ARTICLE 7 TRUSTEES FOR INSOLVENT AND IMPRISONED DEBTORS Section 160. Trustees for creditors. 161. Sole trustee. 162. Two or more trustees. 163. Death of trustee; survivor or successor. 164. Trustees` oath. 165. Vesting of property in trustees. 166. Powers of trustees. 167. Notice to debtors, bailees and creditors. 168. Power to sue notwithstanding notice. 169. Forfeiture for failure to comply with notice. 170. Warrant on withholding account or property. 171. Examination of person arrested. 172. Imprisonment for contumacy. 173. No discharge for defects of form. 174. Penalties for connivance at escape. 175. Effect of answers on examination. 176. Reward to informers. 177. Reference of disputed claims. 178. Application for appointment of referee. 179. Appointment of referee. 180. Entry of order of reference. 181. Powers, duties and compensation of referees. 182. Filing and effect of referees` report. 183. Commission to take testimony out of county. 184. Sale of property and accounts of trustees. 185. Meeting of creditors and notice thereof. 186. Proceedings at creditors` meetings. 187. Payment of disbursements and commissions of trustees. 188. Preferred debts. 189. Distribution of moneys. 190. Preference of debts owing by debtor as trustee. 191. Payment of debts before maturity. 192. Set-off of mutual debts or credits. 193. No set-off in certain cases. 194. Provision for pending actions. 194-a. Provision for contingent or unliquidated liabilities. 195. Penalties recovered. 196. Subsequent dividends. 197. Provision for neglectful creditors. 198. Unclaimed dividends. 199. Disposition of surplus. 200. Allowance to debtor. 201. Accounting by trustees. 202. Trustees subject to order of court. 203. Appointment of substitute trustee. 204. Application by trustee for leave to renounce. 205. Account upon application. 206. Verification of account. 207. Order to show cause. 208. Publication of notice. 209. Hearing. 210. Order permitting renunciation. 211. Assignment by renouncing trustee. 212. Effect of assignment. 213. Order for discharge of trustee from trust. 214. Effect of order. 215. Recording order and filing papers. 216. Payment of expense of renunciation. 217. New trustee in place of one absent. 218. Powers and duties of new trustee. S 160. Trustees for creditors. All trustees, appointed under any authority, conferred by articles three, four and five of this chapter, in the several cases therein contemplated, are hereby declared to be trustees of the estate of the debtor, in relation to whose property they shall be appointed, for the benefit of his creditors; and shall be vested with all the powers and authority hereinafter specified, and shall be subject to the control, obligations and responsibilities hereinafter declared. S 161. Sole trustee. When one trustee only shall be appointed, all the provisions herein contained, in reference to several trustees, shall apply to him. S 162. Two or more trustees. When there are more trustees than one appointed, the debts and property of the debtor may be collected and received by any one of them; and when there are more than two trustees appointed, every power and authority conferred by this chapter on the trustees, may be exercised by any two of them. S 163. Death of trustee; survivor or successor. The survivor or survivors of any trustee, shall have all the powers and rights given by this chapter to trustees. All property in the hands of any trustee at the time of his death, removal or incapacity, shall be delivered to the remaining trustee or trustees, if there be any; or to the successor of the one so dying, removed or incapacitated; who may demand and sue for the same. S 164. Trustees` oath. Before proceeding to the discharge of any of their duties, all such trustees shall take and subscribe an oath, that they will well and truly execute the trust by their appointment reposed in them, according to the best of their skill and understanding; which oath shall be filed with the court that appointed them. S 165. Vesting of property in trustees. The trustees taking such oath, shall be deemed vested with all the estate, real and personal, of such debtor, except such as is exempted by articles three, four and five from the execution of the assignment, in said articles directed. S 166. Powers of trustees. The said trustees shall have power: 1. To sue in their own names or otherwise, and recover all the estate, debts and things in action, belonging or due to such debtor, in the same manner and with the like effect as such debtor might or could have done if no trustees had been appointed, and no set-off shall be allowed in any such suit, for any debt, unless it was owing to such creditor, by such debtor, before presenting the petition of the insolvent under said articles. But no suit in equity shall be brought by assignees of insolvents under the third or fourth articles, without the consent of the creditors having a major part of the debts which shall have been exhibited and allowed, unless the sum in controversy exceeds five hundred dollars; 2. To take into their hands, all the estate of such debtor, whether delivered to them, or afterwards discovered; and all books, vouchers and securities relating to the same; 3. From time to time, to sell at public auction, all the estate, real and personal, vested in them, which shall come to their hands, after giving at least fourteen days` public notice of the time and place of sale, and also publishing the same for two weeks in a newspaper, printed in the county, where the sale shall be made, if there be one; 4. To allow such credit on the sale of real property by them, as they shall deem reasonable, not exceeding eighteen months, for not more than three-fourths of the purchase money; which credit shall be secured by a bond or note of the purchaser, and a mortgage on the property sold; 5. On such sales, to execute the necessary conveyances and bills of sale; 6. To redeem all real or personal property subject to a security