Re Hay.

the admiralty court jurisdiction of suits for necessaries supplied to a foreign ship, money lent to the master to buy necessary supplies has been held within the law, not by subrogation, but as being described by the language: The Sophie, 1 W. Rob. 368; The Onni, Lush. 154. True, the assignee cannot see that the money is applied to the purchase of necessaries; but in case of the need which the law supposes will be proved to him to exist, and which it refers to in speaking of the condition and circumstances of the bankrupt, it may be presumed that the sum supplied will go to his use and that of his family.

The most decisive authority remains to be cited. The bankrupt act of 1841, sect. 3, was identical with the act of 1867, so far as this case is concerned, the one being literally copied from the other; and Mr. Justice Story decided that the assignee could set apart a sum of money to a bankrupt, wherewith to pay his board and that of his family: Re Grant, 2 Story, 315. He further held that the court could not make the allowance in the first instance, for that it was wholly within the authority of the assignee; subject, of course, to an appeal to the court, though the learned judge does not mention that, but it is provided for in that statute as in this.

I give no opinion whether the condition and circumstances of the bankrupt in this case will require the assignee to set apart any, and if any what, sum of money; but decide that this matter must first be determined by him, subject to my final decision if his determination should be excepted to.

I do not mean to say that this question of fact and discretion might not be submitted to the court by consent of both parties; but I do not understand it to have been so submitted in this case. Ordered that the assignee may designate and set apart to the bankrupt, N. C. Stowe, such sum, not exceeding $500, if any, as he shall find to be necessary, under sect. 14 of the bankrupt act; subject to exceptions and the final determination of the court, as provided by said section.

NOTE. The assignee refused to make an allowance to this bankrupt or either of his partners; and, upon appeal from this decision, there was evidence tending to show that each of the bankrupts had earned something since the bankruptcy, and two of them had no family dependent on their exertions, and were skilled workmen in their

business of boot and shoe manufacturers; that the wife of the third had some little property; that the assets were small compared with the debts, the case presenting the appearance of a consumption of the capital for the personal expenses of the partners. The judge sustained the action of the assignee.

In a case brought up a few days later (Re Steele), the testimony was that the bankrupt and his family had suffered much from illness about the time of the bankruptcy; that much of their clothing and bedding had been destroyed for fear of infection; that a settlement would probably have been made with the creditors, if the negotiations had not been broken off by the illness of the debtor. He was an old man, and his assets were considerable. An allowance of money was ordered.

BUGBee.

Re KRUEGER, LOUD, & Co. - Ex parte Bugbee.

OCTOBER, 1872.

Sect. 26 of the bankrupt act authorizes the examination of the bankrupt and of any one who is believed to have important information touching the estate, trade, or dealings of the bankrupt, which may aid the assignee in the execution of his

trust.

It seems that the bankrupt, since the passage of the act of 25th February, 1868, 15 Stats. 37, could not refuse to testify on the ground that his answers might criminate him in the federal courts; but the privilege of communication between client and solicitor or counsel extends to bankrupts and their legal advisers. A person who is examined under sect. 26 is to disclose all matters touching the trade, &c., of the bankrupt; but is entitled to the usual privileges and exemptions. Letters written by one partner to another concerning a lawsuit, which the partners expect to begin, and do presently after begin, are privileged.

So are letters which concern only the case of the party writing the letters, and have no relation to the title or position in the litigation of the interrogating party.

LOWELL, J. That part of sect. 26 which relates to the examination of witnesses is very brief, and might seem to be intended. only to give the bankrupt court power to obtain evidence in actual trials pending before it. But when it was considered that the first section of the statute had already conferred this power by necessary implication in establishing the court and defining its general powers and jurisdiction, and when the subject-matter of the section was seen to be an examination into the trade and dealings, &c., of the bankrupt, the courts have uniformly arrived at the conclusion, that a general examination, without any definite suit or issue pending, was intended to be included: Re Blake, 2 N. B. R. 10; Re Feinburg, id. 425; Re Fay, 3 id. 660; Re Lath

Re Krueger, Loud, & Co.- Ex parte Bugbee.

