247 F. 126 | D. Mass. | 1917
[ have examined the transcript and briefs sufficiently to satisfy myself that the present case cannot be adequately dealt with on review without a certificate from the referee stating the facts in reference to the .disf rauchisement of claims, the relation of the present trustees to previous proceedings in the case, the solicitation of claims, and perhaps other significant circumstances.
Case recommitted to referee to state facts. ‘
On Review of Order of Referee.
This is a controversy over the election of trustees. Until the bankrupt corporation got into financial difficulties, one Gerrish was its dominating spirit. He was its president, treasurer, clerk, and manager, as well as one of its three directors. With the assent of all the directors, it made an assignment for creditors. Shortly afterwards, and as part of the arrangement, an involuntary petition in bankruptcy
A difference of opinion later developed between the receivers .and two directors acting with them on one side, and Gerrish on the other. He favored composition and reorganization; the others, adjudication and winding up. The business and assets of the corporation were then completely in the hands of the receivers. Gerrish still held his stock and his offices in the corporation. He attempted to authorize counsel to act for it in resisting adjudication; but his fellow directors joined against him and employed other counsel to answer for it, admitting the allegations of the'petition. This phase of the controversy was heard by Referee Warner, who ruled that the directors controlled the corporation’s action and that the counsel selected by them was its authorized representative. Adjudication was. accordingly made, and tire first meeting of creditors was duly held.
It seems to me that he was clearly wrong in so doing. • In endeavoring to control the election of trustees, Gerrish’s purpose obviously was to advance, as he supposed, his plan for compromise and reorganization. The plan does not appear to have involved any fraud. It was a legitimate way of settling the bankrupt’s affairs, and Gerrish had a right to do what he properly could to put it through. He was acting for his personal interest, just as the opposing creditors were acting for theirs, but, in spite of his unauthorized use of the corporate name in soliciting claims, it does not appear that he was endeavoring to secure for the bankrupt.unlawful advantages or improper administration of its assets. Both parties went beyond what was proper in the solicitation of claims, and both offered to represent creditors without charge. What Gerrish did in this respect was not so far beyond what the other side did as to justify disfranchising his claims on account of it, while allowing theirs to be voted.
It is unnecessary to decide the further questions which have been argued as to the alleged disqualification of the trustees chosen, by reason of two of them having been assignees and all of them receivers. Such questions may not arise on a new election.
Order approving appointment of trustees vacated; case returned to referee for further proceedings.