North Dakota Law Review North Dakota Law Review
Volume 50 Number 3 Article 8
1973
General Practice - The New Rules in Bankruptcy General Practice - The New Rules in Bankruptcy
Paul J. Scheerer
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Scheerer, Paul J. (1973) "General Practice - The New Rules in Bankruptcy," North Dakota Law Review: Vol.
50 : No. 3 , Article 8.
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GENERAL PRACTICE
THE NEW RULES IN BANKRUPTCY*
BY PAUL J. SCHEERER**
On October 1, 1973 a comprehensive set of Rules governing Bank- ruptcy practice and procedure went into effect. This Article is intended to provide a brief introduction to practice under the new Rules for the general practitioner who occasionally handles
a simple bankruptcy case.' I. INTRODUCTION
A. THE NEW RULES
In an attempt to unify and rationalize practice and procedure under the Bankruptcy Act, a new set of Rules and Official Forms has been promulgated by the Supreme Court replacing the old Gen- eral Orders and Official Forms. These Rules are applicable to all cases pending on or commencing after October 1, 1973.
Prior to the new Rules, the Federal Rules of Civil Procedure (FRCP) had governed procedure in bankruptcy cases, except where the FRCP were in conflict with the Bankruptcy Act.2 The new Rules seek to govern all procedural aspects of a bankruptcy case from its initiation to its conclusion, thus eliminating any conflict between the FRCP and the Act. The enabling Act provides that all taws in conflict with the Rules shall be of no further effect,
* This article appears In Volume 30 of THE BENCH AND BAR OF MINNESOTA No. 6 (Dec.
1973) and is reprinted with the permission of the Minnesota State Bar Association and the author. Because of its relevancy to the practice of law and the conciseness of its format, we include it in this Issue as a service to our readers.
- Editors
** Assistant Professor of Law, William Mitchell College of Law. The author wishes to express his appreciation to Gretchen Quattlebaum, a third year student at William Mitchell College of Law, for her assistance in the preparation of this article.
1. A new set of Rules governing procedure in Chapter XIII of the Bankruptcy Act, 11 U.S.C. §§ 1001-1086, also became effective on October 1, 1973. It is anticipated that these Rules will be the subject of a future article in Bench and Bar.
2. General Order 37.
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and it is anticipated that all provisions of the Bankruptcy Act which conflict with the Rules will eventually be eliminated from the Act.$
The new Rules deal with practice and procedure under the Bank- ruptcy Act and are not intended to affect substantive rights or to alter the subject matter jurisdiction of the Bankruptcy Court.4 It is important to bear in mind that many sections of the Bank- ruptcy Act itself have been altered by the new Rules. Until such time as the Act is amended to reflect those changes, it will be necessary for the practitioner to utilize some form of cross-reference between the Act and the Rules.
B. TERMINOLOGY
The term "bankruptcy case" is used by the Rules to embrace all of the disputes arising during the handling of a bankrupt estate which are determinable by the bankruptcy court and all admini- strative matters during such case.5 A "proceeding" is a litigated matter arising within the case during the administration of the estate.6 Litigation arising during the pendency of the bankruptcy case is divided into two classes: "adversary proceedings" and "con- tested matters" with somehwat different procedural rules being ap- plied to the resolution of disputes in each class.7 This is one of the most important features of the new Rules and, in general, makes disputes between parties and the trustee or the bankrupt more closely approximate a normal civil action.
C. SOURCES
In addition to secondary material which has already been written on the new Bankruptcy Rules," the comments of the Advisory
3. 28 U.S.C. § 2075:
§ 2075. Bankruptcy rules. The Supreme Court shall have the power to prescribe by general rules, the forms of process, writs, pleadings, and motions, and th- prac- tice and procedude under the Bankruptcy Act.
Such rules shall not abridge, enlarge, or modify any substantive right. Such rules shall not take effect until they have been reported to Congress by the Chief Jus- tice at or after the beginning of a regular session thereof but not later than the first day of May and until the expiration of ninety days after they have been thus reported.
All laws in conflict with such rules shall be of no further force or effect after such rules have taken effect.
Section 30 of the Bankruptcy Act, which authorized the Supreme Court to promulgate rules and forms for bankruptcy was repealed on October 3, 1964.
4. Rule 928 ; see 38 U.S.C. § 2075.
5. Rule 101 and Advisory Committee Note (hereinafter "Note") thereto. The Rules are not intended to govern procedure in plenary suits brought in State or Federal District Courts. See Note to Rule 701.
