Opinion
August 21, 1926.
Remington Meek, of New York City, for creditors.
Benjamin H. Wicksel, of New York City, and Adrian Hegeman, of Brooklyn, N.Y., for trustee.
In Bankruptcy. In the matter of Paul A. Zuky, bankrupt. On motion to modify record. Denied.
The creditors whose claims were in the majority in number and amount had the right to elect the trustee. Section 44, Bankruptcy Act (Comp. St. § 9628).
So far as I can determine, they nominated two gentlemen in succession, Mr. Taylor and Mr. O'Connor, to both of whom objections were urged, and the referee indicated that he would not approve them, and without intending any reflection on the gentlemen personally, both of whom appear to be men of high character, I agree with the referee that no assignee or person closely associated in business with an assignee should be appointed trustee.
No formal election seems to have been held. The referee should have held a formal election, at which the votes of a majority in number and amount of the creditors should have been counted, and, if those votes had been cast for a candidate whom the referee was unwilling for any reason to approve, such disapproval should have been regularly made.
The right of the creditors to elect the trustee was given by statute, and should not have been denied, even although it be contended that an election was had when Mr. Taylor was nominated (with which I do not agree), but surely no election was held after Mr. O'Connor was nominated, but simply an approval of the objection of the representative of the minority to Mr. O'Connor was considered, and the referee stated his position before any election was held.
The majority should have been given another chance, even if it be held that an election was held after Mr. Taylor was nominated. In re Van De Mark (D.C.) 175 F. 287; In re Margolies (D.C.) 191 F. 369; In re Hare (D.C.) 119 F. 246; In re Lewensohn (D.C.) 98 F. 576; In re Mackellar (D.C.) 116 F. 547; In re Mangan (D.C.) 133 F. 1000; In re Jacobs Roth (D.C.) 154 F. 988.
I cannot correct the record of proceedings as requested, nor does it make any difference if the nominations were closed.
The motion to modify the record is denied. The order of the referee appointing Mr. Hegeman as trustee is reversed, and he is directed to hold an election of a trustee on notice to the creditors.