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ruptcy Act which provides for avoiding levies, judgments, at

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Syndicate, 196 Fed. 443; including foreign stockholders, Re Monarch Corporation, 196 Fed. 252; Enright v. Heckscher, C. C. A., 240 Fed. 863, but not under the New York statute, Re Jassoy Co., C. C. A., 178 Fed. 515. See Sternbergh v. Duryea Power Co., C. C. A., 161 Fed. 540. An order directing an assessment on stockholders is conclusive as to the necessity thereof but in an action against the stockholder is not binding as an adjudication that he has not paid for his stock when he was not a party to the application. Enright v. Heckscher, C. C. A., 240 Fed. 863; Bergdoll v. Harrigan, C. C. A., 263 Fed. 279; supra, $186w. It has been held that a trustee in bankruptcy cannot maintain claim, under the New York Stock Corporation Law, against stockholders for the balance of the par value of stock issued as full paid for property purchased at an undervaluation. Re Jassoy Co., C. C. A., 178 Fed. 515. (Under N. Y. statute). See Breck v. Brewster, 153 App. Div. N. Y. 800; Courtney. v. Georger, 221 Fed. 502, (under Minn. statute). See Clark v. Johnson, C. C. A., 245 Fed. 442, (under Ark. statute). Contra, Kiskadden v. Steinle, C. C. A., 203 Fed. 375, (under Ohio statute); Babbitt v. Read, C. C. A., 263 Fed. 42, (under Mo. statute). To enforce the statutory liability of directors to creditors for contracting debts in excess of the lawful amount. Re Crystal Spring Bottling Co., 96 Fed. 945 (under Vt. statute), or for paying dividends when the corporation was insolvent, Ibid. ; Seegmiller v. Day, C. C. A., 249 Fed. 177

(under Illinois statute); Contra, E. L. Moore & Co. v. Murchison, C. C. A., 226 Fed. 679 (under South Carolina statute); Ratcliff v. Clendenin, C. C. A., 232 Fed. 61 (under Kansas statute); Cottrell v. Albany Card & Paper Mfg. Co., 142 App. Div. (N. Y.) 148; but that he may sue them to recover corporate funds which they have lost or misappropriated, Re Swofford Bros. Dry Goods Co., 180 Fed. 549; Bynum v. Scott, 217 Fed. 122; Billings v. Charles Millar & Son Co., 227 Fed. 185. But see Lummis v. Crosby, 176 App. Div. N. Y. 315; Babbitt v. Read, C. C. A., 2 Ct., 236 Fed. 42; Sanford v. First Nat. Bank of Marysville, Kan., C. C. A., 238 Fed. 298. A trustee may sue to set aside a fraudulent transfer of the assets of a corporation in which the bankrupt is a stockholder, Greenhall v. Carnegie Tr. Co., 180. Fed. 812; and in such a case, where the result might résuscitate debts of the bankrupt, fro which he could not be discharged in the proceeding, the latter was, against his consent, joined as party defendant, Ibid. For the extent of the liability of a creditors' committee to the trustee, see Re Thomas, 199 Fed. 214. sue to cancel bonds and a mortgage the execution of which by the bankrupt was obtained through fraud. First Nat. Bank of Memphis, Tenn., v. Towner, 239 Fed. 433. As to the right of the trustee to compel the payment of dividends by a corporation in which the bankrupt is a stockholder gee Re Brantman, C. C. A., 244 Fed. 101.

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tachments, or other liens, obtained through legal proceedings against a person who is insolvent, provides : that the court may "on due notice, order that the right under such levy, judgment, attachment, or other lien, shall be preserved for the benefit of the estate; and thereupon the same may pass to it and shall be preserved by the trustee for the benefit of the estate as aforesaid. And the court may order such conveyance as shall be necessary to carry the purposes of this section into effect." 9 Whenever a creditor is prevented from enforcing his rights as against a lien created, or attempted to be created, by his debtor, who afterwards becomes a bankrupt, the trustee of the estate of such bankrupt shall be subrogated to and may enforce such rights of such creditor for the benefit of the estate." 10

9 30 St. at L. 544, $ 67f; Rock invalid as against attaching credi. Island Plow Co. v. Reardon, 222 U.