6. Rule 703 ; Note to Rule 101.
7. Rule 701; Rule 914 and Note thereto.
8. Landers, The New Bankruptcy Rules, 57 MINN. L.R. 827 (1973) ; Kennedy, The Pro- posed Bankruptcy Rules and Official Forms, 46 AM. BANKR. L.J. 53 (1972) ; Treister, A Practicing Lawyer's Primer on the Proposed New Banruptcy Rules, 45 Am. L.J. 843 (1971) ; Herzog, The Impact of the Proposed 2ankruptcy Rules on the Court, 45 Am. BANKR. L.J.
363 (1971),
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Committee following each Rule provide a concise explanation of the Rule and tie the new Rule in with previous procedure and law under the Bankruptcy Act. The Rules, as promulgated, contain two appendices cross-referencing the new Rules to the Federal Rules of Civil Procedure and the Bankruptcy Act which should facilitate recognition of changes and situations in which the new rules are in conflict with the Act. Finally, the 1973 edition of the Collier Pamphlet Edition of the Bankruptcy Act contains numerous edito- rial comments on the impact of the new Rules.
II. FEATURES OF THE NEW RULES
If a single theme can be found in the new Rules, it would seem to be the elevation and enhancement of the status of the Referee. Perhaps the most distinctive feature of the bankruptcy court is the inclusion of a judicial officer who is engaged in the day-to-day administration of a bankrupt estate and yet is periodically called upon to serve as a disinterested tribunal for the resolution of disputes between the bankrupt, the bankruptcy trustee and third parties. Even assuming the most scrupulous efforts by the Referee to approach the dispute with a clear and open mind, litigants under- standably fear at least a subconscious resort to extraneous evidence in deciding the dispute. While the new Rules do not result in a complete bifurcation of the administrative and judicial functions of the Referee, an attempt has been made to free the Referee from some of his more unjudicial appearances. The bankruptcy referee has assumed a more judge-like status through a number of rules and has been relieved of some of his clerical functions.
The judicial proceedings presided over by the Referee will now more closely approximate a normal civil case.
Other important changes effected by the Rules are aimed at a more efficient disposition of bankruptcy cases involving nominal or no non-exempt assets9 and protection of bankrupt estates through automatic stays of certain actions and proceedings upon the filing of the petition.1 0
III. INITIATION OF BANKRUPTCY PROCEEDINGS
A. VOLUNTARY BANKRUPTCY PETITION AND INVOLUNTARY PRO- CEEDINGS AFTER ADJUDICATION
Initiation of proceedings in these instances will remain largely unchanged under the new Rules. In a voluntary bankruptcy, the Bankrupt must file a petition with the Clerk of District Court",
9. Rules 203, 307, 404, 409..
10. Rules 401, 601.
11. Rules 101, 509; Official Form No. 1.
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together with schedules showing his debts and property, and a statement of affairs.12 As before, the practice is to file these docu- ments simultaneously, but under Rule 108(b), if the bankrupt files a petition accompanied by a list of his creditors, he will be allowed an additional 10 days to file the Schedules and the Statement of Affairs. The bankrupt must either pay the $50 filing fee or apply for leave to pay it in installments.13
The Official Forms for the Schedule and Statement of Affairs have been simplified in some respects. For example, the A (Debt) Schedules have been reduced from five to three, the B (Asset) Schedules have been reduced from six to four and the signature of the bankrupt is required at the end of every page. The new Forms ask a number of questions which were not included on the old forms and still require considerable detail, particularly in the Statement of Affairs. The Statement of Affairs now contains a spe- cific question concerning payments made by the petitioner to attor- neys. While the new Rules dispense with the need for verification in most places14 it is still required for the Petition, Schedules and Statement of Affairs.15 In addition, under Rule 911(c), only the original of the papers need be signed or verified with copies being conformed.
B. INVOLUNTARY BANKRUPTCIES
Upon filing of an involuntary petition by a creditor or creditors, the clerk issues a "summons" for service upon the alleged bankrupt together with a copy of the creditor's petition. The manner of serv- ice, which must be made within three days after issuance, is the same as that for adversary proceedings and includes service by mail.6 The bankrupt's time to answer or move in response to the petition runs from the issuance of the summons, rather than from its service as under the Federal Rules and in the ordinary case will be 15 days after issuance. 7 The act or acts of bankruptcy alleged by the petitioning creditors must be pleaded with particul- arity.'
The issues in a contested involuntary petition are to receive priority on the court's calendar under Rule 115(a). If the bankrupt fails to make a timely response by answer or motion, the adjudica- tion is entered by default immediately upon the expiration of a
12. Official Form Nos. 6, 7 and 8.
13. Rule 107; The Supreme Court recently decided that denial of discharge for failure to pay filing fees where the bankrupt was an Indigent was not a contravention of due process requirements. In re Kras, 409 U.S. 434 (1973).
