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It has been held that the discharge in bankruptcy of a firm from firm debts does not relieve the individual members of the firm from liability for firm debts, where no individual adjudication was had.18 The discharge of a corporation will not release its directors or stockholders from any liability that they may have incurred. 14 A limited judgment for that purpose was allowed against the corporation; but otherwise a corporation is entitled to as complete a discharge as an individual.16
$ 658. Revocation of discharge. “The judge may, upon the application of parties in interest 1 who have not been guilty of
trustee of an implied trust, Chapman v. Forsyth, 2 Howard, 202, 11 L. ed. 236; Noblet v. Hammond, 129 U. S. 65, 32 L. ed. 621; Fleitas v. Richardson, 147 U. S. 550, 37 L. ed. 276 (the liability of a husiband for his wife's paraphernal property under the law of Louisiana); Re Harper, 133 Fed. 970, affirmed as Harper v. Rankin, C. C. A., 141 Fed. 626; Mulock v. Byrnes, 129 N. Y. 23; Reeves v. McCracken, 69 N. J. L. 203, 13 Am. B. R. 680; or of a pledgee who has converted the proceeds of collateral, given him as security for his debt, Hennequin v. Clews, 111 U. S. 676, 28 L. ed. 565; Palmer v. Hussey, 119 U. S. 96, 30 L. ed. 362; Re Adler, C. C. A., 144 Fed. 659; but not, it has been held, the mutual obligations of partners; Re Walker, 176 Fed. 455; Haggerty v. Badkin, (N. J. Ch.) 66 Atl. Rep. 420; Re Toklas Bros., 201 Fed. 377; unless the conversion was wilful, McIntyre v. Kavanaugh, 242 U. S. 138. As to its effect upon community debts, see Gibbons v. Horton Tr. & Sav. Bank, 229 Fed. 424.
18 Re Neyland & McKeithen, 184 Fed. 144.
14 Re Marshall Paper Co., C. C. A., 102 Fed. 872.
$ 658. It has been held that a creditor who has not proved his claim, and whose time to prove this has expired, may apply for the revocation of a discharge; Re Bimberg, 121 Fed. 942; Re Chandler, C. C. A., 138 Fed. 637; but, that the assignee of a claim assigned after the discharge of a subsequent creditor, cannot. Re Chandler, C. C. A., 138 Fed. 637. See supra, $ 653, 655. It seems that, in a proper case, the bankrupt himself may move for the vacation of the decree discharging him. Re Hawk, C. C. A., 114 Fed. 916; Re Shaffer, 4 Am. B. R. 728; Remington on Bankruptcy, $ 2812; but leave was denied him when he applied for the purpose of amending his schedules, so as to include an omitted creditor without notice after the expiration of the time for proving the latter's claim. Hawk, C. C. A., 114 Fed. 916. It has been said that the court may, of its own motion, vacate the discharge within the statutory time. Re Bimberg, 121 Fed. 942. It has been held that the trustee of the bankrupt cannot make a motion to reopen the estate. Re Paine, 127 Fed. 246. That a creditor whose claim was not barred by the discharge cannot obtain the revocation. Re Chandler, C. C. A., 138 Fed. 637.
undue laches, filed at any time within one year after a discharge shall have been granted, revoke it upon a trial if it shall be made to appear that it was obtained through the fraud of the bankrupt, and that the knowledge of the fraud has come to the petitioners since the granting of the discharge, and that the actual facts did not warrant the discharge." 4 Where creditors because of a mistake failed to file within the statutory time speci
2 The fraud must be connected the bankrupt. Re Hoover, 105 Fed. with the procurement of the dis- 354. It must set forth grounds charge and not previous conduct which, if sustained, would result in which if duly interposed by objec- the denial of the discharge. Re tion would have prevented the dis- Wright, 177 Fed. 578; Re Downing, charge. Re Weintrob, 263 Fed. 904. 199 Fed. 329. See Gage v. Penfield, It must be actual fraud involving C. C. A., 249 Fed. 961. moral turpitude intentional 3 It should show that knowledge wrongs and not merely acts from of the fraud was first obtained by which fraud is inferred by the law. the applicant since the discharge Re Cuthbertson, 202 Fed. 266. А
was granted. Re Roosa, 119 Fed. misstatement through a mistake in 542; Gage v. Penfield, C. C. A., 249 law made under the advice of coun- Fed. 961; but where such an allesel is not such a fraud. Ibid. A
