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Evolution of the Bankruptcy Court in the Eastern and Western Districts of Arkansas

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Evolution of the Bankruptcy Court in the Eastern and Western Districts of Arkansas THE EVOLUTION OF THE UNITED STATES BANRKTUPCY COURT FOR THE EASTERN AND WESTERN DISTRICTS OF ARKANSAS 1898 – 2005 By Judge James G. Mixon THE EVOLUTION OF THE UNITED STATES BANRKTUPCY COURT FOR THE EASTERN AND WESTERN DISTRICTS OF ARKANSAS 1898 – 2005 In 2004, Bankruptcy Judge James G. Mixon set out to write a scholarly history of the bankruptcy court in Arkansas. He was inspired by an article by Judge Richard Arnold chronicling the history of the district court in Arkansas that was published in the Arkansas Law Review that year. With that article as his benchmark, Judge Mixon took the plunge and enthusiastically immersed himself in the project. Judge Mixon began by poring over old docket books stored at the bankruptcy courthouse and making frequent visits to the Arkansas History Commission’s archives in Little Rock. Later he journeyed to Ft. Worth to the court’s archives to research the earliest Arkansas bankruptcy cases and the parties involved. He conducted taped interviews with three bankruptcy veterans who reflected on how the law in Arkansas had changed. His research was thorough and painstaking and, not surprisingly, the information he amassed turned out to be voluminous. Yet he was never overwhelmed and by August of 2005, he had an idea of how to organize the chaos and had written a working draft. Alas, October 2005 rolled around and with it the “new law” enacted by Congress‐the Bankruptcy Abuse Prevention and Consumer Protection Act”‐was implemented. In the months prior to October, the court was deluged with new cases filed to avoid the provisions of BAPCPA. At the same time, Judge Mixon’s most essential chambers staffer grew ill and unable to function, eventually passing away just at the law came into effect. It was a time of sadness and confusion. Bankruptcy matters came first and the law review article got shoved to the back burner where it has remained all these years since. Ironically, in early 2014, ten years after he started, Judge Mixon had finally cleared his desk of pressing court business and was once again turning his attention to the article when his own untimely death occurred in March. This file contains his draft of the article and his research notes. The draft is a diamond in the rough with many obvious holes that Judge Mixon intended to fill in later. He also wanted to pare down some of the less important portions. His half‐finished opus awaits a bankruptcy scholar with some time and skill to finish the job. Who will step forward? Only time will tell. Mardi Blissard Law Clerk to James G. Mixon September 3, 2014 DRAFT NO. 19 August 22, 2005 THE EVOLUTION OF THE UNITED STATES BANKRUPTCY COURT FOR THE EASTERN AND WESTERN DISTRICTS OF ARKANSAS 1898-2005 The Bankruptcy Act of 18981 was the first permanent bankruptcy law and remained in effect until the passage of the Bankruptcy Reform Act of 1978.2 The 1898 Act created “courts of bankruptcy” defined as the district courts of the United States.3 The 1898 Act also created the office of referee.4 The referee was appointed for two -year terms by the District Court5, and the District Court could remove a Referee for any reason including the reason that the Referee’s services were no longer needed.6 Compensation was $10.00 per case file in all cases.7 By 1903 the Referee received $15.00 per case filed plus $0.25 for every proof of claim filed and one-half of one percent of all monies disbursed to creditors in asset cases.8 A Referee could also serve as a Special Master in the same case and receive additional compensation fixed either by local rule of the District Court or by order.9 In no-asset cases, the Referee’s fee came from the debtor’s filing fee.10 Referees were forbidden to practice as attorneys in any bankruptcy proceeding although it seemed contemplated that Referees would be permitted to practice in other areas of the law.11 The Referee was required to take an oath of office similar to the District Judge,12 but also post a bond not to exceed $5,000.00 together with two sureties.13 The Clerks of the Courts of Bankruptcy were the Clerks of the District Court. The duties of the Referee were enumerated by the Bankruptcy Act and are more similar to the duties of a trustee under today’s law.14 Decisions by the Referee on contested matters were always subject to review by the 1 District Court.15 The typical procedure was discussed by 5 Collier on Bankr. as follows: “A review should be asked by petition; if from an