14. Rule 911(b).
15. Rule 109.
16. See Paragraph VI, infra.
17. Rule 112.
18. Rule 104(c).
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time to answer.19 Under Rule 104 (e), when fewer than three credi- tors join in a petition, and the bankrupt contends that three are needed because he has a total of 12 or more creditors, the court will merely give the petitioners a reasonable opportunity to solicit the number required. The court is no longer required, as it was under Section 59(d) of the Act, to give notice of the pending pro- ceedings to all creditors.
The bankrupt may demand a jury trial on the issues of insol- vency and the act of bankruptcy, but he waives that right by failure to make his demand within the time fixed for answer.20 Referees are not precluded from conducting the jury trial in a contested involuntary petition, but the bankrupt has the right to demand that the district judge preside at such trial.2 1
C. VENUE
The proper venue for the bankruptcy of a natural person re- mains the same as under the old practice: the district of his resi- cence, domicile of principal place of business for the greater portion of the six months preceding bankruptcy.22 Venue is freely trans- ferable under Rule 116 regardless of whether it was originally proper to other districts when required "in the interest of justice and for the convenience for parties." Venue can be transferred by the
"court" (i.e., either the judge or referee) which is the change from § 32 of the Act permitting only the District Judge to order a transfer.
IV. COURT OFFICERS A. REFEREE
Most of the changes in the duties and powers of the bankruptcy referee serve to ameliorate the differences between the bankruptcy referee and a normal civil judge.
1. The office of referee is now denominated "bankruptcy judge"
except in instances when it is necessary to distinguish the referee from the judge of the federal district court.23
2. The referee is now permitted to delegate certain administra- tive and clerical functions which he would otherwise be required to carry out.2 4
19. Rule 115(c).
20. Rule 115(b).
21. Rule 115(b) ; in March 1960, the Judicial Conference adopted a resolution precluding Referees from presiding at Jury trials.
22. Rule 116(a) (1) ; see B.A. § 2(a) (1).
23. Rule 901(7). The requirement of B.A. § 50(a) that the Referee post a bond was de- leted in 1972 by P.L. 92-310, 86 Stat. 201 ; see Rule 502.
24. Rule 506.
519
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3. Limited power to punish for contempt is conferred on the referee.25
4. The-standard established for review of the referee's decision by the district judge is "clearly erroneous," and additional testi- mony is no lolnger permitted to be taken by the district judge upon appeal.26
B. TRUSTEES
As under the old practice, creditors may elect a trustee at the first meeting of creditors by a vote of a majority in number and amount to file claims although important restrictions have been placed on the solicitation in voting of proxies under Rule 208. The duties of the trustee under the new Rules are generally the same as the old practice with a few exceptions:
1. The trustee must now record a certified copy of the petition in every county where the bankrupt has an interest in non-exempt real estate and must give notice of the bankruptcy to banks, in- surance companies and similar institutions.27
2. The trustee must file a statement of executory contracts which he has assumed within thirty days after his qualification.2 8 3. Rule 606(a) authorizes the court to dispense with appoint- ment of an appraiser where it is determined where such an appoint- ment is unnecessary, in contrast to Section 70(f) of the Act which required such appraisal prior to the trustee's disposal of property.
C. ATTORNEYS
The most important changes with respect to attorneys have to do with a solicitation of proxies and compensation of attorneys.2 9 Rule 208 (c) (4) expressly prohibits solicitation of proxies by attor- neys. The Note to this Rule points out that it does not undertake to regulate communication between an attorney and his regular client or between an attorney and a creditor who has asked the attorney to represent him in the proceeding, but prohibits any com- munication by an attorney to any other person or group requesting a proxy from the owner of a claim.
Attorneys (and any other persons seeking compensation from the estate) must file an application for compensation or reimburse- ment of expenses incurred in the bankruptcy. Such applicataion must contain a detailed statement of the services rendered and
25. Rule 920.
26. Rule 810; see General Order 47.
27. Rule 602(a) ; see B.A. §§ 21(g) and 70(d) ; Bank of Marin v. England, 385 U.S. 99 (1966).
28. Rule 607; see B.A. § 70(b).
29. Rule 208(c) (4).
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the expenses incurred and must include a statement by the applicant as to what payments have previously been made or promised to him for services rendered in any capacity in connection with the case. Disclosure of any fee sharing (except among members of a firm) is required, and such fee sharing is forbidden except among members of the firm and among attorneys for bankrupts or peti- tioning creditors who actually contribute services.3 0 Whether or not the bankrupt's attorney applies for compensation out of the estate, he must now file a statement disclosing the compensation paid or promised him, regardless of its source, before the first meeting of creditors.3' Rule 107 (b) (3) provides that the bankrupt's filing fees must be paid in full before the bankrupt may pay his attorney any compensation for services in connection with the case.
