To the Official Forms: Appointment of trustee by creditors, No. 22; by referee, No. 23. Notice to trustee of his appointment, No., 24; official bond, No. 25; order approving bond, No. 26. Order that no trustee be appointed, No. 27. Petition for removal of trustee, No. 52; notice of petition, No. 53; order for removal, No. 54; order for choice of new trustee, No. 55. To the Supplementary Forms: Resignations of trustees, No. 250. Notice of meeting to elect.new trustee, No. 251. See Vol. III, post. SYNOPSIS OF SECTION I. Scope of Section, 1017. II: Comparative Legislation, 1017. a. In England and Continental Europe, 1017. c. In Canada, 1018. III. Appointment of Trustees, 1018. a. Election by creditors, 1018. (1) IN GENERAL, 1018. (2) WHO MAY VOTE, 1019. (3) TIME OF ELECTION, 1020. (4) POSTPONEMENT OF ELECTION, 1020. b. Approval or disapproval, by judge or referee, 1021. (2) GROUNDS FOR DISAPPROVAL, 1022. (II) Undue activity of bankrupt, 1023. (3) EFFECT OF DISAPPROVAL, 1025. (4) REVIEW, 1026. c. Appointment by court or referee, 1026. (1) FAILURE OF CREDITOR TO AGREE, 1026. (2) DELAY IN APPOINTMENT, 1028. (3) DISPUTED CLAIMS, 1028. d. Vacancies, 1028. (1) IN GENERAL, 1028. (2) AFTER ESTATE HAS BEEN REOPENED, 1029. e. Number of trustees, 1029. f. When no trustee, 1029. g. Forms, notification, bond, etc., 1030. IV. Removal of Trustees, 1030. a. For cause, 1030. b. By resignation, 1032. I. SCOPE OF SECTION This section should be read with § 63, on what are provable debts, with § 1 (9), on who are creditors and their agents, proxies, etc., with § 56, on who may vote and what constitutes a voting majority at creditors' meetings, and with § 45, on the qualifications of trustees. None of the matters belonging to those subjects are discussed here. This section has to do only with the kindred topics indicated in the synopsis, supra. 3 II. COMPARATIVE LEGISLATION a. In England and Continental Europe. One of the storm centers of bankruptcy legislation has been the method of appointing the officers of administration.' The English system has see-sawed from administration by the court through commissioners of its own appointment, to that by trustees chosen by the creditors. The present system is midway between the two, the official receiver, who is an officer of the board of trade, taking charge of the estate until the creditors can choose; and even then the board of trade may certify objections to their choice to the high court, which the latter may hold sufficient. If no appointment is made by the creditors within four weeks, the board of trade may itself appoint a trustee, subject to the creditors' right subsequently to appoint some one in his stead. This is, in effect, appointment by the creditors, with a qualified veto by the board of trade. The corresponding officer under the French system is the syndic. As in England, a temporary official syndic is appointed, and the creditors may then advise the court as to their wishes. But their advice is not binding. The result is, as has been said, that the syndic " is generally a person enjoying the confidence of the court who has made the settlement of bankruptcy estates his special profession." This method seems to pertain in most of the continental countries.* 1. For the different methods of appointment in Europe, see "Bankruptcy; a Study in Comparative Legislation," by Dunscomb, Vol. II, No. 2, Columbia College Studies in History, etc. 2. Thus, from 1831 to 1869. 3. Eng. Act of 1914, § 19. Williams on Bankruptcy (12th ed.), pp. 99, 557. 4. See Mr. Dunscomb's admirable monograph, referred to above. b. In the United States.