interest or mortgage, and to satisfy any judgments which may be an incumbrance on any property so sold by them; or to sell such property subject to such mortgages, security interests or judgments; 7. To settle all matters and accounts between such debtor, and his debtors, or creditors, and to examine any person touching such matters and accounts, on oath, to be administered by either of them; 8. Under the order of the court appointing them, to compound with any person indebted to such debtor, and thereupon to discharge all demands against such person. S 167. Notice to debtors, bailees and creditors. The trustees, immediately upon their appointment, shall give notice thereof for at least three weeks in a newspaper published in the county where application was made and therein shall require: 1. All persons indebted to such debtor, by a day and at a place therein to be specified, to render an account of all debts and sums of money owing by them respectively, to such trustees, and to pay the same; 2. All persons having in their possession any property or effects of such debtor, to deliver the same to the said trustees by the day so appointed; 3. All the creditors of such debtor to deliver their respective accounts and demands to the trustees or one of them, by a day to be therein specified, not less than forty days from the first publication of such notice. S 168. Power to sue notwithstanding notice. Notwithstanding any such notice, the trustees may sue for and recover, any property or effects of the debtor, and any debts due to him, at any time, before the day appointed for the delivery or payment thereof. S 169. Forfeiture for failure to comply with notice. Every person indebted to such debtor, or having the possession or custody of any property or thing in action, belonging to him, who shall conceal the same, and not deliver a just and true account of such indebtedness, or not deliver such property or thing in action, to the trustees or one of them, by the day for that purpose appointed, shall forfeit double the amount of such debt, or double the value of such property so concealed; which penalties may be recovered by the trustees. S 170. Warrant on withholding account or property. Whenever the trustees shall show by their own oath, or other competent proof, to the satisfaction of any judge of a county court, or in the county of New York any justice of the supreme court, that there is good reason to believe that the debtor, the spouse of the debtor, or any other person has concealed or embezzled any part of the estate of such debtor vested in the said trustees; or that any person can testify concerning the concealment or embezzlement thereof; or that any person who shall not have rendered an account as above required, is indebted to such debtor, or has property in his or her custody or possession, belonging to such debtor; such judge or justice shall issue a warrant, commanding any sheriff or constable, to cause such debtor, the spouse of the debtor, or other person, to be brought before him at such time and place as he shall appoint, for the purpose of being examined. S 171. Examination of person arrested. The judge or justice issuing such warrant, shall examine every person so brought before him, on oath, in the presence of the trustees or any of them, touching all matters relative to the debtor, his dealings and estate, and touching the detention or concealment of any part of his property, and touching the indebtedness of any person to such debtor; and shall reduce the examination to writing; which the person so examined is hereby required to sign, and which shall be attested by the judge or justice. S 172. Imprisonment for contumacy. If any person so brought before such judge or justice, shall refuse to be sworn, or to answer satisfactorily, all lawful questions put to him, or shall refuse to sign the examination, not having a reasonable objection thereto, to be allowed by such judge or justice, the judge or justice shall by warrant commit such person to prison, there to remain without bail, until he shall submit to be sworn or to answer as required, or to sign such examination; in which warrant the particular default of the person committed shall be specified; and if it be in not answering any question, such question shall also be specified therein. S 173. No discharge for defects of form. If any person so committed, shall bring a writ of habeas corpus, he shall not be discharged by reason of any insufficiency in the form of the warrant of commitment; but the court before whom such person shall be brought, shall re-commit such person, unless it shall be made to appear that he has answered all lawful questions put to him, or had sufficient reason for refusing to sign the examination, as the case may be; or unless such person shall then answer, on oath, the questions so put to him. S 174. Penalties for connivance at escape. Any sheriff, constable or jailer wilfully suffering any person so committed or re-committed, pursuant to the foregoing sections, to escape, on conviction thereof, in addition to any other punishment the court may inflict, shall forfeit to the trustees a sum equal to the whole amount of debts due to the creditors of such debtor, not exceeding two thousand five hundred dollars. S 175. Effect of answers on examination. The person so examined, and answering to the satisfaction of the court, shall not be liable to any penalty imposed for concealing and not delivering any property, or paying any debt; but his answers on such examination, may be given in evidence in the same manner, and with the like effect, as if he had been examined by such trustees in an action brought by them against him for the recovery of such property or debt. S 176. Reward to informers. Any person who shall discover to the trustees any secreted effects, property or things in action, belonging to such debtor, so that they shall be recovered by them, shall be entitled to ten dollars on the hundred dollars, and