V. EXPEDITED TREATMENT FOR CERTAIN CASES
The creditor must still file a proof of claim within six months after the first meeting of creditors in order to share in the distribu- tion of the bankrupt estate. However, if it appears from the Sche- dules that there are no assets from which a dividend can be paid, the Referee may include a statement to this effect in the notice of the first meeting together with a statement that it is unnecessary for creditors to file claims at all unless notified to do so in the future.8 2 Under Rule 504 (a), whether or not the "no dividend" notice is sent, the Referee need not keep the claims list or docket in any bankrupt estate unless it appears there will be a distribution to unsecured creditors after payment of administrative expenses. When- ever the "no dividend" notice is given, the Referee has discretion to expedite the closing of the case by shortening the time for filing a complaint objecting to the bankrupt's discharge under Section 14(c) or excepting debts from discharge under Section 17(a) .3 In cases where there is no non-exempt property in the estate, the court may order that no trustee be appointed.34 If a "no dividend"
notice has been sent to creditors and it subsequently appears that payment of a dividend may be possible, the Referee must give creditors at least 60 days notice to file their claims.3 5
VI. ADVERSARY PROCEEDINGS
Litigation arising in the course of a bankruptcy case is divided into two classes: "adversary proceedings" and "contested matters,"
30. Rule 219(c).
31. Rule 219(b) ; see Rule 107(b) (3) and Official Forms 2, 7 and 8. Local rules in Min- neapolis and St. Paul require that this statement be filed upon the filing of the petition.
82. Rules 302(e); 203(b).
33. Rule 404.
34. Rule 211; see General Order 15.
35. Rule 302(e) (4).
NORTH DAKOTA LAW REVIEW
with somewhat different procedural rules being applied to the two classes. Adversary proceedings are defined in Rule 701 as proceed- ings instituted by a party before the bankruptcy court to:
A. Recover money or property.
B. Determine lien rights or sell property free of liens.
C. Object to or revoke a discharge or determine the dis- chargeability of a specific debt, and
D. Obtain injunctions or obtain relief from the automatic stays provided in Rule 401 or 601.
Any dispute which is not an "adversary proceeding" is called a "contested matter." The rules for adversary proceedings are found in Part VII of the new Rules which makes applicable a modified version of the Federal Rules of Civil Procedure.6
The Plaintiff commences an adversary proceeding by filing a
"complaint" with the bankruptcy court whereupon the referee issues a "summons and notice of trial" which must be served upon the defendant together with the complaint. Service may be made any- where in the United States and may be made by mail as well as by personal service and service by publication.3 7 The extension of the territorial scope of service to anywhere in the United States and service by mail (registered or certified) are, of course, in sharp contrast to the practice under the FRCP. The time periods prescribed by the FRCP have been modified in many instances by the new Rules and reference should be made to Rule 906(b) and (c) which permits enlargement or reduction of almost all time periods prescribed by the adversary Rules. Responses, pleadings and third-party practice are governed by rules generally correspond- ing to the FRCP.
A significant difference between the adversary rules under Part VII and the FRCP is in Rule 713 governing counterclaims which imposes certain limitations in keeping with the limited jurisdiction of the bankruptcy court.3 8 All pretrial and discovery rules of the Federal Rules are made applicable in Rules 716 and 726 through 737 with relatively minor modifications.
VII. CONTESTED MATTERS
Any dispute which is not defined as an adversary proceeding by Rule 701 is a contested matter. Typical examples would be
36. The numbering of the Rules in Part VII is correlated with the numbering of the FRCP. See generally, Yankwich, The Impact of the Rules of Civil Procedure on Bankruptci, 42 CALIF. L. REv. 738 (1954).
37. Rule 704.
88. See generally the discussion of compulsory counterclaims in Katchen v. Landy, 382 U.S. 323 (1966).
522
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objection to the trustee's report setting apart exemptions or objection to a proof of claim where no counterclaim is asserted. Special pro- vision is made for procedure in a contested involuntary proceeding39 Pleading requirements for contested matters are relatively less for- mal than those for adversary proceedings. Relief in a contested matter is ordinarily requested by motion followed by a hearing afforded the party against whom relief is sought. Aside from the pleading requirements, practice in contested matters will be quite similar to that in adversary proceedings with substantial portions of the adversary rules from Chapter VII incorporated into the rules governing contested matters by Rule 914.
