated by the judge the money necessary to carry it out. Creditors are discouraged from attempting to influence the proceedings in the manner above described by being made subject to imprisonment for two years if they attempt to extort money as a consideration for acting in bankruptcy proceedings (§ 29b (5)). It would seem that with these safeguards the present scheme might operate successfully. The judges are given sufficient power by paragraph d to refuse to confirm a composition which is too favorable to the debtor. Provisions for composition are contained in the English law and in the laws of the Continental nations, and have become an established part of those systems of bankruptcy. As paragraph a authorizes compositions only after an examination which does not take place till after adjudication (§ 55), its scope is quite different from that under the act of Congress of June, 1874. Several questions which were discussed under that act as to the effect of a composition before adjudication on an attachment, and the right of creditors having attached 1 Act of June 22, 1874, § 17, 18 Stats. 182. et seq. See an essay on Bankruptcy by S. Whitney Dunscomb, Jr., Esq., in the 2 Re Haskell, 11 N. B. R. 164, Fed. second volume of the Studies on His Cas. No. 6192. tory, Economics, and Public Law, pub 3 See an article by John Lowell in lished by Columbia College, at p. 84. 1 Lalor's Encyclopædia, p. 223. 5 Re Shields, 15 N. B. R. 532, Fed. 4 Robson, Bankruptcy, 7th ed. p. 745 Cas. No. 12,784. |