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U.S. Supreme Court

John Hancock Mut. Life Ins. Co. v. Bartels, 308 U.S. 180 (1939)

John Hancock Mutual Life Insurance Co. v. Bartels

No. 33

Argued November 9, 1939

Decided December 4, 1939

308 U.S. 180


1. Subsections (a) to (r) of § 75 of the Bankruptcy Act do not provide that a petition for composition or extension shall be dismissed in the absence of a reasonable probability of the financial rehabilitation of the debtor, nor do they warrant the imputation of lack of good faith to a farmer debtor because of that plight. P. 308 U. S. 184.

2. The purpose of § 75 of the Bankruptcy Act is to afford relief to debtors in economic distress, however severe, by giving them a chance to seek an agreement with their creditors, under subsections (a) to (r) and, failing this, to ask for the other relief afforded by subsection (s). P. 308 U. S. 184.

The farmer debtor may offer to pay what he can, and he is not to be charged with bad faith in taking the course for which the statute expressly provides.

3. Section 75(i) of the Bankruptcy Act in providing that, before confirming proposals for composition or extension the court must be satisfied that the offer and its acceptance are in good faith and have not been made or procured by forbidden means or except as provided by the statute, hits at secret advantages to favored creditors or other improper or fraudulent conduct. P. 308 U. S. 185.

4. A farmer debtor, having failed to obtain the acceptance under § 75 of the Bankruptcy Act, subsections (a) to (r), by the requisite majority of creditors, of a proposal for composition or extension of time to pay his debts, filed his amended petition under subsection (s) praying that he be adjudged a bankrupt, that his property be appraised, that his exemptions be set aside, and that he be permitted to retain possession of his property under the supervision of the court.

Held, that he was entitled to be so adjudged and to have his proceeding for relief entertained and his property dealt with in accordance with that subsection, and that the court of bankruptcy erred in dismissing the petition upon the ground that, under the evidence, there was no reasonable probability of his financial rehabilitation and because, in the judge's opinion,

Page 308 U. S. 181

no offer had been made by the debtor which could be construed a an offer in good faith for extension and composition. P. 308 U. S. 183.

100 F.2d 813 affirmed.

Certiorari, 307 U.S. 617, to review the reversal of a decree dismissing the petition of a farmer debtor to be adjudged a bankrupt under § 75(s) of the Bankruptcy Act.

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