gation appeared in an affidavit andischarge may be revoked because nexed to the creditor's petition, an of the subsequent discovery of ar- amendment
allowed. Re ticles fraudulently concealed by the Hoover, 105 Fed. 354; Re Oleson, bankrupt. Re Hoover, 105 Fed. 354; 110 Fed. 796; Re Upson, 124 Fed. because of the withdrawal without
980. The petition should also make notice, for a consideration, of ob- a substantial showing of facts to jections filed by certain creditors, prove the absence of undue laches. upon whose opposition the others Re Oliver, 133 Fed. 832. Leave was relied. Re Meyers, 100 Fed. 775; refused to amend the petition by and because he intentionally gave an adding a new objection after the erroneous address of a creditor in
expiration of a year from the disorder to obtain the discharge with- charge. Re Wright, 177 Fed. 578. out the latter's knowledge. Re See Re Weintrob, 263 Fed. 904. A Dictz, 97 Fed. 563. But see Re delay of ten months, Re Mauzy, 163 Adams, 242 Fed. 335. An order of Fed. 900; and of eight months, Re discharge may be amended at any Downing, 199 Fed. 329, were held time before the proceedings are to constitute such laches. It has closed, so as to discharge the bank- been held that notice of the fraud rupt from his debts as a member of
to the trustee, previous to the disa firm, as well as from his individ
charge is notice to all the credual liabilities. Re Diamond, C. C. itors. Re Oleson, 110 Fed. 796. But A., 149 Fed. 407. The petition for see supra, $ 653. the revocation of a discharge must 4 30 St. at L. 544, 550, $ 15. “Re state specifically that the discharge Hansen, 107 Fed. 252. was obtained through the fraud of
fications against the discharge, the discharge was vacated although it did not appear that the bankrupt was guilty of any fraud.5 Where, through mistake, certain debts had been omitted from the schedules, a motion was granted when made by the bankrupts to set aside the discharge and to permit them to amend their schedules by including both the creditors' claim and their counterclaim. The hearing upon an application for the revocation of a discharge must be before the judge; but he may refer it to the referee as special master, to report the evidence and facts with his opinion.7
§ 659. Costs and fees. The Courts of Bankruptcy have power "to tax costs wherever they are allowed by law, and render judgments therefor against the unsuccessful party, or the successful party for cause, or in part against each of the parties, and against estates in proceedings in bankruptcy." 1 When a petition in involuntary bankruptcy is “dismissed by the court or withdrawn by the petitioner, the respondent or respondents shall be allowed all costs, counsel fees, expenses, and damages occasioned by such seizure, taking or detention of such property. Counsel fees, costs, expenses, and damages shall be fixed and allowed by the court, and paid by the obligors in such bond.” 2 “In cases of
6 Re Appelgate, 235 Fed. 271. But see Re Groves, 244 Fed. 197.
6 Re McKee, 165 Fed. 269.
7 Re Oliver, 133 Fed. 832. Where no proceedings were taken before the referee after his request for a deposit to cover the costs of the hearing, the petition was dismissed at the cost of the petitioners for want of prosecution. Re Meyers, 100 Fed. 775.
8 659. 130 St. at L. 544, 546, $ 2; Re Carolina Cooperage Co., 96 Fed. 604. See supra, g 409. The power thus granted is not restricted by General Order XXXIV, quoted infra: Petition of Kurtz Brass Bed Co., 250 Fed. 116. In a proper case the costs may be divided. Re Liberty Doll Co., 242 Fed. 695. Re Ward, 203 Fed. 769; King Hardware Co. v. J. G. Christopher Co.,
C. C. A., 222 Fed. 225.' See Re H. B. Hollins & Co, 225 Fed 619. Where the bankrupt is penniless, the court will not tax against him the costs of a successful opposition to his discharge. Re Kyte, 189 Fed. 531. No costs were awarded to the alleged bankrupts when petitions in an involuntary bankruptcy were dismissed for want of jurisdiction, in the case of an individual because he had not resided a sufficient length of time in the district. Re Williams, 120 Fed. 34, and in the case of a corporation because it was not a member of the class subject to bankruptcy. Re Philadelphia & Lewes Transp. Co., 127 Fed. 896.