VIII. AUTOMATIC STAYS AND INJUNCTIONS
Two particularly significant provisions in the new Rules deal with automatic stays, one relating to in personam actions against the bankrupt and the other to in rem proceedings involving his assets. The filing of a petition automatically stays all suits against the bankrupt and any proceeding to enforce a judgment, if the suit or judgment is based on an unsecured provable debt (except one non-dischargeable under Section 17a(1), (5), (6), or (7) of the Act.)40 This stay remains in effect until the bankruptcy court lifts it, the bankrupt loses his discharge, or the bankruptcy case is dismissed.4 1 As to debts not properly scheduled by the expiration of 30 days after the first meeting (these being non-dischargeable under Section 17a(3) if the creditor has no actual notice of the bankruptcy), the stay is deemed annulled at the end of the 30-day period unless the creditor has actually filed a claim by that time. To obtain relief from an automatic stay, a creditor files a complaint which commences an adversary proceeding governed by Part VII of the Rules.4 2
Upon the filing of the petition, the in rem automatic stay sus- pends all enforcement of liens on property over which the court has summary jurisdiction; namely (1) property in the court's cus- tody, and (2) property subject to a judicial lien that arose within four months of bankruptcy.43 This stay remains in effect until the court lifts it, until the bankruptcy case is dismissed or closed, until the property with the court's approval is set aside as exempt, or is abandoned or transferred." As with the in personam stay for unsecured debts, to obtain relief from the automatic stay the
39. Rules 101, 111, 112.
40. Rule 401(a).
41. Rule 401(b).
42. Rules 401(d), 701(6).
43. Rule 601(a) ; see B.A. § 67a.
44. Rule 601(b).
NORTH DAKOTA LAW REVIEW
secured party files a complaint commencing an adversary proceed- ing.4 5
In proper cases, a restraining order or injunction may be ob- tained in situations not covered by one of automatic stays.46 The adversary rules again apply, but the complaint is filed by the party seeking the order or injunction. Here the provisions of FRCP 65 are incorporated, except that a receiver or trustee is excepted from the security requirements of FRCP 65 (c) .7
IX. DISCHARGES AND DISCHARGEABILITY OF DEBTS
The dispute as to the right of the Bankrupt to receive a discharge (Sections 14 and 15) or the dischargeability of a particular debt (Section 17) is an adversary proceeding governed by Part VII.'
A. GRANTING OR REVOKING OF THE DISCHARGE
Changes in this area, except for some provisions designed to permit expedition of no asset cases on an optional basis, are routine.
The Rules relating to primarily administrative matters such as set- ting the last day to object to discharge or extension of this time, giving notice to creditors of this date, and the contents of the discharge provision, are similar to past practice.49 A corporate bankrupt no longer need affirmatively apply for a discharge as it will be automatically discharged at the expiration of the time fixed by the court unless a waiver or complaint objecting to dis- charge has been filed.5"
A significant change from present practice is found in Rule 407 which imposes the burden of proof upon the objecting party (i.e., the plaintiff in the adversary proceeding). This represents a change from Section 14c (8) of the Act, where the burden of proof shifts to the bankrupt once the objector has established a prima facie case.
B. DISCHARGEABILITY OF DEBTS
With respect to dischargeability of individual debts under Sec- tion 17, either the bankrupt or the creditor can seek a ruling with respect to dischargeability in an adversary proceeding commenced by a complaint. With respect to debts allegedly nondischargeable under Section 17a (2), (4), or (8), the creditor must commence an action within the time fixed by the court which time usually will be set for between 30 and 90 days after the first meeting of creditors.
45. Rules 601(c), 701(b).
46. Rule 765 and Note thereto.
47. Rule 765.
48. Rule 701(4) and (7).
49. Rules 404, 405 and 406.
50. Rule 404(d) ; see Note to Rule 405.
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In other situations there is no time limit for filing the complaint and a closed case may even be reopened for this purpose.51
The 1970 amendments to Section 17 giving the bankruptcy court jurisdiction to hear all objections to dischargeability of debts has already resulted in the application of the FRCP where the debt is ruled non-dischargeable and the Bankruptcy Court proceeds to judgment.52 Since the new Rules govern all proceedings in Bank- ruptcy Court, those Rules, rather than FRCP, will govern in cases involving non-dischargeable debts.