rop, 4 id. (4°) 93. It will be found that systems of bankruptcy have usually made provision for such investigations. Thus the act of 5 Geo. II. ch. 30, § 16, passed in 1732, was remarkably like our sect. 26. It provided that the commissioners might examine, as well by word of mouth as by interrogatories, every bankrupt, touching all matters relating to his trade, dealings, estate, and effects; and might also "examine, in manner aforesaid, all and every other person duly summoned before, or present at, any meeting of the said commissioners, or the major part of them, touching all matters relating to the trade, dealings, estate, and effects of every such bankrupt." In 1 Christian, Bankrupt Law (2d ed.) 375, the learned writer says of these examinations: "The object in general is to compel a discovery by a confession of the party, which in every court will be evidence against himself." In later statutes, the power has generally been defined somewhat differently; but the main object and use of it have been similar. Thus the statute of Massachusetts, 1846, ch. 168, § 1 (now codified in Gen. Sts. ch. 118, § 107), and like statutes in England, authorize the courts of bankruptcy and insolvency to summon and examine persons suspected of having property of the bankrupt. In deciding a case upon the statute of 1846, Shaw, C. J., uses almost identical language with that I have quoted from Mr. Christian: "The purpose of the statute seems to be, by a thorough investigation of the case and an appeal to the conscience of the party suspected, to enable the assignees to judge whether they will proceed to claim such property for the general creditors, and to obtain evidence to aid them in prosecuting such claim:" Harlow v. Tufts, 4 Cush. 448, 453. This being the purpose of the law, I have thought proper, as matter of practice, in order to guard against vexatious and oppressive examinations, to require a brief statement to be made on oath by the assignee or creditor applying for the summons, showing the subject-matter upon which he wishes to examine, and some ground to believe that the witness has information which would benefit the general creditors. It is not necessary that the witness should be himself suspected of having any estate or effects of the bankrupt, because our statute is not limited to that; but most witnesses will be found to be persons so suspected, or persons in complicity with them, because the

examination is of no value as evidence, excepting against the witnesses themselves.

These examinations, then, stand in effect on the footing of summary bills of discovery; and, in my opinion, they should be subject to those rules of evidence which the courts have found to be just and necessary in cases of discovery in equity, and at law when courts of law have equity powers; and I have consulted the decisions in that class of cases as well as those in bankruptcy. The discovery cannot be limited by reference to an action pending, for there is no such limitation in the law; but it is to be confined to the subject-matter, the trade, dealings, estate, of the bankrupt: Ex parte Legge, 17 Jur. 415, per Coleridge, J. The right of the assignees, then, as I consider it, extends to a discovery of all such matters as may throw light upon the estate of the bankrupt, including the debts owed him and conveyances and payments made by him, which are supposed to be voidable by his assignees whether on the ground of preference or any other.

In the examination of witnesses or parties, whether in the way of discovery or otherwise, there are certain questions which they may refuse to answer; the two principal grounds of demurrer being that the answer may tend to criminate the witness, and that the conversation or document called for is privileged. The former objection is perhaps no longer available to bankrupts, so far as relates to crimes against the bankrupt law or other crimes cognizable by the federal courts, since the statute of Feb. 25, 1868, 15 Stats. 37, which was probably intended to meet their case, and which provides that no answer or other pleading, and no discovery or evidence obtained by means of any judicial proceeding, shall be given in evidence, or used in any manner against the party or witness, or his property or estate, in any criminal or penal proceeding in the courts of the United States. But the objection that the communication is privileged is the one which. this case raises.

The right which every person, whatever his character or standing, has to consult freely with his legal adviser, is one which, where criminal trials are concerned, it is not too much to call a sacred one; and in civil matters it is a most important right, with

out which the usefulness of the solicitor and advocate must be seriously diminished. So far from curtailing this privilege, I believe the law would do well to extend it to some other professional persons. It has been ruled that the solicitor of a bankrupt is an exception; because the privilege being that of the client, and the bankrupt being bound to disclose every thing, the solicitor must do likewise: Re Elliott, Fonbl. B. R. 74. This ruling appears to me to be founded on a misapprehension. Undoubtedly, a bankrupt is bound to disclose the whole truth concerning his property, dealings, &c., and to surrender all his books, contracts, &c., to his assignee; equally true is it that every witness, whether a party in interest or not, is bound to disclose the whole truth concerning the matter under inquiry: but the whole truth does not include confidential communications between client and solicitor, or client and counsel, which are admissions made under the seal of authorized secrecy.

In this case it appears that the bankrupts, in February, 1871, made an executory contract with the witness and his partner, composing the firm of Holt & Co., to sell them certain timber, to be delivered at the bankrupts' mill in the State of Illinois. About the time the bankrupts stopped payment, a shipment of timber was made from the mill to the port of Boston: and this timber was taken by Skillings & Co., as belonging to them by virtue of some pledge from the bankrupts; but the witness and his partner considered that it belonged to them, and took it from Skillings & Co., by a writ of replevin; and the suit is still pending in the courts of the State. I understand that, if Holt & Co. prevail in that suit, the assignees intend to claim the timber as assets of the bankrupts and that, besides, they are interested in favor of the title of Skillings & Co., because there will be a balance left for the general creditors, after the pledge has been redeemed from them; whereas, if Holt & Co.'s title is good, it takes the whole. Under these circumstances, it is proper that the assignees should examine the witness concerning the delivery of the timber; and the only remaining question is, whether the letters, all of which are written by one partner to his co-partner, are privileged. It seems that Holt was at the mill of the bankrupts in Illinois when the replevin suit was brought; and the other part