at that rate, on the value of the effects so discovered, to be paid by the trustees, out of the estate of such debtor; but this section shall not extend to persons who have such property, effects or things, in their own possession. S 177. Reference of disputed claims. If any controversy shall arise between the trustees and any other person in the settlement of any demands against such debtor, or of debts due his estate, the same may be referred to one or more indifferent persons, who may be agreed upon by the trustees and the party with whom such controversy shall exist, by a writing to that effect signed by them. S 178. Application for appointment of referee. If such referee or referees be not selected by agreement, then the trustees or the other party to the controversy, provided no action at law is pending arising out of any such debts or demands, may serve a notice of their intention to apply to a judge of the court which appointed said trustees, or to any justice of the supreme court at chambers, residing in the same district with said trustees, for the appointment of one or more referees, specifying the time and place when such application will be made, which notice shall be served at least ten days before the time so therein specified. S 179. Appointment of referee. On the day so specified, upon due proof of the service of such notice, the judge or justice before whom the application is made may in his discretion proceed to select one or more referees, the same in all respects as they are now selected according to the rules and practice of the supreme court. S 180. Entry of order of reference. The judge or justice by whom they shall be selected, shall certify such selection in writing. Such certificate, or the written agreement of the parties, shall be filed by the trustees in the office of the clerk where the order appointing the trustees is entered; and an order shall thereupon be entered by such clerk appointing the persons so selected referees to determine the controversy. S 181. Powers, duties and compensation of referees. Such referees shall have the same powers, and be subject to the like duties and obligations, and shall receive the same compensation, as referees appointed by the supreme court, in actions pending therein. S 182. Filing and effect of referees` report. The report of the referees shall be filed in the same office where the order for their appointment was entered, and shall be conclusive on the rights of the parties, if not set aside by the court. S 183. Commission to take testimony out of county. When any witness to such controversy shall reside out of the county where the said trustees resided at the time of their appointment, the referee or referees appointed to hear said controversy shall have power to issue a commission or commissions in like manner as justices of the peace are now authorized to issue the same, and the testimony so taken shall be returned to said referee or referees in the same manner, and be read before them on a hearing, in like manner as testimony taken on commission before justices of the peace.
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S 184. Sale of property and accounts of trustees. The trustees shall, as speedily as possible, convert the estate, real and personal, of such debtor, into money. They shall keep a regular account of all moneys received by them as trustees; to which, every creditor, or other person interested therein, shall be at liberty, at all reasonable times, to have recourse. S 185. Meeting of creditors and notice thereof. The trustees, within fifteen months from the time of their appointment, shall call a general meeting of the creditors of such debtor, by a notice to be published in the same manner, as hereinbefore directed respecting the publication of the notice of their appointment; in which notice, they shall specify the place and time of such meeting, which time shall not be more than three months, nor less than two months after the first publication of such notice. Every such notice shall be published at least once in each week, until the time of such meeting. S 186. Proceedings at creditors` meetings. At such meeting, or other adjourned meeting thereafter, all accounts and demands, for and against the estate of such debtor, shall be fairly adjusted, as far as the same can be ascertained, and the amount of moneys in the hands of the trustees declared. S 187. Payment of disbursements and commissions of trustees. Out of the moneys in their hands, the trustees may first deduct all the necessary disbursements made by them in the discharge of their duty, and a commission at the rate of five per centum on the whole sum which shall have come into their hands. S 188. Preferred debts. They shall pay all debts due by such debtor to the United States, and all debts due by him to persons who, by the laws of the United States, have a preference in consequence of having paid money as sureties of such debtor. S 189. Distribution of moneys. They shall distribute the residue of the moneys in their hands, among all those who shall have exhibited their claims as creditors, and whose debts shall have been ascertained, in proportion to their respective demands, and without giving any preference to debts due on specialties, as follows: 1. In proceedings under the third and fourth articles of this chapter, among those who were creditors at the time of the execution of the assignment by the insolvent; 2. In proceedings under the fifth article, among those creditors, at whose suit the debtor was imprisoned on execution at the time of his discharge. S 190. Preference of debts owing by debtor as trustee. In making such distribution, the trustees shall first pay all debts that may be owing by the debtor as guardian, executor, administrator or trustee; and if there be not sufficient to pay all debts of the character above specified, then a distribution shall be made among them, in proportion to their amounts respectively. S 191. Payment