2 30 St. at L. 544, 547, $ 3; Re Ward, 203 Fed. 769. Where after dismissal the bankrupt was obliged to sue to recover the expenses caused
involuntary bankruptcy, when the debtor resists an adjudication, and the court, after hearing, adjudges the debtor a bankrupt, the petitioning creditor shall recover, and be paid out of the estate, the same costs that are allowed to a party recovering in a suit in equity; and if the petition is dismissed, the debtor shall recover like costs against the petitioner.” 3 The expense of determin-,
by the seizure, he was allowed to charged to the fund. Re Wentworth include therein his counsel fees in Lunch Co., 25 Am. B. R. 612; desuch proceedings, Re Weissbord, 241 cided by Stanley W. Dexter, Special Fed. 516; but not the expenses in- Master. The courts have refused to curred in procuring the dismissal; include in the costs taxed against nor any damages in excess of the the petitioner's compensation for amount named in the bond. Ibid. the trustee and the latter's counsel. When there is no seizure, taking Re National Carbon Co., C. C. A., or detention of property there is no 241 Fed. 330. A judgment of disliability upon the bond except for missal with specified costs to the the usual costs, unless the peti- bankrupt does not prevent him from tioners acted without probable cause subsequently proceeding upon the and maliciously, and in such a case bond to recover other expenses. Re the remedy is a suit in the nature McKenzie, 219 Fed. 630. By D, N. of a suit for malicious prosecution. J. Bankruptcy Rule 16 upon the Re Mochs & Rechnitzer, 174 Fed. dismissal the compensation of a 165; Re National Carbon Co., C. A. special master may be taxed against A., 241 Fed. 330. Where no seizure the petitioning creditors. Re Ward, has been made and no bond given 203 Fed. 769. When the respondent no costs, counsel fees or damages has not been deprived of the poswill be awarded upon the dissolu- session of his property, no counsel tion for want of jurisdiction of an fees are allowed. Re Morris, 115 injunction against the payment of Fed. 591; not even it was held when money. Re Williams, 120 Fed. 34, the appointment of the receiver presupra, &$ 297, 298. Where the peti- vented the alleged bankrupt from tion is dismissed the costs and ex- redeeming property held by penses of the receivership may be sheriff. Re J. Ito Terusaki, 238 charged againt the petitioners, Fed. 934. It has been held that Beach v. Macon Grocery Co., C. C. the bankrupt must file his bill of A., 125 Fed. 513; Re Lacov, C. C. costs with the clerk and give to the A., 142 Fed. 960; Re Weissbord, petitioning creditors, notice of taxa241 Fed. 516; supra, $ 634.
But tion, together with the amount of see Re Veler, C. C. A., 249 Fed. his bill. Re Haeseler-Kohlhoff 633; Re Independent Machine & Carbon Co., 135 Fed. 867. Tool Corp., C. C. A., 251 Fed. 484. 3 General Order XXXIV, held Where the receiver had by his serv- that the costs of contesting claims ices largely increased the estate, the before the election of a trustee, expenses of the administration, in- which were incurred in an attempt cluding a reasonable allowance to to control the election, not the receiver and his counsel, were chargeable to the estate. Re Mer
ing the title to, and of protecting the property subject to a lien may, in a proper case, be charged against the proceeds thereof. The cases in which costs can be charged against property, which is exempt, have been previously considered. “The actual and necessary expenses incurred by officers in the administration
cantile Co., 95 Fed. 123; Re Worth, 130 Fed. 927; Re Fletcher, 10 Am., B. R. 398, by Referee Miller, A creditor cannot be allowed his counsel fees upon the re-examination of a claim, which is again allowed; but when he resided at a distance, his reasonable traveling and hotel expenses were allowed him. Re George Watkinson & Co., 130 Fed. 218. Claimants to property in the possession of the trustee, when successful, are not allowed their costs and expenses, unless it appears that the defense made by the trustee was captious or unwarranted. Re Stewart, 178 Fed. 463. A stranger to the proceeding who successfully defeats a summary application against him cannot have his expenses and counsel fees paid out of the estate. Re Reiswig, 255 Fed. 390. Costs of summary applications cannot be taxed personally against parties who do not appear.
Havens & Geddes Co. v. Pierek, C. C. A., 120 Fed. 244. Where a reclamation proceeding was dismissed, the trustee was allowed to tax, as part of the costs, the charges and expenses of the preservation of the property during its pendency. Re Schocket, 177 Fed. 583.
4 Re Goldville Mfg. Co., 123 Fed. 579. See Re Gaskill, 130 Fed. 235; Re Erie Lumber Co., 150 Fed. 817, 825. Ordinarily the expense of determining the title to a fund or other property impressed with different equities, some of which are superior to others, in the hands of
the trustee including the compensation of accountants should be charged against the general estate. In case this insufficient against the least favored claimants. If the amount due the latter is insufficient, against those holding the superior equities. But no item of expense should be charged against any person whose rights were determined without any need of resorting thereto. Re J. C. Wilson & Co., 252 Fed. 631. But see Re J. F. Pi on, Jr., Co., 225 Fed. 889; Re Tietje, 263 Fed. 917. The general expenses of the proceedings should not be charged against lienors who establish their claims. The Bethulia, 200 Fed. 877; Re Cutler & John, 228 Fed. 771; Re Russell Falls Co., 249 Fed. 260, aff'd Keefe v. Worchester Tr. Co., C. C. A., 253 Fed. 536; certiorari denied, 249 U, S. 602, 39 Sup. Ct. 259, 63 L. ed. 797. A deposit for the purposes of a composition may, even if the composition is not consummated, in a proper case be used for the expenses of the bankruptcy proceeding, Re Miller, 243 Fed. 242; or such parts thereof as resulted from the unsuccessful attempt to make the composition. Re Wiener, 215 Fed. 278; supra, $ 653. Where the bankrupt transacted business in a district where he did not reside in the name of another who also became bankrupt the expense of the administration of both estates was charged against the property therein. Re Offrich, 260 Fed. 682.
5 Supra, $ 650.