Fortner and Perrin, Inc., a California Corporation, as Assignee of Carmen E. Fortner and Stan Ruzicka v. James A. A. Smith, Trustee in Bankruptcy

In May of 1960, Mrs. Carmen E. Fort-ner and Stan Ruzicka (sometimes referred to hereinafter as the claimants) owned the stock of two corporations doing engineering and machine shop business. On May 3, 1960, they entered into an agreement with Robert F. Feland, Jr., whereby they sold their stock to him — part payment in cash, and the balance of $152,000 for Mrs. Fortner and $20,000 for Mr. Ruzicka to be paid over a period of years. After the sale, Fe-land transferred the assets so acquired to Conair, Inc.

On November 1,1960, Feland had Con-air, Inc., file a petition for arrangement under Chapter XI of the Bankruptcy Act. The appellee here was appointed receiver on the same date (and thereafter operated the business until bankruptcy ensued and the corporation’s assets were liquidated) .

On December 1,1960, a first meeting of the creditors under Chapter XI was held pursuant to Section 334 of the Bankruptcy Act, 11 U.S.C. § 734 , for the purpose of electing a trustee. There was also calendared for the same time a hearing on an order to show cause which raised the issue of whether the claimants or Feland had the right to speak for the debtor corporation, Conair, Inc., in the…