The NCBJ’s Formation

Although 2016 marks the 90th anniversary of the National Conference of Bankruptcy Judges (“NCBJ”), formerly known as the National Association of Referees in Bankruptcy (“NARB”), NARB’s formation in 1926 was actually the second generation of the organization. Shortly after passage of the Bankruptcy Act of 1898, the bankruptcy referees formed the first National Association of Referees in Bankruptcy. Its first National Convention of Referees in Bankruptcy, attended by 30 referees from 14 states, was held at the Chicago Beach Hotel in Chicago on July 25, 26, and 27, 1899. Referee Charles A. Hawley of Seneca Falls, New York, was elected its first president. Its Rules, adopted July 27, 1899, state, “The objects of this association shall be to promote the purposes of the National Bankruptcy Law, by making practice in bankruptcy more uniform, and suggesting desirable and proper amendments.” A suggestion was made to ask each referee to contribute $1.00 for future expenses, which “would be about five hundred dollars.” The organization became inactive about five years later. In 1927, its former Secretary-Treasurer “turned over the defunct organization’s accumulated funds, $118.04,” to the then newly formed NARB.

In 1920, Referee Herbert M. Bierce of Winona, Minnesota, became concerned that support in Congress could develop to repeal the Bankruptcy Act of 1898. At that time, the more than 500 bankruptcy referees serving nationwide in 84 judicial districts were mostly isolated within their respective districts. There were no uniform practices. Referees were criticized as being inefficient, having conflicts of interest, and disproportionately using estate assets to pay costs of administering the estate. Prominent law firms did not practice in the bankruptcy arena, which was dominated by small cliques of attorneys and other professionals. Referees, appointed by district courts for twoyear renewable terms, served a judicial function, administered the estate, and routinely had ex parte communications. Decisions of bankruptcy referees were not reported.

Herbert was interested in forming a new organization of Referees in Bankruptcy. He heard that Referee Paul H. King of the Eastern District of Michigan was “a man of personal magnetism, high ideals and splendid organizing ability.” In 1923, he wrote to Paul about the concept of forming an organization for Referees in Bankruptcy. Paul was interested. At the time, there was no centralized list of Referees in Bankruptcy. Paul compiled a list by contacting each Clerk of the District Courts across the country, which showed there were approximately 535 active Referees in Bankruptcy in the continental United States. For many years, Herbert maintained the “only reasonably accurate roster of Referees for this country.”

Paul wrote a letter to each Referee in Bankruptcy inquiring about interest in forming a national organization of referees. After receiving a positive response, Herbert recounts what happened next: Late in the Spring of 1925 a Rotary district conference was held at Hibbing, Minn., on the “Iron Range”, which Mr. King attended as the representative of Rotary International. There I met him. We discussed pushing the organization, with a meeting to be held in Detroit. He readily agreed to undertake the detailed task and to so proceed. He secured the cooperation of the Michigan and Detroit Bar Associations and the Detroit Lawyers Club all of which appointed committees to assist him. His “boss”, U.S. District Judge Arthur J. Tuttle, who shared the federal judicial work in the Eastern District of Michigan with, now, Circuit Judge Charles C. Simons, was enthusiastic for the movement. Both judges were very proud of the Detroit bankruptcy court organization and were anxious that its virtues be made known. The Book-Cadillac, a new edifice in place of a smaller popular hostelry, was selected as headquarters and July 9th and 10th, 1926, Friday and Saturday, were chosen as dates. Mr. King issued the call and continued, by one method or another, to secure pledges of attendance. As soon as a Referee indicated his intention to attend, Mr. King made this intention certain by drafting such Referee to participate in the program. Thus he early built up an interesting program, as the idea worked admirably.

In July 1926, a conference of bankruptcy referees from across the nation was held at Detroit’s Book-Cadillac Hotel, organized by Paul. Eighty-two referees from 24 states and the District of Columbia attended. There the National Association of Referees in Bankruptcy “was organized July 9, 1926, when, on motion of Referee J. F. Hendricks, Doylestown, New York, seconded by many, it was unanimously decided to form a permanent organization ‘even though the Referees would not necessarily be permanently in office.’”

The referees adopted a constitution, elected officers and directors, and established the Journal of the National Association of Referees in Bankruptcy. Paul was elected the first President. Referee Watson B. Adair of Pittsburgh was elected Vice President. Herbert was elected Secretary-Treasurer. An elected board of directors consisted of one member from each of the nine regional circuits then in existence. Four committees were formed: Ethics, Legislation, Resolutions, and Uniformity of Practice. Membership on each committee consisted of one member judge from each of the nine circuits.

Initially, NARB’s principal goals were to work towards the adoption of at least some uniform practices, formulate administrative practices to improve efficiency, foster communication among referees, establish ethical guidelines, and improve the public’s perception of bankruptcy. The newly formed Journal of the National Association of Referees in Bankruptcy was important in achieving these goals. Herbert was its first editor. During Paul’s year as NARB’s first president, NARB conducted a comparative statistical study to identify the most and least efficient referees measured by administrative fees and creditor distributions and prepared a Code of Ethics for Referees.

Watson, NARB’s second president, describes the purpose of NARB and the Journal of the National Association of Referees in Bankruptcy in his introduction to the 1927, No. 1, Journal issue:
This issue of the Journal reports the proceedings at the second Annual Conference, as well as the current news of the Association. The success of the two conferences and the interest shown in the various issues of the Journal prove the value of both. With rare exceptions, each referee in bankruptcy works alone, consulting with no other referee and having inadequate knowledge of how things are done by other referees. If this Association could make available the experience of each referee for the information of all it would really benefit both the referees and the public. The Journal serves as a line of communication among the referees and as a forum for discussion of bankruptcy practices and policies. These services can be further developed.

NARB adopted a Code of Ethics for Referees at its second annual conference held August 29 and 30, 1927 in Buffalo, New York.