-The history of bankruptcy legislation in this country reveals the same changes. Our administrators have been called, successively, either assignees or trustees. Not until our law of 1867 was the principle that insolvent estates are really trusts and the creditors, as beneficiaries, entitled to choose the trustees, recognized by our law. Even under that law, the recognition was somewhat half-hearted. The choice in the first instance, though by the creditors as now, was subject to the approval of the judge; and yet, in case an assignee failed to qualify or the office became vacant, the judge or register might ignor the creditors and "fill the vacancy." The judge could "for any cause needful or expedient" either appoint additional assignees or order a new election. We have never adopted the asset-saving device of a temporary official trustee,' but continue to limp along with, when "absolutely necessary for the preservation of estates," a court-chosen receiver.s c. In Canada.- In Canada the Governor in Council, upon the application of the Secretary of State appoints the trustees whose authority is limited territorially to the whole or part of one or more bankruptcy districts. A majority in number of the creditors who hold half or more in amount of the proved debts of twenty-five dollars or upwards may substitute any authorized trustee for the one named in the receiving order." III. APPOINTMENT OF TRUSTEES a. Election by creditors.-(1) IN GENERAL.-The present law goes further than any bankruptcy statute either here or elsewhere in giving creditors the right to choose the trustees. The section under discussion declares: "The creditors shall appoint one trustee or three trustees." There is nothing here giving the judge or referee the right to approve or disapprove. Nor is there anything in § 2 (17) conferring on them such a power; though some have thought it is inherent in the court under the last sentence of § 2. Trustees in bankruptcy are creatures of the statute. Viewed as Congress left it therefore, the law of 1898 vests in the creditors an unqualified right to appoint their own trustees.10 Indeed § 44, which declares they "shall appoint," under familiar canons of construction, must be 5. There was even an official assignee appointed by the court, under the laws of 1841. 6. Thus, see Act of 1867, § 13, R. S., § 5034. 7. Eng. Act of 1914, §§ 70-74. 8. Compare Bankr. Act, § 2 (3). 9. Can. Bankr. Act of 1919, §§ 6, 14, 15. Duncan on Bankruptcy, p. 151. 10. In re Lewensohn (D. C., N. Y.), 3 Am. B. R. 299, 98 Fed. 576. taken as controlling on the earlier and more general words of § 2 (17), giving courts of bankruptcy power to "appoint trustees,' pursuant to the recommendations of creditors. 9911 14 (2) Who may vote.- Subsection a of § 56, provides that creditors shall pass upon all matters submitted to them by a majority vote "in number and amount of claims of all creditors, whose claims have been allowed and are present. In the nature of things, all creditors who entitle themselves to vote before the result is announced, should be counted; conversely, no others should.12 It has been held that provisional allowances or disallowances may be made in proper cases to permit the prompt selection of a trustee,13 and this may be permissible where the only other possible course would be to postpone the election of a trustee until intricate questions of law and fact pertaining to the claim were determined. If there is a postponement, all claims proven in the interval have the same rights as those previously allowed. When, after the first meeting, proper amendments are granted bringing in new creditors, such creditors, it seems, may, if it appears that their votes would have changed the result, petition for a new election and, if successful thereat, oust the elected trustee.15 Creditors may vote in person or they may be represented at the meeting by duly authorized agents, attorneys or proxies.16 It appears to be established by the weight of authority that an attorney admitted to practice in a court of bankruptcy may not represent his client, who is a creditor of the bankrupt, in the election of a trustee, unless he presents and files a written power of attorney." The method 11. See Bankr. Act, § 56-a, and discussion thereunder, post. 12. In re Lake Superior, etc., Co. Fed. Cas. 7,997. 13. In re Malino (D. C., N. Y.), 8 Am. B. R. 205, 118 Fed. 368. But compare In re Columbia Iron Works (D. C., Mich.), 14 Am. B. R. 526, 142 Fed. 242. 14. Postponement until determination of question of preference.