a(6). In the case at bar, the amount in controversy is $ 2,750 and although creditors were in court, it was not pursuant to a notice of a proposed compromise. The case cited by petitioners, Pullman Coach Co. v. Eshelman, 4 Cir., 1924, 1 F.2d 885, 886, is clearly distinguishable from the case at bar in that in the Pullman case, the notice of the meeting, pursuant to which creditors were in court, was a general notice to creditors that the purpose of the meeting was to pass on certain specified matters, as well as 'to 'consider the claims of H. G. Barnes, Commercial National Bank, * * * and transact such other business as may come before said meeting." In that case, the Barnes claim and the Commercial National Bank claim were passed upon. In this case, the notice which brought creditors into court was a notice of an order to show cause 'why the real estate (described) should not be sold at public auction with the liens, if any, to attach to the proceeds, and that the court, at the said time and place adjudge and determine the validity of the liens referred to in the Trustee's petition.'
It is significant that while petitioners allege in their petition to the Referee for an order that 'all' creditors received the notice, there is no allegation that 'all' creditors were present at the subsequent hearing, the allegation being merely that 'in the presence of creditors' the so-called compromise agreement was reached; nor is there any proof in the record that all creditors were present at the hearing.
General Order 33, 11 U.S.C.A. following section 53 requires the following procedure where a controversy is sought to be compromised:
'* * * trustee * * * shall make application to the court * * * the application shall clearly and distinctly set forth the subject matter of the controversy, and the reasons why it is proper and for the best interest of the estate that the controversy should be settled by * * * compromise.'
11 U.S.C.A. § 50 provides:
'The receiver or trustee may, with the approval of the court, compromise any controversy arising in the administration of the estate upon such terms as he may deem for the best interest of the estate.' (Emphasis supplied.)
The obvious purpose of the rules requiring notice to creditors and an application by the trustee to the court when there is a proposed compromise, is to afford an opportunity for all objecting creditors to prepare and present their views to the court. While petitioners aver that 'all creditors received due notice of said hearing,' such notice was of the hearing of the order to show cause why the offer for the purchase of one of the bankrupts' realty should not be accepted; no creditors ever received a notice that a compromise proposal would be presented. The cases cited by petitioners are not applicable where, as in the instant case, there is no allegation nor proof in the record that all creditors were present or represented in court when the discussion occurred which petitioners allege resulted in the compromise agreement. The obvious purpose of Section 50 is to require the approval of the court.
Obviously the petitioners failed to proceed properly as required by the rules. I cannot understand petitioners' argument that a compromise agreement was entered into. A compromise is a mutual concession, a partial surrender. This is so elementary that it requires no extended discussion. Ross Packing Co. v. United States, D.C.E.D.Wash.S.D.1942, 42 F.Supp. 932. If petitioners' interpretation of the so-called agreement of February 28, 1952, were to be adopted, viz., that the full amount of the Gaumer lien attaches to the full amount of the proceeds of $ 7,500, then nothing has been conceded. By claiming the full value of their lien, petitioners have not entered into a compromise agreement.
The Referee is, therefore, sustained.
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