In re Edward G. Dumahaut and George Spicer, Bankrupts.

(2.) The voluntary assignment having been ratified by the terms of the composition as originally adopted, cannot now be attacked by the creditors bound by the composition proceedings, or by the assignee in bankruptcy; (3.) The bank acquired a vested interest in the general assignment by the operation of the original composition, of which it cannot be deprived without its consent. No one appears to object to the amendment, except the bank. The bankrupts are satisfied, and so are all the other creditors.

The amendment to the bankrupt Act, which authorizes and regulates proceedings for composition, (Act of June 22d, 1874, § 17, 18 U. S. Stat. at Large, 182,) expressly provides, that "the creditors may, by resolution passed in the manner and under the circumstances aforesaid, add to, or vary the provisions of, any composition previously accepted by them, without prejudice to any persons taking interests under such provisions, who do not assent to such addition or variation. And any such additional resolution shall be presented to the Court in the same manner, and proceeded with in the same way, and with the same consequences, as the resolution by which the composition was accepted in the first instance."

There is nothing which, in terms, requires the debtor to be present at a meeting of creditors called to consider a resolution to vary a composition which has been accepted. Ilis presence at the meeting to consider his own proposition is required, in order that inquiry may be made of him as to the true condition of his affairs, and information obtained from him by the creditors, to enable them to act understandingly upon the matter in hand. The law does not make it his duty to attend any other meetings, though, if summoned to appear, he should attend. The creditors may excuse his attendance at the first meeting, and, if they do, the Court will not refuse to ratify the resolution on that account, unless it appears that his presence was important for the due consideration of the proposition. There is no doubt but a creditor may ask that the debtor be summoned to appear at any meet

In re Edward G. Dumahaut and George Spicer, Bankrupts.

ing called in the subsequent proceedings. If, however, from any cause, this request is not complied with, the Court will not refuse to approve what is done, unless it appears, with reasonable certainty, that information was required from him in respect to the subject-matter under consideration at the time, and that the complaining creditor might have been injuriously affected by his absence. Such a condition of affairs does not appear in this case. The resolution of amendment was proposed by a creditor and not the debtor. It had reference entirely to the manner in which the composition should be carried into effect. The avails of the property assigned had already been secured to the creditors, and the only question to be considered was as to the best mode of realizing the money. It is unnecessary to inquire whether the creditors could take the property out of the hands of the voluntary assignee without the consent of the debtor, for he does not object. Even the complaining creditor was satisfied to remove the assignee, for, in his suit, he had obtained an order that the property in the hands of the assignee be delivered to his receiver. I think, therefore, this objection is not well taken.

The other two may be considered together. The validity of the assignment is not attacked in these proceedings. The effect of what has been done is not materially different from that which has been attempted by the bank. Both parties want the property taken out of the hands of the voluntary assignee. The difference is, that the bank wants the trust administered by the receiver appointed by the State Court, while the other creditors desire to have it administered by the assignee in bankruptcy. If the facts stated in the petition for review filed by the bank are true, the same creditors will be entitled to the dividends, no matter who executed the trust. As the assignment was for the equal benefit of all partnership creditors, and the bankrupt law will distribute the property in the same way, no injury can arise from the provision in the resolution of amendment, directing the assignee in bankruptcy to make his distribution in accordance

In re Edward G. Dumahaut and George Spicer, Bankrupts.

with the bankrupt law. The property is still in the hands of the voluntary assignee. The question is, who shall take it from him, the receiver in the State Court or the assignee in bankruptcy. A majority of those in interest prefer it should go to the assignee in bankruptcy, and there is nothing in the law to prevent it, unless the bank, which is the only complaining creditor, will be prejudiced in respect to some interest acquired under the original composition, as accepted. All the right it acquired under the composition was to receive its dividend, upon the distribution of the proceeds of the assigned property. That right has not been taken away by the amendment.