order, this is the only way. There is no limit set by the statute, but a review must be within a reasonable time; this is usually fixed by a standing rule. It seems that a review can be asked only after the granting of an order, though it would seem that the referee may certify a specific question also. The petition should clearly point out the error complained of, and ask a review. The latter is a matter of right. The referee’s decisions on questions of fact or involving discretion will not ordinarily be interfered with. Findings of fact by the referee are presumed to be correct until the contrary is shown and the burden of proof rests with the persons objecting thereto. If the findings are manifestly erroneous, they may be set aside. The court will not consider for the first time questions not raised below, or issues not presented by the record. But the court may review findings where certain testimony in the case appears to have been overlooked or ignored. The record usually consists of a certificate, prepared and signed by the referee, which should state the question on which the review has been asked and the ruling of the referee, and, either in the certificate or in a schedule annexed to it, give the evidence or a summary of it, and a copy of the order, if any. The practice in the several districts necessarily varies as to the formalities to be observed in seeking a review by the judge of the orders or other proceedings of a referee; in some districts it is held sufficient to get out the substance of the matter in dispute without requiring the filing of formal exceptions to the referee’s findings or rules.” There were no rules of bankruptcy procedure as such16, but practice was governed by the procedural provisions of the Bankruptcy Act itself, and by general orders and forms promulgated by the Supreme Court of the United States17, and local general orders.18 In 1898, the Eastern District of Arkansas was divided into three divisions, the Eastern (Helena) Division, the Western (Little Rock) Division and the Northern (Batesville) Division.19 The Western District was divided into the Fort Smith Division and the Texarkana Division.20 1. Patrick Callan Dooley The first case filed in the Western Division of the Eastern District of Arkansas was the case of Joseph Rudolph21, by the law firm, Rose, Hemingway & Rose22, and the case was 2 referred by the District Court,23 to Patrick Callan Dooley as Referee. The petition was handwritten and listed a schedule of creditors and the amount of the claims. All claims were listed as unsecured and incurred in consideration of merchandise sold to the debtor.24 The debtor claimed Lot 5 in Block 105 in the City of Little Rock as exempt homestead under Arkansas law and set the value at $1,500.00. Notice of the first meeting was published in the Arkansas Democrat and the Trustee filed a report of no assets on October 24, 1898. The notice of the first meeting stated that the meeting would be held at Dooley’s office, Rooms 3 and 5 of the Kahn Building in Little Rock, Arkansas.25 The Trustee petitioned for the award of $2.50 for “typewriting and stationary in said case”, and the attorney for the Debtor, G. B. Rose, objected on the grounds that the fee was not permitted by law. The Referee then withdrew his request. The Trustee’s fee in the case was $1.50 payable to the debtor before he got his discharge. The debtor petitioned the District Court for his discharge and the discharge was granted by the District Court.26 Notices of first meeting of creditors was sent by the Referee (Dooley) and frequently published in the State Republican Newspaper.27 (Case 466, Arthur Faulk, March 21, 1903, Ft. Worth). The meetings took place at Dooley’s office at 16 and 17 Kahn Building, Little Rock, Arkansas.28 In the Faulk case for instance, which was an asset case which paid 12.5% dividend, Dooley received fees totaling $54.20, the Trustee received $109.49 and Attorney Morris M. Cohn received $125.00. Patrick Callan Dooley was born near Gort, Ireland on December 25, 1842. He immigrated to the United States in 1850 with his mother and settled in Chesire, Masschusetts. He attended the University of Michigan for four years and graduated from the Law Department 3 in 1869. He moved first to Little Rock then to Dewitt, Arkansas, and practiced law. He married Matilda Arnold Stoddard and had two daughters, Keo, who became the wife of J. E. England; and Nellie Dooley. He was a member of the Arkansas State Senate in 1872, and he was appointed Judge of the 12th Judicial Circuit29 by Governor Elisha Baxter on April 26, 1873, and served until 1875 when he moved to Little Rock and resumed the practice of law.
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