tors, but

was otherwise valid as S. 354, 56 L. ed. 231, affirming C. against the trustee. First Nat. C. A., 168 Fed. 654. Fallows v. Bank v. Staake, 202 U. S. 141, 50 Continental & Commercial Tr. & L. ed. 967, affirming C. C. A., 133 Sav. Bank, 235 U, S. 300; Re Fitz- Fed. 717. In such a case, the at: hugh Hall Amusement Co., 169 Fed. torneys for the attaching creditors 171 (all cases of liens of execu- may be allowed, out of the bank. tions); Rock Island Plow Co. v. rupt's estate, reasonable compensa. Reardon, 222 U. S. 354, 56 L. ed. tion for their services in procuring 231, lien of execution against prop- the attachment. Receivers of Va. erty returned to vendor; Fallows v. Iron, Coal & Coke Co. v. Staake, C. Continental & Commercial Tr. & C. A., 133 Fed. 717. Such a lien Sav. Bank, 235 U. S. 300, lien of is not preserved unless the Court of execution against chattel mortgage; .Bankruptcy enters some order upon Re Malone's Estate, 228 Fed. 566 the subject. Thompson v. Fair. (lien of an attachment which took banks, 196 U. S. 516, 49 L. ed. 577; precedence of declaration of Re Baird, 126 Fed. 845. The trushomestead). See Mutual Life Ins. tee is entitled to a reasonable time Co. of N. Y. V. Cockrell, N. Y. within which to apply for the order. Sup. Ct., Sp. Tm., Bischoff J., N. Watschke v. Thompson, 85 Minn. Y. L. J. Dec. 22, 1911.

The rem-
105, 7 Am. B. R. 504.

The right edy is not confined to cases where, is lost by the action of the if the lien were allowed, the title trustee in first basing his right to to the property affected would pass relief upon the ground that the to the bankrupt. The Court of person who took the property subBankruptcy has power to allow the ject to the lien had acquired an trustee to enforce, for the benefit. unlawful preference. Rock Island of all the creditors, an attachment Plow Co. v. Reardon, 222 U. S. 354, obtained by one of them within the 364, 56 L. ed. 231. four months' period, so as to cut off 10 30 St. at L. 544, 564, 8 67b. an unrecorded prior deed, which was The word "prevented” means pre

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“Whenever it may be deemed for the benefit of the estate of a bankrupt to redeem and discharge any mortgage or other pledge, or deposit or lien, upon any property, real or personal, or to relieve said property from any conditional contract, and to tender performance of the conditions thereof, or to compound and settle any debts or other claims due or belonging to the estate of the bankrupt, the trustee, or the bankrupt, or any creditor who has proved his debt, may file his petition therefor; and thereupon the court shall appoint a suitable time and place for the hearing thereof, notice of which shall be given as the court shall direct, so that all creditors and other persons interested may appear and show cause, if any they have, why an order should not be passed by the court upon the petition authorizing such act on the part of the trustee.”' 11

“Whenever three trustees have been appointed for an estate, the concurrence of at least two of them shall be necessary to the validity of their every act concerning the administration of the estate." 12 “Whenever a composition shall be set aside, or discharge revoked, the trustee shall upon his appointment and qualification, be vested as herein provided with the title to all of the property of the bankrupt as of the date of the final decree setting aside the composition or revoking the discharge.”' 18 It has been held that a trustee cannot move to reopen a bankruptcy proceed

vented by bankruptcy proceedings. Re Schweitzer, 217 Fed. 495. The lien of an execution issued by a judgment creditor who has lost his preference by the bankruptcy proceedings may be thus enforced by the trustee for the benefit of all the creditors, Ibid.

11 General Order XXVIII. Re East Stroudsburg Supply & Construction Co., 248 Fed. 356. He may with the approval of the court complete a contract of conditional sale.

Re Wegman Piano Co., 221 Fed. 128, and waive the failure by the vendor to comply with the pro

visions of the State statute upon the subject. Breakstone v. Buffalo Foundry & Machine Co., 167 App. Div. 62. The trustee has the right to assume the executory contracts of the bankrupt, Re Berry, 247 Fed. 700. It seems that he cannot renounce them, nor return to an ad. verse claimant property in his possession without leave of the court. Re Caldwell Machinery Co., 215 Fed. 428.

12 30 St. at L. 544, $ 47b.

13 30 St. at L. 544, § 70d; $$ 653, 658, infra.

ing after it has been closed. 14 "The death or removal of a

trustee shall not abate any suit or proceeding which he is prose· cuting or defending at the time of his death or removal, but the

same may be proceeded with or defended by his joint trustee or successor in the same manner as though the same had been commenced or was being defended by such joint trustee alone or by such successor.” 15 (a) The trustee may, pursuant to the direction of the court, submit to arbitration any controversy arising in the settlement of the estate. (b) Three arbitrators shall be chosen by mutual consent, or one by the trustee, one by the other party to the controversy, and the third by the two so chosen, or if they fail to agree in five days after their appointment, the court shall appoint the third arbitrator. (c) The written finding of the arbitrators, or a majority of them, as to the issues presented, may be filed in court and shall have like force and effect as the verdict of a jury.” 16 “The trustee may, with the approval of the court, compromise any controversy arising in the administration of the estate upon such terms as he may deem for the best interests of the estate.’’ 17 The court

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14 Re Paine, 127 Fed. 246.

