482 The rentals of exempt land of the bankrupt contracted for and accruing after adjudication do not constitute assets of his estate in bankruptcy. Having set it aside for his use any creditor desiring to subject the exempt property to the payment of a debt must pursue his remedy in the State court.483 A decree of the Federal court setting aside to a bankrupt and his wife certain land as a homestead is not binding upon a creditor who was not a party to the bankruptcy proceeding.484 Until the bankrupt has established what, if any, of the property belongs to him as exempt, freed from the claim of his trustee in bankruptcy, he is in no position to maintain trover in the State court for the conversion of such property.185 The reference to exemptions in this section does not show an intent to require a claim for an exemption to be made prior to adjudication.486 Where one partner had, prior to bankruptcy, transferred all of his property and interests to the other partner, and it became in the hands of the other partner, who was also a bankrupt debtor, exempt under the laws of the State, the trustee takes no title.487 Other questions regarding exempt property are considered elsewhere.488 482. In re Oleson (D. C., Iowa), 7 Am. B. R. 22, 110 Fed. 796. 483. Newberry Shoe Co. v. Collier (Sup. Ct., Va.), 111 Va. 288, 25 Am. B. R. 130, 68 S. E. 974; Matter of Ballard (D. C., Tex.), 44 Am. B. R. 651; Schexnailder v. Fontenot (La. Sup. Ct.), 45 Am. B. R. 658, 85 So. 207; In re Bass, Fed. Cas. 1.091, in which Judge Bradley said: "In other words it is made as clear as anything can be, that such exempted property constitutes no part of the assets in bankruptcy. The exemption is created by the state law and the assignee acquires no title to the exempt property. If the creditor has a claim against it, he must prosecute that claim in the court which has jurisdic tion over the property which the bankrupt court has not." See In re Remmerde (D. C., Iowa), 30 Am. B. R. 701, 206 Fed. 826; Matter of Elkin (D. C., N. J.), 34 Am. B. R. 134, 218 Fed. 971. Chattel mortgage against exempt property. Where a debtor within four months of bankruptcy executed a chat tel mortgage on a stock of merchandise which was declared to be an unlawful preference and an act of bankruptcy and the property placed in the possession of the trustee but the bankrupt allowed under the State law to select $300 worth of the merchandise as an exemption, the property selected remained unaffected by the bankruptcy proceeding and consequently subject. to the mortgage. Bank of Mendon v. Mell (Kan. City, Ct. of App., Mo.), 185 Mo. App. 510, 33 Am. B. R. 777, 172 S. W. 484. 484. Bogart v. Cowboy State Bank & Trust Co. (Tex. Civ. App.), 37 Am. B. R. 387, 182 S. W. 678. 485. Lun v. Henry (Hawaii Sup. Ct.), 35 Am. B. R. 795, 22 Haw. 160. 486. In re Fisher (D. C., Va.), 15 Am. B. R. 652, 142 Fed. 205. 487. In re Rudneck (D. C., Wash.), 4 Am. B. R. 531, 102 Fed. 750. 488. See in § 6, ante. And compare §§ 2 (11) and 47-a (11); also General Order XVII. b. Life insurance policies. The provisions of subdivision 5 in regard to life insurance policies with a cash surrender value do not apply to life insurance policies which are exempt under a State law; as to such policies the State law must control regardless of whether they have a cash surrender value. This question has been considered elsewhere.489 Other matters regarding the effect of the proviso in subdivision 5 are discussed in this section, ante. 490 491 VII. APPRAISERS AND APPRAISAL a. In general. The only reference to appraisers occurs in subsection b. The words seem to require the appointment of appraisers in every case. At the same time, it is not thought that this is so far jurisdictional as to make defective a title sold by a trustee without appraisal. Three appraisers, not two or one, must be appointed. They must be disinterested; this excludes creditors and all other persons having an interest in the proceeding.492 The appointment may be, in fact, usually is, made by the referee. Their fees are discretionary, the statute being silent, and are fixed in some districts by general rule, 492a in others by order in each case. They are usually in the form of a per diem, and are moderate rather than large." 489. See under section 6, ante, subtitle "Insurance policies." 490. See under this section, ante, subtitle "Life insurance policies." 491. Necessity of appraisal.- While the want of an appraisal does not necessarily invalidate a sale by trustee of property of a bankrupt's estate, and a sale for a reasonable price without appraisal may be confirmed, yet, if the price is wholly inadequate the sale will not be allowed to stand. In such a case, the purchaser may return the property and recover the purchase price with interest. Matter of Monsarrat (D. C., Hawaii), 25 Am. B. R. 820, 3 U. S. Dist. Ct. Hawaii. 