— Where the referee, after twice adjourning the election of trustee and affording an opportunity to creditors to examine the bankrupt in support of their objection that a certain creditor was not entitled to vote for trustee unless it surrendered a preference alleged to have been received by it, finds from the evidence adduced that the alleged preference had not been established, no error is committed in refusing to postpone the election of trustee until the final determination of the question of preference and permitting the creditor to vote. In re Milne (D. C., N. Y.), 20 Am. B. R. 248, 159 Fed. 280. 15. In re Perry, Fed. Cas. 10,998; In re Ratcliffe, Fed. Cas. 11,578; In re Morgenthal, Fed. Cas. 9,813. 16. Creditor includes "his duly au thorized agent, attorney or proxy." Bankr. Act, § 1 (9). See Matter of Capital Trading Co. (D. C., N. Y.), 36 Am. B. R. 339, 229 Fed. 806; Matter of Wilson (C. C. A., 1st Cir), 39 Am. B. R. 419, 242 Fed. 479, affd. 37 Am. B. R. 513. 17. Matter of Capital Trading Co. (D. C., N. Y.), 36 Am. B. R. 339, 229 of voting at meetings of creditors generally and the power of proxies to vote is considered elsewhere.18 19 (3) TIME OF ELECTION.- Both the statute and the forms indicate that the creditors must appoint a trustee or trustees "at their first meeting." This means the meeting called under the notice known as Form No. 18. In general, the election of trustee should take place at the time and place fixed in the notice, and objections, technical in their nature, or motions manifestly for the purpose of delay, will usually be denied. It has been suggested that the provision that trustees be elected at the first meeting is directory and not mandatory.20 (4) POSTPONEMENT OF ELECTION.-If possible, there should be no postponement of an election of trustee,21 but a referee may, in his discretion, adjourn a first meeting of creditors in order that claims may be presented and allowed,22 or that the creditors may compose their differences in the case of a no-choice vote,23 although the selec Fed. 806; In re Henschel (C. C. A., 2d Cir.), 7 Am. B. R. 662, 113 Fed. 443; In re Lazoris (D. C., Wis.), 10 Am. B. R. 31, 120 Fed. 716; In re Scully (D. C., Pa.), 5 Am. B. R. 716, 108 Fed. 373; In re Eagles & Crisp (D. C., N. Car.), 3 Am. B. R. 733, 99 Fed. 733. Form of power of attorney.- See Official Forms, Nos. 20, 21, Vol. III, post. 18. See under § 56 of this work. 19. See In re Jones, Fed. Cas. 7,447; In re Lake Superior, etc., Fed. Cas. 7,997; In re Back Bay Automobile Co. (D. C., Mass.), 19 Am. B. R. 835, 158 Fed. 679, revg. 19 Am. B. R. 33. See also Am. B. R. Dig., §§ 312-317. 20. In re Fisher (D. C., N. J.), 14 Am. B. R. 366, 135 Fed. 223, wherein it was held that the election of a third trustee in addition to the two elected at the first meeting was valid, and the three trustees could join in a petition for an order directing the sale of the bankrupt's property. 21. In re Richards (D. C., N. Y.), 4 Am. B. R. 631, 103 Fed. 849. See also In re Henschel (C. C. A., 2d Cir.), 7 Am. B. R. 662, 113 Fed. 433. Postponement to bring in other creditors. Where, at the time stated for the election of a trustee, a majority in number of the creditors are ready and opposed to delay, but a minority requested a postponement of an hour in order that others favorable to their candidate might be present, the referee was justified in denying the postponement, no good reason therefor being shown. Matter of Grat (D. C., Mass.), 36 Am. B. R. 524, 228 Fed. 925. An adjournment on the ground of surprise will not be granted where the surprise relied upon is not as to a fact, but arises from oversight of a provision of law as to the correct execution of a letter of attorney. In re Finlay (D. C., N. Y.), 3 Am. B. R. 738, 104 Fed. 675. 22. Matter of Rosenfeld-Goldman Co. (D. C., Mass.), 36 Am. B. R. 520, 228 Fed. 921. 23. When postponement permitted. Where the vote for trustee results in no choice, the unanimous request of the creditors for an adjournment of the meeting for twenty-four hours to enable them to compose their dif |