of debts before maturity. Every person to whom a debtor, except one proceeding under the fifth article, shall be indebted on a valuable consideration, for any sum of money not due at the time of such distribution, but payable afterwards, shall receive his proportion with other creditors, after deducting a rebate of legal interest upon the sum distributed, for the time unexpired of such credit. S 192. Set-off of mutual debts or credits. Where mutual credit has been given by any debtor, except a debtor proceeding under the fifth article of this chapter, and any other person, or mutual debts have subsisted between such debtor and any other person, the trustees may set off such credits or debts, and pay the proportion or receive the balance due. But no set-off shall be allowed of any claim or debt, which would not have been entitled to a dividend as hereinbefore directed. S 193. No set-off in certain cases. No set-off shall be allowed by such trustees, of any claim or debt, which shall have been purchased by, or transferred to, the person claiming its allowance, which could not have been set off by him, according to the provisions of this article, in a suit brought by such trustees. S 194. Provision for pending actions. If, at the time any dividend is made, any action or proceeding be pending against the trustees, in which a demand against such debtor may be established, the trustees may retain in their hands, the proportion which would belong to such demand if established, and the necessary costs and expenses of such action or proceeding, to be applied according to the event of such proceeding or action, or to be distributed in a second or other dividend. S 194-a. Provision for contingent or unliquidated liabilities. If, at the time any dividend is made, there shall be a contingent or unliquidated claim against the debtor or an outstanding bond, recognizance or undertaking upon which the debtor shall have been principal, surety or indemnitor, the trustees must retain in their hands for such period or periods as the court having jurisdiction of the matter may by order direct a sum of money sufficient to pay a due or equal proportion of said dividend upon such contingent or unliquidated claim or liability if and when the same shall be established and liquidated. S 195. Penalties recovered. All penalties which shall be recovered by any trustees, pursuant to the provisions of this article, shall be deemed a part of the estate of the debtor, and shall be distributed as such among his creditors. S 196. Subsequent dividends. If the whole of such debtor`s estate be not distributed on the first dividend, the trustees shall, within one year thereafter, make a second dividend of all the moneys belonging to the estate of the debtor, then in their hands, among the creditors entitled thereto as hereinbefore specified; and in the same manner from year to year, so long as any moneys belonging to the estate of such debtor shall remain in the hands of the trustees, they shall make a dividend thereof among the creditors entitled thereto. S 197. Provision for neglectful creditors. Any creditor who shall have neglected to deliver to the trustees an account of his demand, before the first, second, third or other dividend, and who shall deliver his account to them before the second, or other subsequent dividend, shall receive the sum he would have been entitled to, on any former dividend, before any distribution be made to other creditors. S 198. Unclaimed dividends. If any dividend that shall have been declared, shall remain unclaimed by the person entitled thereto for one year after the same was declared, the trustees shall consider it as relinquished, and shall distribute it, on any subsequent dividend, among the other creditors. S 199. Disposition of surplus. If after settling the estate of any debtor, and after discharging his debts, entitled to a dividend, any surplus shall remain in the hands of his trustees, the same shall be paid to such debtor or his legal representatives. S 200. Allowance to debtor. Every debtor who shall be discharged under the third or fourth articles of this chapter shall be allowed the sum of five per centum on the net produce of all his estate, that shall be received by the assignees, to be paid to him by them, in case such net produce, after such allowance made, shall be sufficient to pay the creditors of such debtor, entitled to a dividend, the sum of seventy cents on the dollar, on the amount of their debts respectively, as the same shall have been ascertained; but the said allowance shall not exceed in the whole, the sum of five hundred dollars. S 201. Accounting by trustees. Within ten days after any dividend made by any trustees, they shall render on oath and file with the clerk of the court where the order appointing them was entered an account in writing of all their proceedings in the premises, stating: 1. Their disbursements, commissions and the dividends made by them; 2. The names and residences of the creditors to whom dividends were made, and the names of those actually receiving them; 3. The property, moneys and effects of the debtor remaining in their hands, and the value and situation of such property. And such trustees may at any time be compelled by an order of the supreme court, or of the county court of the county in which they reside, to render such account on oath, on the application of the debtor, or of any creditor. S 202. Trustees subject to order of court. Such trustees shall be subject to the order of the supreme court, and of the county court of the county in which they were appointed, upon the application of any creditor, or of any debtor in respect to whom they were appointed, in relation to the execution of any of the powers and duties confided to them; and they may be removed by such court, for cause shown. S 203. Appointment of substitute trustee. Whenever any trustee shall be removed, or shall die, or become incapacitated to perform his duties, the