641. See also Matter of Irvine (D. C., S. Car.), 43 Am. B. R. 155, 255 Fed. 168. The appraisement is evidence upon which the court may base a valid discretion when called upon to confirm or set aside a trustee's sale. Jacobsohn v. Larkey (C. C. A., 3d Cir.), 40 Am. B. R. 563, 245 Fed. 538. 492. Matter of Columbia Iron Works 493 (D. C., Mich.), 14 Am. B. R. 526, 142 Fed. 234, in which case it was held that the appointment of an appraiser upon the suggestion of a creditor was not necessarily void. Lessee of bankrupt as appraiser.-A lessee of a portion of the property of a bankrupt under a mining lease, executed more than four months before the petition in bankruptcy was filed, and requiring work to be done and royalties to be paid, not shown to have an interest in the bankruptcy proceedings or in the sale of the property, is not disqualified as an appraiser under section 70-b of the Bankruptcy Act. Clark Hardware Co. v. Sauve (C. C. A., 8th Cir.), 33 Am. B. R. 674, 220 Fed. 102. 492a. See Bankruptcy Rules in Vol. post. IV, 493. Appraisers; fees. Appraisers should make a careful and accurate inventory; it should be more than a mere formality, especially where r ceivers are operating a business. An Inasmuch as the appraisal is often the key to the administration of asset cases and knowledge of the percentage of cost price used in getting at values essential to bidders and court alike, one of the appraisers should be selected and serve as the representative of the referee. Such a practice will, it is thought, check collusive bidding and inadequate prices at subsequent sales. It has been held that the prevailing cost to the trade should be adopted as the actual value.194 An official appraiser of a bankrupt estate is, as a matter of law, incapable of purchasing the property of the estate prior to the filing of his appraisal.495 496 497 b. Practice. In no-asset cases appraisers are not needed, or often appointed. In asset cases, their appointment should be moved at the first meeting of creditors.95 Where possible, the wishes of the creditors should be consulted as to their choice. The appointment is evidenced by an order.19 An oath of office must be taken." The appraisal should be made as soon as possible; no notice to creditors or parties in interest is required. It has been said that an appraisal should be general rather than special, only such particularity being given as will be sufficient to reasonably identify the property in character and quantity, and give a fair idea of its value. When made, it is reduced to writing, 499 signed by the appraisers, and filed with the allowance of two hundred and fifty dollars apiece to three appraisers should be approved, where it appears that the case was extraordinary, the business consisting of thirty stores scattered over New England, and that the receiver and trustee have handled over $66,000.00. Matter of Mills Tea & Butter Co. (D. C., Mass.), 37 Am. B. R. 154, 235 Fed. 812. Cross reference.-See also under section 62, ante, subtitle "Appraisers services and fees." In re Fiddler & Son (D. C., Pa.), 23 Am. B. R. 16, 172 Fed. 632, it was held that the trustee must justify by special circumstances the payment of more than $5 per day as fees to appraisers. 494. In re Prager (Ref., Col.), 8 Am. B. R. 356. 495. Matter of Frazin & Oppenheim (C. C. A., 2d Cir.), 24 Am. B. R. 598, 181 Fed. 307 revg. 23 Am. B. R. 289, 174 Fed. 713, holding that under the rule of equity that no person can be permitted to purchase an interest in property and hold it for his own benefit where he has a duty to perform in relation to such property which is inconsistent with the character of a purchaser on his own account and for his own individual use, an official appraiser of a bankrupt is incapable of purchasing the property which he has appraised. 495a. Form of petition for appointment of Appraisers, see Supplementary Forms, No. 192, Vol. III, post. 496. Official Form No. 13, Vol. III, post. 497. Id. 498. In re Gordon Supply, etc., Co. (D. C., Pa.), 13 Am. B. R. 352, 133 Fed. 798. 