X. CONTEMPT AND APPEALS TO DISTRICT JUDGE
The new rules give the referee power to punish for contempt by imposing a fine of up to $250.5 3 Misbehavior during a hearing may be punished summarily; other misbehavior may be punished only after a hearing upon written notice specifying the alleged of- fense.54 Where it appears to the referee that more severe punish- ment is warranted (i.e., imprisonment or fine exceeding $250) the matter must be certified to the District Judge as was the former practice.55
Review of a referee's judgment by the District Judge is now characterized as an "appeal" rather than a "petition for review"
under § 39c of the Act. Such an appeal is governed by Part VIII of the Rules which generally adopts the Federal Rules of Appellate Procedure. An appeal is taken by filing a "Notice of Appeal''5 with the referee within 10 days after entry of judgment, subject to extension of the time for appeal upon application. The standard for review of the referee's decision is the "clearly erroneous"
rule, and the District Judge no longer can receive evidence in connection with a review of the referee's order or findings.5 7
51. Rule 409(a) (1) ; see B.A. § 17(c).
52. For example, if the bankruptcy court sustained the objection of a creditor to the dis- charge of a debt on the ground of obtaining credit by means of a false financial statement (B.A. § 17(a) (2)), the bankruptcy court will determine the remaining issues and render judgment against the bankrupt if the objecting creditor prevails on the merits. See gener- ally, Pedersen, The Bankruptcy Act and The Consumer Debtor, February 1971 BENCH AND BAR 21; Countryman, The New Dischargeability Law, 45 Am. 13ANKR. L.J. 54 (1971).
53. Rule 920(a) (3). Justice Douglas dissented from the Supreme Court's Order trans- mitting the new Rules to Congress on the basis of the new contempt power of Referees.
54. Rule 920(a) (1).
55. Rule 920(a) (4) ; compare B.A. § 41(b).
56. See Official Form No. 8.
57. Rule 810 and Note thereto; compare General Order 47 and Section 39(c).
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GLOBE-GAZETTE PRINTING COMPANY
Wahpeton, North Dakota
North Dakota's Leading Publishers of LEGAL FORMS AND DOCKETS
ORDERS FILLED BY RETURN MAIL
Authorized Distributors of
Mimeograph
A B Dirt
Azograph • • Paper and Ink
Offset Folders
More bank
-for your money
Your full service bank is a good friend to have during your school days, and after. The First National Bank in Grand Forks is your complete financial center with all the services you'll ever need.
+ Checking Services + Saving Services
+ Loans (car, mobile home, real estate, etc.) + Trust Services
+ Safe Deposit Boxes + Traveler's Checks + Money Orders & Drafts + Many Special Services
'A;T1ONA L
IR ST National Bank
BANKJA IN GRAND FORKS
MAIN OFFICES: 4th & DEMERS-DRIVE-IN MOTOR BANK- ING: 5th & DEMERS-GRAND FORKS AIR FORCE BASE-IN- SURED TO $20,000 F.D.I.C.
IIEI* l
P
BANKANDTRUSTATONATo L COMPANYOF GRAND FORKS, NORTH DAKOTA 58201 TRUST DEPARTMENT
Complete Trust Capabilities
TRUSTEE
CUSTODIAN, GUARDIAN, ADMINISTRATOR,
TRUSTEE CORPORATE PENSION & PROFIT SHARING TRUSTS, TRUSTEE HR-10 (KEOGH) SELF EMPLOYED RETIREMENT TRUST
AGENTS FOR INVESTING, ESCROW AGENTS, FARM MANAGER, ESTATE PLANNER, TRUSTEE SHORT TERM TRUST
TRUSTEE LIFE INSURANCE TRUST STOCK TRANSFER AGENT
EXECUTOR
ROMAINE D. THORFINNSON
Trust Officer
TITLE INSURANCE COMPANY OF MINNESOTA
400 SECOND AVENUE SOUTH/MINNEAPOLIS. MINNESOTA 55401 Telephone (612) 332-5111
REPRESENTED IN NORTH DAKOTA BY-
Achillo SLOPE COUNTY ABSTRACT COMPANY LMoe LaMOURE COUNTY ABSTRACT COMPANY
ten SLOPS COUNTY ABSTRACT COMPANY58458 Bo 596-701 )Teleone No. 337
(s58823 (70t 1523-4031t .Gro.Vldtn fie
(send to Bowmen) C. H. Strand. Vrfidelkol? Officer Gerard C Gordon.Vlitig OYcer
Ashley ASHLEY ABTRACT COMPANY Lngdon CAVALIER COUNTY ABSTRACT COMPANY
5 84 3 6e43 (7011} I 28.340 or 288.3491 B ST R B.34 Pt 58249 313 Ninth A nue Dorothy M. Powers, 1701 256-2628--Vallidatingi Officer FP F. Bendar. Validating Officer
Ma, A. Wishek. Validating Officer 1LA1 RANSOM COUNTY TITLE COMPANY Ble nwerck THE NORTH DAKOTA GUARANTY AND TITLE CO. 5804 Title Building -(701) 683-4611
68501 20% N.6thSest1701223-835LOwell 0. Tion, Validating Officer 55601 20675 N. 6th Street. I7O Il 223-6535
Mildred J. Berresh. Vaideting Officer Mande THE MANDAN ABSTRACT COMPANY Boodean ROT6NEA5 COUNTY ABSTRACT COMPANY S554 P.O. Box 637-1701) 663-5362
Iotm
STNA OUWASRC OPN J. C. Pfeil,,. Validating Officer
6631B 1701) 228-2215
Carl J. Fnreean. Validating Officer M.nning NORTHWEST ABSTRACT COMPANY 58642 (701) 367-6141
Bowbefle BURKE ABSTRACT COMPANY D C. EsI,,ger. Vlidatiog Officcr
58721 Don 217-(701) 377 2361
Richrd 0, Anderson. Vaidating Officer M.Culoky SHERIDAN COUNTY ABSTRACT COMPANY 58463 (701) 363-2285
Bowmn BOWMAN COUNTY ABSTRACT COMPANY Bnn F. Klud. Validatng Officer 588623 First and Main-(701 523-4031
