75 law gave them such control "with consent of the court." Now the court is given sole power to remove," but this must be done by the judge, not the referee." The district rules which confer on the referees jurisdiction to perform all the functions of the judge usually except such powers as have been withdrawn from them by the General Orders. Numerous cases on the removal of trustees under the former law will be found in point.78 The practice on removals is suggested by Forms Nos. 52, 53, 54, and 55.79 Removal is a matter of discretion 80 and is, therefore, not reviewable, but, being a judicial discretion, should be exercised only when there is sufficient cause,82 which must have arisen after the appointment of the trustee.83 Where a trustee, by concealment or false representation, induces creditors to agree to a composition contrary to their interests, he should be removed. It is not necessary to justify a trustee's removal that he 75. Act of 1867, § 18, R. S., § 5039. 76. Bankr. Act, § 2 (17). 77. General Order XIII. Approval of judge. An order of a referee in bankruptcy removing a trustee, which has not been affirmed by a judge who under General Order No. 13, has sole power of removal, is void, and another provision of the order appointing a new trustee, and a subsequent order directing the old trustee to turn over assets must also fall as having no legal foundation. Matter of Berree & Wolf (D. C., Pa.), 34 Am. B. R. 549, 185 Fed. 224. 78. In re Sacchi, 43 How. Pr. (N. Y.), 250; In re Mallory, Fed. Cas. 8,990; Ex parte Perkins, Fed. Cas. 10,982; In re Blodgett, Fed. Cas. 1,552; In re Price, Fed. Cas. 11,409; In re Perry, Fed. Cas. 10,998; In re Grant, Fed. Cas. 5,692. 79. A petition seeking the removal of a trustee in bankruptcy and also the revocation of certain orders allowing applications to sell or redeem securities belonging to the bankrupt's customers which had been pledged by the bankrupt, a stockbroker, examined and held, insufficient, the manner and extent of the petitioner's damage not being set forth and it appearing that the petitioners delayed unreasonably in 81 making the application. In re Carothers & Co. (D. C., Pa.), 27 Am. B. R. 603, 192 Fed. 691. 80. In re Day & Co. (C. C. A., 2d Cir.), 24 Am. B. R. 252, 178 Fed. 545, affg. 23 Am. B. R. 56, 174 Fed. 164. 81. In re Dewey, Fed. Cas. 3,849; In re Adler, Fed. Cas. 82. 82. In re Mallory, Fed. Cas. 8,900. See also Am. B. R. Dig., § 323. Cause for removal.-A trustee in bankruptcy who is employed in the office of the attorney for an assignee for the benefit of creditors, which attorney is also acting for him, should be removed upon the ground that the interests of the trustee and the assignee may conflict. Matter of Forestier (D. C., Cal.), 35 Am. B. R. 51, 222 Fed. 537. 83. State of Alabama v. Montevallo Min. Co. (D. C., Ala.), 48 Am. B. R. 283, 278 Fed. 989. The fact that a trustee in bankruptcy had, prior to his appointment, acted for the bankrupt and his wife, pursuant to an agreement under which they had conveyed to him all their property for the benefit of themselves and creditors is insufficient to justify his removal. Matter of Holden (D. C., N. Y.), Am. B. R. 161, 258 Fed. 720. 44 84. In re Wrisley (C. C. A., 7th Cir.), 13 Am. B. R. 193, 133 Fed. 388. be guilty of personal dishonesty; he may have so conducted the business or affairs of the estate as to have lost the confidence of the creditors and thus prevented their co-operation with him, in which case it will be for the benefit of the estate that he be removed.85 The fact that a trustee has changed his legal residence to another district is not ground for his removal, where the change neither makes it impossible for him to perform his duties as trustee, nor difficult for the creditors to locate and communicate with him.se 87 b. By resignation. The statute does not, as did its predecessor, provide for the resignation of the trustee. He can unquestionably resign, but, it is thought, his resignation is still ineffectual, save "with the consent of the judge' or referee.88 SECTION FORTY-FIVE QUALIFICATIONS OF TRUSTEES § 45. Qualifications of Trustees.-a Trustees may be (1) 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. Analogous provisions: In U. S.: Act of 1867, § 18, R. S., § 5035. In Eng. Act of 1883, § 21 In Can.: None. Cross-references: To the law: Appointment and removal of trustee, § 44. Bonds of trustees, § 50. First meeting of creditors, how conducted, § 55. Voters at meetings of creditors, § 56. SYNOPSIS OF SECTION I. Qualifications of Trustees, 1033. a. In general, 1033. b. Statutory qualifications; corporations as trustees, 1034. I. QUALIFICATIONS OF TRUSTEES a. In general. The only statutory disqualification under the former law seems to have been that the proposed trustee had received a preference. At the same time, the action of the creditors being subject to the approval of the judge, many disqualifications were in effect recognized by the courts. Since only those qualified may be appointed, votes should not be received for any nominees not clearly within the terms of this section. When the objection is that the proposed trustee is not competent to perform the duties of the office, however, votes should be received, and, if they result in his appointment, his ability to perform such duties should be investigated before he is allowed to qualify. 1. See also Am. B. R. Dig., § 320. 2 2. Compare, under former law, § 18, R. S., § 5035. 3 5 b. Statutory qualifications; corporations as trustees.