The Federal Reporter (Annotated), Volume 174: Cases Argued and Determined in the Circuit Courts of Appeals and Circuit and District Courts of the United States. January-March, 1910. Page: 159

                                
AMERICAN GRAPORHONE CO. V. LEEDS & CATLIN CO.

and papers of defendant do not cease to be accessible for that purpose
merely because they are in the custody of receiver. Indeed, receiver
and his counsel on the argument stated that they were open for com-
plainant's inspection, and would be produced before the master when
subpoenaed. The receiver, however, would have no interest in the de-
termination of this claim, and could not be expected to expend any part
of the fund in his hands in preparing any statement.
If, on the other hand, the claim be one which is provable in bank-
ruptcy, it is hardly to be supposed that the District Court will assume
the burden of liquidating it. Such proceedings usually involve many
technical questions of patent law, Which may more appropriately and
expeditiously be disposed of in the Circuit Court, which is continual-
ly passing upon such questions. Presumably, when the claim is liqui-
dated and master's report confirmed, the District Court will accept the
judgment of the Circuit Court as sufficient proof of claim, as it would
the money judgment of any court of competent jurisdiction.
Whether or not the receiver will appear in such proceedings and en-
deavor to have the amount of the claim reduced as far as possible is
a question for him to decide, or on which he will take the instructions
of the District Court. This court certainly has no authority to require
him to appear, except as a witness having custody of books and pa-
pers. Of course, if he does appear, and is substituted as defendant, it
will be his duty to prepare such a statement as he can from the books;
but, unless he elects to appear, it would seem that he would be under
no such obligation.
No relief of the sort prayed for should now be granted, nor is there
any necessity for requiring receiver to make election whether or not he
will be substituted. Complainant may proceed with its accounting
against defendant, exactly as if no proceedings in bankruptcy were
pending; and, if the receiver decides to intervene, he will make what-
ever application for relief may be necessary.
2. It is not for this court to say what moneys the receiver shall or
shall not pay out. All questions as to priority of claims and as to pay-
ment of moneys in the custody of the District Court should be submit-
ted to that court for determination. If the claim be one not prova-
ble in bankruptcy, presumably that court will make no provision for
its payment. If it be a provable claim, it is equally presumable that
whatever funds there may be in the hands of receiver, over and above
the expenses of administering the estate, will be retained, until all
provable claims are liquidated and all questions of priority (if any arise)
are determined. The whole matter is exclusively in the jurisdiction of
the bankruptcy court.
3. The receiver owes no active duty to complainant to expend the
money of the estate in an effort to ascertain the facts asked for. Un-
doubtedly the receiver will afford all reasonable facilities, as he said
he would, for the examination of the records which contain the infor-
mation sought for. Personally he knows nothing about it And the
officers and employes of defendant may be produced by subpoena be-
fore the master at the same time as the books, and interrogated on the
subject.