C. B. Strand. Vabldating Officer Minneeutten BENSON COUNTY ABSTRACT COMPANY. INC.
58351 1701) 73-5491
Cando TOWNER COUNTY ABSTRACT COMPANY Donald L Leber. Validating Officer 58324 409 Main Street-l701 968-3651
R. C. McLeud. Validating Officer Mino J. M. DEVINE & CO. INC.
58701 307 Third Aoenue. SE.
Cerringtone FOSTER COUNTY ABSTRACT & TITLE CO. Boo 1316-701) 838 3921
68421 (701)652 -2241 MUreI M Johnson. Vidaring Oftler
Feben E. Noack, Validaltin Offcer
Mirn. WARD COUNTY ABSTRACT INC.
Crosby DIVIDE ABSTRACT COMPANY. INC. 658701 316 Minor Federal Savnogs & Loan Bl.
65730 P.O Box 230-(7011965-6352 123 Fmrs See S.W.-(7018382517
Dennis V. Sundsaml. Vadeting Officer Relen B. Andeeon, vta.lmoemg Officer
OenU Lake RAMSEY COUNTY ABSTRACT COMPANY MeIrU RENVILLE ABSTRACT COMPANY. INC.
58301 Rmea Cnt Courrhounse 58761 [7011756-6487
1701) 662-4526 Noral J. Veikley. Validating Officer
Thomas M. Kelly. Vatirdrg Officer
Mot HETTINGER COUNTY ABSTRACTERS. INC.
Weokinlon DICKINSON ABSTRACT COMPANY -58646 Box 308-017011 824-3148
58601 Professional Building Thomas J. Ward. Valhdamg Officer
148 West 1st Streer-(701) 225-2271
Audrey Baud. Velidarm Office, Naoe LOGAN COUNTY ABSTRACT COMPANY 58561 1701) 754-2200
Boindele DICKEY COUNTY ABSTRACT COMPANY H. G. Ruemmele. Validating Officer 58436 1701) 349 3450
Robert R. Betting. Validating Officer Ne Rockford SURETY TITLE COMPANY 58356 J701) 947 2446
eFee CASS COUNTY ABSTRACT COMPANY Edgar P. Malnnn. Vafidamg Office, 58102 Merchant, National Bank BSmldng
Box 826-(701 ) 232-3341 Role ROLETrE COUNTY ABSTRACT CORP.
Irene Fraser. Validatirg Officer 58367 (701) Telephone No. 3149
Feender WELLS COUNTY ABSTRACT COMPANY Ralph J. Lasop. Valmdating 0icer
58438 (701) 547 -3121 Rugby PIERCE COUNTY ABSTRACT COMPANY B B. Ergbrenlh. Valdarrg Officer 58368 P.O. Box 551 -(701) 776 6961