- Trustees may be either individuals or corporations. In either case, they must have offices within the judicial district, although not necessarily at or near the bankrupt's place of business. Under the former law, it was held that they must reside in such district. It is evident that actual presence is intended by the phrase "reside or have an office," rather than a legal or voting residence. The having of a fixed place of abode would seem to be what is intended by the statute. This restriction seems to make it necessary to appoint a different trustee in an ancillary proceeding in another district. If a corporation is chosen, only those authorized by charter or by law "to act in such capacity" can be appointed trustee. This manifestly applies to trust companies and other corporations which are permitted by law to do a trustee business. If a trust company is named as trustee, it should appear that the company has no connection or relationship with the bankrupt which would make the position of any particular advantage to the company. An alien may be chosen as a trustee if he resides or has an office in the district. 8 3. Matter of Jacobs and Roth (D. C., Pa.), 18 Am. B. R. 728, 157 Fed. 988. Referee residing at a distance.-A referee is not authorized to disapprove the appointment of a person elected trustee by a majority in number and amount of creditors on the ground that such person, though a resident of the district, resides too far from the place of business of the bankrupt, where such person is possessed of all the required qualifications. Petition of Safran (C. C. A., 1st Cir.), 47 Am. B. R. 372, 275 Fed. 819, revg. 46 Am. B. R. 714, 272 Fed. 899. 4. In re Havens, Fed. Cas. 6,231; In re Loder, Fed. Cas. 8,459. 5. Residence or office in judicial district. In the case of In re Seider (D. C., N. Y.), 20 Am. B. R. 708, 163 Fed. 139, Judge Chatfield said: "A person might be domiciled or reside a greater portion of the year, and perhaps pay taxes in the county of Kings and in the eastern district of New York, and vote at a legal residence in another portion of the State, or even in a different State altogether. So with reference to the question of an office. A lawyer might have an office at his home in Brooklyn, and an office in one of the down town buildings in the Borough of Manhattan, and a third office in Jersey City, in the State of New Jersey, and any one of the three might be sufficient to meet the requirements of § 45." It seems that a person having a place of business within the judicial district may be appointed a trustee although he resides without such district. In re Loder, Fed. Cas. 8,459. 6. Compare In re Boston H. & E. R. R. Co., Fed. Cas. 1,678. 7. A trust company named as trustee in many deeds of trust securing obligations owing to the bankrupt, and hav ing as a director the principal counsel of the bankrupt, should not be appointed trustee of the bankrupt as its interests might conflict with those of the other creditors. Wilson v. Continental Building & Loan Association (C. C. A., 9th Cir.), 37 Am. B. R. 444, 232 Fed. 824. 8. In re Coe (D. C., N. Y.), 18 Am. B. R. 715, 154 Fed. 162, holding that the term individuals" is very broad c. Disqualifications.- So long as General Order XIII continues in force, certain disqualifications, based on precedent and common sense, rather than the statute, will also be recognized by the courts. Thus, under the present law, it is thought, one who is palpably the bankrupt's choice will be held disqualified, or, more correctly, his appointment will not be approved;10 although there is no statute against the election of a trustee merely because he is acceptable to the bankrupt." Mere hostile animus against the bankrupt does not positively disqualify the trustee,12 but he should be a person free from prejudices and entirely disinterested.13 The fact that a trustee has business relations with the referee is not sufficient to disqualify him, nor is he disqualified because he occupies the same suite of offices as the attorney for the bankrupt,15 or because he had an office with an attorney who represented certain stockholders of the bankrupt who claimed to be creditors, but whose claims were to be contested and who were former clients of the trustee." The fact that a person appointed trustee was formerly a receiver of the bankrupt estate, designated by the court, is evidence of his fitness and competency," and it has also been held that the fact that the trustee advised 14 and includes aliens as well as corporations. 9. See section 44, ante, subtitle, "Approval or disapproval by judge or referee." 10. See section 44, post, subtitle "Undue activity of trustee." 11. In re Eastlack (D. C., N. J.), 16 Am. B. R. 529, 145 Fed. 68, approving an election where it appeared that the name of the trustee was suggested to one of the creditors by the bank. rupt's attorney, and such creditor sent letters to all the other creditors recommending the election of the person so suggested. 12. In re Lewensohn (D. C., N. Y.), 3 Am. B. R. 299, 98 Fed. 576; In re Mangan (D. C., Pa.), 13 Am. B. R. 303, 133 Fed. 1000. 13. Matter of Ballentine (D. C., N. Y.), 37 Am. B. R. 111, 232 Fed. 271. Interest of creditors.- Where the person appointed trustee of a bankrupt estate receives his appointment, in part, at least, as a result of the active efforts in the solicitation and voting of 16 claims by a creditor which is his corporate employer and in which he is a stockholder, and such creditor holds security for a part of its debt and is charged with having preferences, such person's appointment will be disapproved. Matter of Anson Mercantile Co. (D. C., Tex.), 25 Am. B. R. 429, 185 Fed. 993. 14. In re Brown, 2 N. B. 590. 15. Matter of Fisher (D. C., Pa.), Am. B. R. 793, 193 Fed. 104. 26 16. In re Blue Ridge Packing Co. (D. C., Pa.), 11 Am. B. R. 36, 125 Fed. 619. 17. In re Huddleston (D. C., Ga.), 21 Am. B. R. 669, 167 Fed. 428. See also In re Crooker. Co. (Ref., Mass.), 27 Am. B. R. 241. Solicitation of claims by receiver for the purpose of being appointed trustee. -In the absence of affirmative evidence of collusion with the debtor, it is no objection to the appointment, as trustee, of the receiver in bankruptcy, who received a majority in number and amount of the claims allowed, that he |