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In re STARK.
(District Court, E. D. New York. March 2, 1907.)

L BANKRUPTCY—EXAMINATION 0F BANKRUP'n—REFEREEs—JURIBDIorroN—EMPLOYMENT OF STENOGRAPHER—STATUTES—APPLICATION. Bankr. Act July 1, 1898, § 38, subd. 5, c. 541, 30 Stat. 555 [U. S. Comp. St. 1901, p. 3435], authorizing referees in bankruptcy, on the application of the trustee during the examination of the bankrupt or other proeeedings, to employ stenographers at the expense of the estate at a compensation not to exceed 10 cents per folio for reporting and transcribing the proceedings, does not apply to hearings on the examination of the bankrupt before a special commissioner. '

2. SAME-—DEFENSE—EXAMINATION—APPROVAL OF BILL.

Where the testimony of an alleged bankrupt was taken before a special commissioner, at the request of a receiver, by a public law stenographer, who charged 20 cents a folio for the testimony, the bill could only be allowed and paid out of the bankrupt’s estate after its approval by the receiver and proof that all the examination was necessary and resulted in benefit to the estate.

Samuel Sperling, for petitioning creditor.
Charles Pechner, for bankrupt.

CHATFIELD, District Judge. Application has been made for the approval of a stenographer’s bill for testimony taken upon an examination of the bankrupt before a special commissioner, at the request of the receiver. The stenographer is a public law stenographer, who has charged 20 cents per folio for the testimony, and the question is raised whether this rate can be paid out of the bankrupt estate, or whether all testimony in bankruptcy proceedings, whether before a referee or special commissioner, is to be limited to 10 cents per folio.

The authority for the latter proposition arises from the provisions of section 38, subd. 5, of the bankruptcy law of July 1, 1898, c. 541, 30 Stat. 555 [U. S. Comp. St. 1901, p. 3435], which is as follows:

“Sec. 38. Jurisdiction of Referees—Referees respectively are hereby invested, subject always to a review by the judge, Within the limits of their districts as established from time to time, with jurisdictiOn to * * ‘.

“(5) Upon the application of the trustee during the examination of the bankrupts, or other proceedings, authorize the employment of stenographers at the expense of the estates at a compensation not to exceed ten cents per folio for reporting and transcribing the proceedings.”

It does not seem to the court that the provisions of section 38, subd. 5, apply to hearings before a special commissioner. The meaning of this section would seem to be that a referee in bankruptcy may make use of the services of a stenographer when the trustee considers that the testimony should be taken, and that in such case the rate is fixed, but this rate has nothing to do with the employment of a stenographer on isolated and unusual occasions, where, at the request of the creditors or of the receiver, a special hearing is had before a special commissioner.

The bankruptcy law gives the court power to appoint special masters or commissioners to hold hearings in certain special cases enumerated in section 21a. If the hearing is not a statutory hearing before a referee in bankruptcy, the provisions of section 38, as to the employment of a stenographer by the referee in bankruptcy, would not apply. It is not within the contemplation of the law, upon a motion to discover assets and to consider special questions, that an exhaustive examination of all the issues of the bankruptcy be covered before the appointment of a trustee. Many questions should be left for hearings before the referee, and such examination should not be prolonged at the expense of the estate. The receiver or creditor applying for the examination will be compelled to approve of the stenographer’s bill, and to certify that all of the examination was necessary. The bills can then be passed upon in settling the receiver’s accounts, and close scrutiny should be given, with a view to preventing the unnecessary prolongation Of such examination.

The court will not pass upon the amount of this bill until the receiver applies for leave to pay the same, but the rate per folio should be a matter for consideration by the receiver before the hearing begins, if he wishes to use a stenographer. If no assets should be discovered and no advantage gained, the receiver will be held responsible for any needless expense.

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BANKRUPTCY—EXAMINATION or BANKRUPT—PRESERVATION 0F TESTIMONY—DEFENSE.

Where a trustee in bankruptcy had no funds in his hands, and the bankrupt claimed to be without means, the bankrupt could not compel the trustee to pay for a stenographer’s minutes, referee’s fees, and disbursements in taking the testimony, which the bankrupt desired to introduce in opposition to that offered by the trustee, in a proceeding to compel the bankrupt to turn over property; it being within the discretion of the referee to determine how the bankrupt’s testimony should be taken and preserved in order that he might not be in contempt, solely because of his inability through poverty to perpetuate the testimony.