Pending the original proposition, and before its acceptance, the bank commenced its suit. in the State Court to bring the voluntary assignee to an account. That it had the right to do, under the terms of composition originally proposed. That proceeding has resulted in an adjustment of the accounts and a settlement of the amount due. Provision is made in the order now under review for a reimbursement of the reasonable expenses incurred in that suit. The amount is to be ascertained, and, no doubt, ample justice will be done in the premises. I see, therefore, no right which the bank has in the property that will be prejudiced by the order as it

stands.

The order of the District Court is affirmed.

Wilson M. Powell, for the Bull's Head Bank.

William B. Hornblower, opposed.

Russell v. The United States.

WILLIAM J. RUSSELL AND OTHERS, PLAINTIFFS IN ERROR

vs.

THE UNITED STATES, DEFENDANTS IN ERROR.

Under § 10 of the Act of June 6th, 1872, (17 U. S. Stat. at Large, 238,) now §§ 2,513 and 2,514 of the Revised Statutes, which provides that certain materials necessary for the construction and equipment of "vessels built in the United States for the purpose of being employed in the foreign trade," may be imported in bond, and that, on proof of the use of such materials for such purpose, no duties shall be paid thereon, such materials, when used in the construction of a merchant vessel built in the United States for the Japanese Government, and employed by it for service between Japanese ports, and not documented as an American vessel, are not free of duty.

(Before WAITE, Ch. J., Southern District of New York, July 1st, 1878.)

WAITE, Ch. J. This was an action upon a warehouse bond, given by the plaintiffs in error to the United States, on the warehousing of a quantity of composition metal and copper nails, imported by them in October, 1872. The goods were withdrawn in accordance with instructions issued by the Secretary of the Treasury, to carry into effect section 10 of the Act of June 6th, 1872, (17 U. S. Stat. at Large, 238,) now found in sections 2,513 and 2,514 of the Revised Statutes. That section is as follows: "That, from and after the passage of this Act, all lumber, timber, hemp, manila, and iron and steel rods, bars, spikes, nails and bolts, and copper and composition metal, which may be necessary for the construction and equipment of vessels built in the United States for the purpose of being employed in the foreign trade, including the trade between the Atlantic and Pacific ports of the United States, and finished after the passage of this Act, may be imported in bond, under such regulations as the Secretary of the Treasury may prescribe; and, upon proof that

Russell v. The United States.

such materials have been used for the purpose aforesaid, no duties shall be paid thereon: Provided, That vessels receiving the benefit of this section shall not be allowed to engage in the coastwise trade of the United States more than two months in any one year, except upon payment to the United States of the duties on which a rebate is herein allowed; And, provided further, that all articles of foreign production needed for the repair of American vessels engaged exclusively in foreign trade, may be withdrawn from bonded warehouse free of duty, under such regulations as the Secretary of the Treasury may prescribe."

In the regulations adopted by the Secretary of the Treasury, pursuant to the authority of this Act, it was provided, that no credit should be allowed upon the bond for the duties upon the goods withdrawn, until after the vessel had been registered or enrolled and licensed to engage in the foreign trade. With the exception of a small quantity, the goods, when withdrawn, were used in the construction of the steamers Capron and Kuroda, then being built in New York city, by Messrs. C. & R. Poillon, for the Japanese Government. These steamers were merchant vessels, and were, on their completion, delivered to the Japanese Government, and have, ever since, been used by that Government in carrying freight and passengers between Japanese ports and Japanese and Chinese ports. They never took out any papers as American vessels. Upon this state of facts, the District Court ordered a verdict in favor of the United States for the amount of the duties as liquidated by the collector, and gave judgment accordingly. This action of the Court is now assigned for error.

It was manifestly the intention of Congress, by this statute, to encourage the foreign carrying trade in American vessels. Such must have been the construction put upon the Act by the Secretary of the Treasury when he adopted the regulations by which it was to be carried into effect, and such is the plain and obvious meaning of the language used: Vessels built in the United States for the purpose of being