499. Official Form No. 13, Vol. III, post. referee. With it, should be filed affidavits of the number of days actually spent by each appraiser; this for the guidance of the referee in fixing the fees.500 VIII. SALES OF PROPERTY a. In general. Subsection b also provides for the sale by the trustee of the bankrupt's real and personal property. The subject of sales is largely controlled either by rules or by the order of the court in each case. Here the present law differs materially from that of 1867. The latter, especially after the amendments of 1874, regulated sales with much particularity.501 Subject to the statute and General Orders XXI and XXIII interpreting it, the assignee (trustee) then had a large discretion as to sales. Cases under that law should, therefore, be cited with caution. The present statute, after, in general words,502 conferring jurisdiction on courts of bankruptcy to convert estates into money and distribute them, and charging this duty on the trustee,503 limits the latter's powers by the words "under the direction of the court," in § 70-b, and then, as to sales, provides that the same, when practicable, shall be made subject to the approval of the court; indeed, that no sale at less than 75 per cent. of the appraised value shall be made without such approval.504 This subsection and the one that follows are, other than those in § 58-a (4), the only words of the present statute having to do with the reduction of a bankrupt's property into money. Thus, the only statutory check on absolute discretion is that creditors are entitled to notice of all proposed sales.505 This latter restriction is, as we have seen, unfortunate. The subject is, however, one of practice rather than law. This is recognized in General Order XVIII and the numerous special rules regulating sales in the different districts. 505a 500. See generally 1 N. B. N. 179, and Rule 13, Erie Co. (N. Y.) District in 1 N. B. N. 114. Compare also In re Grimes (D. C., N. Car.), 2 Am. B. R. 730, 96 Fed. 529; In re Jamieson (Ref., R. I.), 6 Am. B. R. 601. Form of petition for allowance for services, see Supplementary Forms, No. 173, Vol. III, post. 501. See "Analogous Provisions" at head of this section. 502. Bankr. Act, § 2 (7). Hawaii), 25 Am. B. R. 820, 3 U. S. 505. See under section 58, ante, subtitle "Of proposed sales:" Sale without court order.—A sale by a trustee in bankruptcy of personal property belonging to the estate of the bankrupt, in the absence of an order of the bankruptcy court authorizing such sale, is not absolutely void and cannot be attacked collaterally. Trabue v. Ash (Ct. of Civ. App., Tex.), 41 Am. B. R. 122, 200 S. W. 415. 505a. See Bankruptcy Rules in Vol. IV, post. b. Practice on sales; conduct of sales. (1) IN GENERAL.-It will be seen that a trustee has the option (1) of disclaiming the bankrupt's property, or (2) of selling it. If the latter, (a) he may sell it immediately without notice, if it be perishable, in which case the practice is indicated in Form No. 46; 506 (b) he may sell it at public auction on notice using Form No. 42; 507 or (c) he may sell it at private sale 508 under General Order XVIII (2) with or without notice, as the court shall direct," 509 in which case Form No. 45, modified to fit the facts, should be used; or (d) he may sell it subject to liens, when the practice is not unlike that on a sale of unincumbered property, though Form No. 44 should be used; or (e) he may sell it clear of liens, for which no form is provided but to which Form No. 44, with the additional recitals and directions indicated in the last paragraph, may be adapted, 509a or (f) he may redeem it from liens, as provided in General Order XXVIII, in which event Form No. 43 should be used; or (g) he may sell unconverted assets as a part of the final meeting of creditors. 510 The bankruptcy court may order how a sale of the bankrupt's property shall be made and may order the property sold either in parcels or as a whole.511 It has been held that the act of March 3, 1893 (27 Stat. 75; U. S. Comp. Stats. 1901, p. 710), requiring judicial sales of land to be made upon the land itself, or at 506. This form is erroneous in so far as it recites a notice. See also Supplementary Forms, Nos. 289, 289a, Vol. III, post. 507. For a form of notice, see 1 N. B. N. 117. 508. The court may, under its broad powers, order, a private sale of either real or personal property belonging to the estate. In re Edes (D. C., Me.), 14 Am. B. R. 382, 135 Fed. 595. See also McKay v. Hamill (C. C. A., 3d Cir.), 26 Am. B. R. 164, 185 Fed. 11; In re Britannia Mining Co. (D. C., Wis.), 28 Am. B. R. 651, 197 Fed. 459. 509. As to when notice to creditors and lienors of a private sale should be given, see Allgair v. Fisher (C. C. A., 3d Cir.), 16 Am. B. R. 278, 143 Fed. 962. Notice. A sale by a trustee in bankruptcy, or an offer to sell at public auction, may be made on ten days' notice. Matter of Progressive Wall Pa 509a. See Suplementary Forms, Nos. 293-295, Vol. III, post. 510. The forms here referred to are Official Forms; see also Supplementary Forms, Vol. III, post. 511. Matter of Haywood Wagon Co. (C. C. A., 2d Cir.), 33 Am. B. R. 618, 219 Fed. 655. Sale of property subject to oil lease. - Where a tract of land subject to an oil and gas lease is subdivided and sold and later the lessee produces oil on one of the subdivisions the purchaser of that particular subdivision is en |