Aaron J. Levy, for bankrupt.
Lyon & Smith, for trustee.

CHATFIELD, District Judge. In this proceeding in bankruptcy, the trustee made a motion before the referee to compel the bankrupt to turn over certain property. The trustee has no funds in his hands, and the bankrupt claims to be absolutely without means. The trustee introduced the evidence he desired, in support Of his motion, and the bankrupt Offered testimony in opposition thereto. The bankrupt and his attorney not furnishing indemnity for'the expense of taking his testimony, the trustee, inasmuch as there were no funds in the estate, refused to assume any responsibility, and the referee ruled that the bankrupt “was not entitled to take further testimony, unless he or his attorney advanced the money or agreed to hold themselves responsible therefor.” This is certified by the referee, and the bankrupt now makes a motion for an order directing the trustee to pay for stenographer’s minutes and the referee’s fees and disbursements.

Inasmuch as the trustee has no funds in his possession, the motion cannot be granted. The trustee has incurred the responsibility of taking testimony in his own behalf, and the bankrupt has the right to offer testimony in opposition thereto; but it lies within the discretion of the referee to determine whether this testimony shall be heard orally, taken in longhand, or written out in the form of stenographer’s minutes. If the bankrupt desires the testimony to be perpetuated, the obligation would seem to be on him to provide the means therefor, and, inasmuch as the motion is one to compel him to turn over property, the referee is the proper party to judge whether he is so penniless that the testimony should be taken in longhand or heard orally. If there were money in the estate, the referee might exercise his discretion and direct the trustee to become responsible therefor. The case of In re Hammer (decided in the Southern district of New York July 1, 1907), approving of a referee’s ruling that a hearing will be closed unless the bankrupt furnishes indemnity for the expense of transcribing testimony, ap— plies in so far as it shows that the discretion rests with the referee in the matter.

The motion to direct the trustee to pay for the minutes will be denied, and the matter referred back to the referee to determine whether the bankrupt has shown himself unable to comply with the order, and, if so, to determine what opportunity should be given the bankrupt in the way of taking of oral testimony, in order that he may not be put in a position where he would seem to be in contempt of court, solely because of a default which he may not be able to prevent. '

Section 39, subd. 9 (Act July 1, 1898, c. 541, 30 Stat. 555 [U. S. Comp. St. 1901, p. 3436]), would seem to prescribe the duty of the referee in the matter.

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CUSTOMS AND USAeEs—SHIPPING~Dm1URRAOE—CrrARTER PARTY.
Where a charter party provides for lay days for loading in specific
terms, the contract cannot be afiected by any custom of the port.
[Ed. Note—For cases in point, see Cent. Dig. vol. 15, Customs and
Usages, § 34.]

In Admiralty. Suit for demurrage.

Hyland & Zabriskie, for libelant.
Williams, Folsom & Strouse, for claimant.

CHATFIELD, District Judge. The libelant claims demurrage for the detention of the schooner Mary S. Bradshaw at Bermuda Hundreds, Va., whither she had proceeded under charter party to receive a cargo of lumber. The charter party contained the following provision:

“It is agreed that the lay days for loading and discharging shall be as follows (if not sooner dispatched) commencing 24 hours from the time the vessel is ready to receive or discharge cargo 30 M feet per day, Sundays and legal holidays excepted to be allowed for loading, and New York Maritime Association rules for discharging. And that for each and every days detention by default of the said party of the second part, or agent, thirty-seven dollars per day, day by day, Shall be paid by said party of the second part or agent, to the said party of the first part, or agent. The cargo or cargoes to be received and delivered alongside.”

This charter party was signed on behalf of the claimant, as follows: “B. \lV. Lear, Ellington & Guy, per Telegraphic Attorney, Andrew J. Bailey.”

It appears from the evidence that, after correspondence, Mr. Bailey was directed by the claimant to enter into the agreement and charter the vessel on behalf of Ellington & Guy, who were desiring to ship a cargo. The Bradshaw reported at Bermuda Hundreds, on Friday, July 27, 1906, at 7 a. m. On August 6th she was transferred to a more convenient berth at the northern end of the same wharf, some cargo placed on board upon the 7th, and on the morning of the 8th the loading was actually begun. The loading was completed on Friday, August 17th, at 9 a. m., and upon the evidence the libelant is entitled to recover, under the terms Of the charter party, which was executed by authority, and formed the contract under which the parties were acting.

