In re William Duncan & Son

Mrs. Bertha Watts Shotwell, a petitioning creditor in this matter, has filed a petition to review the order of the referee in bankruptcy denying her claim. She is the mother of Mrs. William Duncan, 1 and filed a proof of claim on February 7, 1958, alleging that the debtor, William Duncan & Son, was indebted to her in the amount of $10,000.

After a hearing, the referee in bankruptcy denied Mrs. Shotwell’s claim, and concluded as follows:

Other creditors objected to the proof of this claim, and two arguments were proposed in opposition to Mrs. Shotwell’s claim. The first was that the claim was barred by the applicable Statute of Limitations, which foreclosed the commencement of an action upon an oral contract after a period of two years had passed from the accrual of the cause of action. 4 The second was that the contract was invalid under the provisions of the Statute of Frauds, 5 in that this was an oral agreement which, by its terms, could not be performed within a year.

*161 It is a basic rule in bankruptcy-proceedings that the validity of the obligations of the bankrupt are to be determined by the law of the state wherein the court of bankruptcy is located. See 2 Remington…