WaIler T. Bosley. Validatmng Offie Foenr SARGENT COUNTY ABSTRACT & TITLE
56032 GUARANTY CO. Stanley MOUNTRAIL COUNTY ABSTRACT CO.
(701) 724-3226 58784 (701) 628-2915
R. J. Bating. Validating Officer A. L Whinrmorn Validating Office,
Grafoe WALSH COUNTY ABSTRACT COMPANY Steele KIDDER COUNTY ABSTRACT COMPANY
58237 Box 111-(7011352-1650 58482 (701) 470-2432
W. F. Schun. Validating Officer Linn Sherman. Validating Office,
Grand Fares GRAND FORKS ABSTRACT COMPANY To-ner MtHENRY COUNTY ABSTRACT COMPANY 9820 Box 326-(701) 772-3484 58788 (701) 537-5723
H. G. Roemmela. Validating Officer Kenneth McDonald
"eTen MERCER COUNTY ABSTRACT COMPANY ValleR City THE BARNES COUNTY ABSTRACT COMPANY
8545 {701) 749-2190 58072 250 Central Ae N.-(701) 845-0551
Harold E. 8.r), Validating Officer Roy Gillund. Vafidatlmr Offcer
Metnes ADAMS COUNTY ABSTRACT COMPANY Wahpeton THE RICHLAND COUNTY ABSTRACT COMPANY 58639 1701)567 -2224 58075 207 North Fourh Sureer-(701) 642-3781
Inga Johnsn, Vahdarmrg Officer Carl Gaslow Vafidating Officer
Nllabrts TRAILL COUNTY ABSTRACT COMPANY Washbore SECURITY ABSTRACT COMPANY 58046 (7011 6_3431 or 63436 58577 PO Daner 370-(701) 462-3244 Estelle M. Keloy. Validating Offcer Carl F. Eli,-, V0adatinng Office,
Jerealow. n STUTSMAN COUNTY ABSTRACT & GUARANTEE CO. Watford Cicy THE ABSTRACT AND TITLE COMPANY 58401 P. Boo 715-1701) 252-4870 5884 Courthouse
Herold P. Barch. Vadting Ofce, Boo 567-(701) Telophrn NO 577 Glays DeOrdeor. Vahdmmrg Offcor Cecelia Rude. Vehdatlng Officer
Lekee NELSON COUNTY ABSTRACT COMPANY Willi.n WILLIAMS COUNTY ABSTRACT COMPANY 68344 (701) )7 2023 5R801 Drawer F -17011) 72-3381
Lotsn L Johnson. Validating Officer A. 0. MMser. Vahding Office,
rorifnrmrneeerrlemeirhn
H. G. RUEMMELE. STATE REPRESENTATIVE Br 326. Grand Force North Dakota 682Q
(701) 772-3414
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NORTH DAKOTA LAW REVIEW
VOLUME 50 SUMMER 1974 NUMBER 4
BOARD OF EDITORS
THOMAS L. HAMLIN, Editor-in-Chlef
JAMES S. HILL OWEN L. ANDERSON
Developments and Book Review Editor Special Projects Editor
DAVID A. ENGEN DAVID S. MARING
Case Comment Editor Note Editor
ROBERT J. ERICKSON DUANE H. SCHURMAN
Articles Editor Research Editor
ALAN J. LARIVEE, Business Manager
SENIOR STAFF
DAMON E. ANDERSON JOHN V. BOULGER JERALD L. ENGLEMAN JAMES H. HENRICHSEN
JOHN 0. HOLM JOHN P. KJELMYR
CARLAN J. KRAFT
RICHARD A. CLAPP KENNETH L. DALSTED
JOHN S. FOSTER DONNA D. GECK
JOSEPH F. LARSON II DUANE A. LIr.EHAUG
ROGERT L. MANLEY JOEL D. MEDD MARY L. MUEHLEN RUSSELL J. MYHRE RICHARD W. OLSON
JUNIOR STAFF
ROBERT S. T. JOHNSON JOEL D. JOHNSON RONALD H. MCLEAN PATRICK R. MORLEY
FACULTY ADVISOR
BRUCE BOHLMAN
SECRETARY
H. JEFFEREY PETERSON VIRGINIA W. POWELL
SHERYL A. RAMSTAD DALE V. SANSTROM
MARK M. SuBY GARY R. THUNE
MICHAEL D. NELSON PETER S. PANTALEO STEVE M. SHERMOEN ROBERT J. UDLAND
SHIRLEY COVINGTON
The North Dakota Law Review Is the Journal of the
STATE BAR ASSOCIATION OF NORTH DAKOTA
ALAN B. WARCUP, President
WARD M. KIRBY, President-Elect NORLYN E. SCHULZ, Sec'p-Treas.
ROBERT P. SCHULLER, Executive Director 314 MDU Office Building
Bismarck, North Dakota
* •
The views herein expressed are those of the individual authors and are not necessarily those of the State Bar Association or the North Dakota Law Review.
THE NORTH DAKOTA LAW REVIEW is published four times a year in November, January, March and May by the University of North Dakota School of Law in co-operation with the State Bar Association of North Dakota.
Communications concerning editorial matters and permission to reprint material con- tained herein should be addressed to: Editor, North Dakota Law Review, University of North Dakota School of Law, Grand Forks, North Dakota 58201.
Communications concerning business matters and requests for reprints should be ad- dressed to: Business Manager, North Dakota Law Review, University of North Dakota School of Law. Grand Forks, North Dakota 58201. Subscription $10.00 per volume, $3.50 per issue. Second class postage paid at Grand Forks, North Dakota.
Subscriptions will be automatically renewed, unless notice of cancellation is received.
Copyright, 1974, by the University of North Dakota School of Law.