The evidence offered relating to a custom prevailing at Bermuda Hundreds, with reference to the assignment of a wharf, could not vary the written contract as entered into by the parties. Carbon Slate Co. v. Ennis, 114 Fed. 260, 52 C. C. A. 146. Both parties may be assumed to have had knowledge of this custom. Yet, if the charterer desired to use the port of Bermuda Hundreds for loading, he should have seen to it that the charter contained a provision protecting him from any delay caused by the enforcement of harbor customs. The owner of the Bradshaw, making the charter, had a right to assume that the charterer could carry out his contract without reference to the custom.

According to the customary method of computation, nine days de— murrage, amounting to $333, was incurred, -for which the libelant may have a decree, together with interest and costs.

THE J. S. WARDEN.
(District Court, E. D. New York. June 27, 1907.)

1. MARITIME LIENs—EVIDENCE To ESTABLISH.

Evidence of an account stated between a claimant and the owner of a vessel for supplies furnished has no tendency to establish a maritime lien on the vessel.

2. SAME—SUPPLIEs—NEW JERSEY STATUTE.

A claim for a lien for supplies furnished a vessel in her home port in New J ersey, under 2 Gen. St. N. J. p'. 1966, § 46, sustained on evidence that they were furnished and charged to the vessel.

[I2§d. Note—Created by state laws, see note to The Electron, 21 C. 0. A. 1.]

In Admiralty.

S. Howell Jones, for libelant.
Wing, Putnam & Burlingham, for claimant.

CHATFIELD, District Judge. The libelant has brought an action in admiralty against the steamer J. S. Warden for coal and kindling wood furnished to said boat within the state of New Jersey during the months of July and August, 1905. The alleged reasonable value of these supplies is $1,333.10, upon which $200 has been paid by the claimant.

The libelant claims a lien under the laws of the state of New Jersey, and also a maritime lien on the ground that credit was furnished directly to the vessel. The claimant denies the various allegations, and alleges that it became the purchaser for value of the steamboat J. S. Warden during the month of August, 1905, and that it has paid for all coal and wood received on board since the 9th of August in that year; that Newark, N. J., where the supplies were furnished, was the home port of the W arden, and that no lien exists either under the state laws or as a maritime lien in admiralty. The matter was referred to a United States commissioner in this district, who has taken the proof and re— ported that, owing to a clerical error, the amount of the claim should be $1,033.10, which, with interest from September 1, 1905, to the date of the report, amounting to $86.43, makes a total of $1,119.53, for which the commissioner reports that he finds a valid lien against the vessel. Exceptions have been filed to the commissioner’s report, based upon the objections made to the receipt of evidence, and upon the defense that no lien existed. The evidence taken before the commissioner shows that the libelant attempted to prove the reasonable value of certain goods, which he offered evidence to show were charged to the steamer Warden. The claimant objected to the introduction Of this tes— timony, and the testimony was received apparently subject to further connection. The libelant also attempted to prove an account stated, as against the claimant, and payments on account by checks, which checks were not honored, but were offered as admissions of liability.

It is difficult to see how a maritime lien could be established by proving an account stated. The account could not be rendered to the boat, and this evidence would seem to be competent merely for the purpose of estopping the claimant from disputing the quantity and the value fix— ed upon the supplies by the libelant.

There is sufficient testimony to substantiate the finding by the commissioner, as against the claimant, for the reasonable value of the supplies. The testimony as a whole raises the presumption that the supplies were furnished and charged to the vessel. No motion to strike out the testimony was made by the claimant, based upon a failure to further connect the deliveries with the boat, and no testimony was offered by the claimant to contradict any of the claims of the libelant.

So far as the testimony shows, the port of Newark was the home port of the vessel, and the case is thereby not affected by the decision filed upon the 30th day of January, 1907, by the Circuit Court of Appeals, Second Circuit, in the case of Consolidation Coal Company v. The Steam Yacht Golden Rod, 151 Fed. 6.

The exceptions to the commissioner’s report will therefore be overruled, and a decree may be entered for the libelant for the amount found by the commissioner, with interest from the date of the report.

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