court which originally appointed such trustee, after giving notice, and an opportunity to the creditors to propose proper persons, may appoint another in the place of such trustee, who shall, in all respects, have the like powers and authority, and be subject to the same control, obligations and responsibilities; and the said appointment shall be certified and recorded, as the original appointment was required to be recorded. S 204. Application by trustee for leave to renounce. Any trustee appointed pursuant to the provisions of this chapter who shall be desirous of renouncing the trust vested in him, may apply to the court from whom his appointment was received, for an order to all persons interested, to show cause why such renunciation should not be accepted. S 205. Account upon application. Such application shall be accompanied by a full, true and just account of all the transactions of such trustees, in that character, and particularly of the property, moneys and effects received by him; of all payments made, whether to creditors or otherwise; and of the remaining effects and estate of the debtor, in respect to whom, or whose estate, he was appointed trustee, within his knowledge, and the situation of the same. S 206. Verification of account. To such account shall be annexed the affidavit of the trustee, that the said account is in all respects just and true, according to the best of his knowledge and belief. S 207. Order to show cause. The court shall thereupon grant an order, directing notice to be given to all persons interested in the estate of the debtor, in respect to whom or whose estate such trustee was appointed, to show cause on a day, or at a term and at a place therein to be specified, why he should not be permitted to renounce his appointment. S 208. Publication of notice. Such notice shall be published, once in each week, for four weeks successively, in such newspapers, as such court shall direct. S 209. Hearing. On the day appointed for such hearing, and on such other days as shall from time to time be appointed, if it shall appear that notice was duly published, the court shall proceed to hear the proofs and allegations of the parties. S 210. Order permitting renunciation. If it shall appear that the proceedings of such trustee, in relation to his trust, have been fair and honest, and particularly in the collection of the property and debts vested in him; and if such court be satisfied, that for any reason, it is inexpedient for such trustee to continue in the execution of the duties of his appointment, and that such duties can be executed by another trustee, without injury to the estate of the debtor, or to the creditors; and if no good cause to the contrary appear, the court shall grant an order, allowing such trustee to renounce his appointment, and to assign the property and effects of the debtor. S 211. Assignment by renouncing trustee. Such assignment shall be executed by such trustee, to such person, or persons, as the court shall appoint for that purpose; and in the appointment, such persons as shall have been named to be assignees by the creditors of such debtor, or by the major part of them, shall be preferred, if approved by such court. S 212. Effect of assignment. Such assignment shall transfer to the persons to whom it shall be made, all the remaining estate and effects, vested in the trustee so renouncing; and such new assignee shall have the same powers, be subject to the same duties, and be entitled to the same compensation, as the original trustee; and shall continue any suit that may have been commenced by such original trustee, in his name, or in that of such new assignee. S 213. Order for discharge of trustee from trust. Upon producing to the court allowing such assignment, the certificate of the assignee, duly proved by the oath of a subscribing witness, that such assignment has been duly made, and the property capable of delivery, belonging to such debtor, together with all the books, vouchers and documents, relating to the estate of such debtor, has been duly delivered; and also a certificate of the county clerk, that such assignment has been recorded; such court shall grant to the trustee so applying, an order that he be discharged from his trust. S 214. Effect of order. Upon such order being granted, such trustee shall be discharged from the trust reposed in him, and his power and authority shall thereupon cease; but he shall, notwithstanding, remain subject to any liability he may have incurred, at any time previous to the granting of such order, in the management of his trust. S 215. Recording order and filing papers. Such new assignment, upon being duly proved or acknowledged, shall be recorded in the office of the clerk of the county where the order appointing the original trustee was entered; and the petition of the trustee, the affidavit and proceedings thereon, with the certificate of the new assignee, shall be filed in the same office. S 216. Payment of expense of renunciation. The expense of all proceedings in effecting such renunciation and assignment, shall be paid by the trustee making the application. S 217. New trustee in place of one absent. Whenever any trustee appointed under any authority conferred by any of the provisions of articles three, four or five of this chapter, shall remove from and continue to reside out of this state for one year, it shall be lawful for the court which originally appointed such trustee, after giving notice and an opportunity to the creditors to propose proper persons, to appoint another person in the place of such trustee. S 218. Powers and duties of new trustee. The trustee appointed in the place of the trustee so removed shall in all respects have the like powers and authority, and be subject to the same control, obligations and responsibilities as the trustee originally appointed; and the appointment of such trustee shall be certified and recorded as the original appointment was required to be recorded.