See infra, 8 654.

15 30 St. at L. 546, 557, $ 46. 16 30 St. at L. 544, 553, § 26.

It has been held: that the court may set aside the award of the arbitrators for any reason that would justify a new trial of an action at common law; Re McLam, 97 Fed. 922, and may set the same aside when the third arbitrator was selected by the contending parties instead of by the two arbitrators respectively selected by them. Ibid.

17 30 St. at L. 44, 555, $ 27a; Re Jackson Stores, 192 Fed. 705; Re John H. Woodbury Dermatological Institute, C. C. A., 191 Fed. 819, where the compromise was rejected upon the protestant's indemnifying the estate against any loss that might thereby be sustained. The bankrupt has no right to interfere

with such compromise. Re Kranich, 174 Fed. 908. A majority of the creditors have no power to compel the compromise of a pending suit. Re Meadows, Williams & Co., 181 Fed. 911. It has been held that a trustee in bankruptcy will not be authorized to compromise and settle a suit brought by the bankrupt in a State court without the consent of the bankrupt's attorney therein who has a lien on any judgment recovered for his services; and that he cannot set aside the abandonment or settlement of the contest of a will made by the bank. rupt while insolvent. Edington v. Masson, C. C. A., 177 Fed. 209. Re Adamo, 151 Fed. 716.

For a refusal of leave to compromise a claim by the receiver of a bankrupt to property described in the schedules, see Re Stier March Contracting Co., 245 Fed. 223.

may order the trustee to enter his appearance and defend any pending suit against the bankrupt:’’ 18 “A trustee may, with the approval of the court, be permitted to prosecute as trustee any suit commenced by the bankrupt prior to the adjudication with like force and effect as though it had been commenced by him.” 19 "Suits shall not be brought by or against a trustee of a bankrupt estate subsequent to two years after the estate has been closed.” 20 When an asset, such as a patent

or patent license 22 or the membership in an exchange 28 or real estate association, 24 or a leasehold, 26 is subject to burdens the trustee is not bound to

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18 30 St. at L. 544, 547, § 116.

19 Ibid. & 11c. This does not authorize his substitution in a suit such as

an action for malicious prosecution, the proceeds of which form no part of the assets. Re Haensell, 91 Fed. 355. The court whose approval is required is that which appointed the trustee. The Alert, 199 Fed. 542. The trustee is bound in collateral proceedings by a judgment against him in a suit in which he was substituted for the bankrupt. Re Van Alstyne, 100 Fed, 929. He may be estopped by his failure to intervene in a pending suit. Frazier v. So. L. & Tr. Co., C. C. A., 99 Fed. 707. Ordinarily, when there are sufficient assets to pay the costs and damages, no bond for costs nor injunction bond will be required of a trustee in bankruptcy suing in a Federal court in the district where he was appointed, even where the State law requires a bond in such a case. Re Barrett, 132 Fed. 362. A trustee is usually bound by a stipulation made by a receiver of the bankrupt before his appointment. Re E. M. Newton & Co., C. C. A., 153 Fed. 841.

20 30 St. at L. 545, 549, § 11d. See Bailey v. Glover, 21 Wall. 342,

22 L. ed. 636; Hammond v. Whittredge, 204 U. S. 538, 51 L, ed. 606, Jenkins v. International Bank, 106 U. S. 571, 27 L. ed. 304. See $ 654, infra. This section applies only to suits arising out of disputes. in respect of property and of rights of property of the bankrupt to which adverse planes existed while in the hands of the bankrupt and before the institution of the proceedings in bankruptcy. Dushane v. Beall, 161 U. S. 513; Ham- . mond v. Whittredge, 204 U. S. 538; Yazoo & Miss. R. R. Co. v. Brewer, 231 U. S. 245.

21 Sessions v. Romadka, 145 U, S. 29, 36 L. ed. 609.

22 Re Wisconsin Engine. Co., 234 Fed. 281.

23 Sparhawk v. Yerkes, 142 U. S. 1, 35 L. ed. 915; Jaretzki v. Lee, City Court of City of New York, McAvoy, J., N. Y. L. J., Jan’y. 6, 1912. But see Dushane v. Beall, 161 U. S. 513, 40 L. ed. 791.

24 Re Berry, 247 Fed. 700.

25 Re Chambers, Calder & Co., 98 Fed. 865. The obligations which the trustee assumes by occupying, after the adjudication, premises leased to the bankrupt has not yet been authoritatively determined. Referee Remington is of the opinion

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